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http://www.proactiveinvestors.com.au/companies/...d-hanlong-4616.html Dual-listed Moly Mines (ASX/TSX: MOL) finished the December quarter with a cash balance of A$40 million. During the quarter, $141 million market-capped Moly Mines, signed a Subscription Agreement with Hanlong Mining Investment Pty Ltd, which, upon completion, will provide an immediate US$200 million equity and debt injection to the Company, retire the balance of the TCW Interim Finance Facility and provide a majority controlling interest to Hanlong. Hanlong will subscribe to 207.1 million shares in Moly Mines for US$140 million – struck at A$0.747 per share. In addition, Hanlong will provide Moly Mines with an interest bearing US$60 million 10 year project loan and arrange debt financing for up to US$500 million by 30 June 2010 for the Spinifex Ridge Molybdenum Project. Moly Mines will also issue Hanlong with 35.5 million unlisted options exercisable at C$1.00 per share maturing 3 years from the date of issue. The company was able to strike this deal despite falling molybdenum prices, cut-backs in molybdenum capacity and lack of financing available for new molybdenum project development. Both Foreign Investment Review Board approval and Moly Mines shareholder approval for the transaction has been received for the transaction. National Development and Reform Commission and Ministry of Commerce approvals have been received. Final approval from the People’s Republic of China approval from the State Administration for Foreign Exchange is in progress. Moly Mines is seeking an extension to the 31 January 2010 completion period due to the likely delayed receipt of SAFE approval and the Chinese New Year holiday period in mid‐February. Transfer and settlement of the US$200 million of the Subscription Agreement could also be delayed as a result. Spinifex Ridge Molybdenum Project – 10Mt/annum Final feasibility study engineering works have commenced on the 10Mt/a project with proposals received from major engineering groups. Infrastructure optimization will be completed in parallel to the engineering works. Outside of this work stream the project is development ready ‐ key contracts that support an immediate financing remain in place. Key long‐lead items of equipment required for the full 20mt/a Spinifex Ridge Molybdenum Project have been received. A selling agent has been appointed to divest equipment that has been identified as being surplus to the preferred 10Mt/a start up project. Spinifex Ridge Iron Ore Project
Moly Mines has been allocated an initial 0.8Mt/a iron ore stock‐pile and shipping capacity for 20 months commencing July 2010 at the Utah Point port. Port construction delays are expected to prevent shipments from Moly Mines allocated areas until 4th Quarter 2010. Accordingly pre‐development work has been limited to further metallurgical test work and ore specification. Finance The Trust Company of the West Interim Financing Facility was restructured during the Quarter following the successful completion of the institutional placement and Share Purchase Plan. Of the $138.1m balance outstanding at Quarter end: - US$41.0 million will be due for repayment 18 months from 31 October, 2009 (30 April 2011 debt)
- US$76.6 million will be due for repayment in 2 years from 31 October, 2009; and
- US$20.5 million will be due 5 years from October 31, 2009 Interest accrues on the debt at 15% per annum. The 30 April 2011 debt is expected to be repaid through the sale of long lead equipment that is surplus to the design requirements for the preferred 10Mt/a Spinifex Ridge Molybdenum Project. Funds received in excess of the US$40 million will be used to repay the US$78 million 2 year maturity debt. Upon the completion of the Hanlong Subscription Agreement, the Interim Financing Facility will be repaid in full. If the Hanlong Subscription Agreement does not complete by 15 February 2010, the Company is required to issue 5.9 million new “Restructure Warrants” per the TCW Restructure Agreement and as approved by shareholders at the general meeting of 26 October 2009. the Company successfully raising a minimum of US$25 million in new equity. During the quarter the Company issued 62 million shares at C$0.75 / A$0.80 per share that raised C$46.5 million / A$49.6 million before costs through an institutional placement (42 million shares and 14 million warrants) and a Share Purchase Plan (20 million shares). Commodity Markets The molybdenum market was steady in the Quarter following a sudden fall in September 2009. The spot market traded in a range of US$11.00/lb to US$13.00/lb for the majority of the Quarter. Spot market activity has increased in early 2010 with molybdenum oxide prices trading above US$15.00/lb during January. In the 5 and 3 year period to end of 2009, the average price for molybdenum oxide was US$25.4/lb and US$23.5/lb respectively.
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