TORONTO, ONTARIO--(Marketwire - May 29, 2008) -
NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR DISSEMINATION IN THE UNITED STATES
Moly Mines Limited, (TSX:MOL)(ASX:MOL) is pleased to provide a Spinifex Ridge Molybdenum Project update as the Company moves rapidly towards full Project implementation in a period of improving debt and equity capital markets.
Mine Planning
The Company is currently finalising the long term mine plan based on the new Measured and Indicated Resource announced in March 2008. This is expected to result in a significant increase in reserves from the current 315 million tonnes. Based on the planned name-plate 20 million tonnes per annum processing capacity, the mine life is expected to extend well beyond 20 years (based on Measured and Indicated Resources only) and more than 30 years if a significant portion of the Inferred material converts to resource.
The long term mine plan currently being developed still uses a starter-pit design very similar to the base case 10 year mine plan developed during the Definitive Feasibility Study completed in September 2007. This pit rapidly captures the higher grade core to the deposit, providing substantial cash flow during the early debt-repayment period of the mine.
The major expansion to the Spinifex Ridge resource base has also led to the commencement of engineering scoping studies for the expansion of the current name plate 20 million tonne per annum processing capacity to 30 million and 40 million tonnes per annum. Project engineers WorleyParsons are conducting these studies with the expansion being modelled to occur as early as year 5 of the mine.
Recent analysis indicates that the current resource includes a significant zone of tungsten mineralisation which falls within the planned pit. The Company is evaluating methods for extraction of this valuable by-product metal from Project tailings.
Iron Ore Drilling at Spinifex Ridge
The Company has commenced drilling for iron mineralisation at Spinifex Ridge. Drilling concentrates on several areas where previous surface rock chip samples had identified grades between 55-65% Fe. This material is within existing mining tenements in close proximity to the planned Mo/Cu pit. Pending the results of the drilling, scoping studies will be undertaken on the production of a saleable Fe-ore product utilising the main Spinifex Ridge comminution facilities.
Project Contracts
The Project's construction preparation continues to proceed well with the value of capital cost contracts awarded to date being over A$270 million.
In preparation for commencement of site works approximately 140 transportable housing units that will house over 500 staff have been built and transferred from Perth to temporary storage in Port Hedland, about 150km from Spinifex Ridge.
The Company is on schedule to award contracts for over 50% of the Project's capital costs prior to commencing total Project financing early in the second half of 2008. This will substantially de-risk the Project from a capital cost perspective and underlines the high confidence levels in the Project's engineering and design work.
The Project's engineering manager, WorleyParsons', first bonus related to the Project's progress under the EPCM Agreement is due for assessment at May 31, 2008. The Project remains on track for second half 2009 commissioning.
Tenure and Approvals
Site land leases and titles continue to be awarded to the Company with all key primary and secondary titles now in place for the development of the mine. Most recently Miscellaneous Licences have been received for the mine airport, mine roads and various pipeline routes.
The Environmental Protection Authority of Western Australia ("EPA") recently released their EPA Bulletin and have recommended the Project proposal be approved, subject to the implementation of certain conditions, all of which are considered to be reasonable and manageable through the Company's best practice systems. Ministerial sign-off is expected soon allowing access to site for the commencement of construction activities shortly thereafter.
Molybdenum Off-take and Market Update
The Company is continuing negations in relation to molybdenum off-take arrangements. Our advisors do not consider the finalization of these arrangements to be a pre-requisite to full Project financing.
Commodities markets remain very strong. Molybdenum oxide prices remain above US$33.00/lb with Ferro-Molybdenum currently trading at approximately US$36.00/lb. Many market commentators and industry analysts believe molybdenum prices could increase further over the next 2 years as supply continues to stagnate against strong demand. Copper forecasts also remain strong with copper being a significant by-product for the Spinifex Ridge Project.
As at the end of April 2008, the Company had A$69 million cash on hand.
These press materials do not constitute an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration or an exemption from registration. Any public offering of securities to be made in the United States will be made by means of a prospectus that will contain detailed information about the company and management, as well as financial statements.
THESE PRESS MATERIALS ARE NOT FOR RELEASE IN THE UNITED STATES.
This news release includes "forward-looking statements" as that term within the meaning of securities laws of applicable jurisdictions. Forward-looking statements involve known and unknown risks, uncertainties and other factors that are in some cases beyond Moly Mines' control. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this news release, including, without limitation, those regarding Moly Mines' future expectations. Readers can identify forward-looking statements by terminology such as "aim," "anticipate," "assume," "believe," "continue," "could," "estimate," "expect," "forecast," "intend," "may," "plan," "potential," "predict," "project," "risk," "should," "will" or "would" and other similar expressions. Risks, uncertainties and other factors may cause Moly Mines' actual results, performance, production or achievements to differ materially from those expressed or implied by the forward-looking statements (and from past results, performance or achievements). These factors include the failure to complete and commission the mine facilities, processing plant and related infrastructure in the time frame and within estimated costs currently planned; variations in global demand and price for molybdenum and copper; fluctuations in exchange rates between the U.S. dollar and the Australian dollar; failure to recover the resource and reserve estimates of the Project; the failure of Moly Mines' suppliers and service providers to fulfil their obligations under construction, supply and tolling agreements; unforeseen geological, physical or meteorological conditions, natural disasters or cyclones; changes in the regulatory environment, industrial disputes, labor shortages, political and other factors; the inability to obtain additional financing, if required, on commercially suitable terms; and global and regional economic conditions. Readers are cautioned not to place undue reliance on forward-looking statements. We assume no obligation to update such information.
FOR FURTHER INFORMATION PLEASE CONTACT:
Moly Mines Limited Derek Fisher Managing Director +61 8 94293300 Email: info@molymines.com Websites: www.molymines.com
