With the successful wet commissioning of the new Utah Point shiploader and berth at Port Hedland over the last weekend Moly Mines (ASX/TSX: MOL) is on track to meet its target of first shipment of iron ore in early December.
Approximately 70,000 tonnes of Atlas Iron’s ore was shipped on the bulk panamax vessel, the Bergen Max.
Dr Derek Fisher CEO of Moly Mines said this was a significant milestone for the company and for new iron ore miners of the Pilbara and for Western Australia.
Moly Mines has announced that it has awarded the final significant operations contract for the 1 million
tonne per annum Spinifex Ridge Iron Ore Project, Bullbuck Pty Ltd for the transport of the iron ore product from the mine site to the Utah Point port facilities at Port Hedland.
The primary crusher has been delivered to site while the secondary crushers, screens and slewing stockpile conveyor will be completed by the second week in October for commissioning and production by the end of October.
Mining equipment began arriving on site early in September and mining operations will commence by the end of this month.
Ore haulage to Moly Mines’ stockpile area at the Utah Point facility will commence on or around 6 November 2010. The stockpile will be built up over the course of November for first shipment of Spinifex Ridge ore in early December. Sales contracts will be concluded in the near term.
Spinifex Ridge Financing Facility
In relation to the US$500 million financing facility, Hanlong has advised the Company that they now anticipate finalizing term sheets for the Project Finance Facility for the Spinifex Ridge project in mid October 2010 with full loan documents expected to be executed during the period December 2010 to January 2011.
This is subject to the completion of the EPC arrangements and iron ore and molybdenum marketing agreements with Hanlong that will be put to minority Moly Mines shareholders for approval before the end of 2010.
Although significant progress on the Project Finance Facility has been made, terms and conditions for the Project Finance Facility are still being negotiated with the proposed Chinese financers and the level of interest and feedback gives Moly Mines confidence that the funding will be forthcoming.
The Subscription Agreement dated 19 October 2009 between Moly Mines and Hanlong Mining Investment Pty required Hanlong to use best endeavours to procure a US$500 million Project Finance Facility for the Spinifex Ridge Molybdenum Project on or before 30 September 2010.
Hanlong’s parent entity Sichuan Hanlong (Group) Co Ltd agreed to provide, from itself or a related body corporate, a guarantee in favour of the proposed financiers.
Moly Mines has reported that strong progress has been made toward completing the Project Finance Facility. Hanlong are actively engaged with the proposed financiers and regulatory authorities both at the Sichuan provincial and at the state level in Beijing.
China Development Bank and China Exim Bank have participated in Perth office and Spinifex Ridge site due diligence over the last 8 weeks. In July, a comprehensive engineering study was completed by a major Chinese engineering group as part of the banking process for the 10 million tonne per annum Molybdenum Project.
In August the Sichuan branch of the National Development Reform Commission concluded that the Molybdenum Project complied with overseas investment policies and the project has now been submitted to the Beijing office of the NDRC.
The proposed financiers have requested the completion of an Engineering Procurement and Construction contract that describes the scope, cost and schedule for construction of the Molybdenum Project as a core condition precedent to the financing.
Moly Mines is currently preparing these arrangements with suitable contractors. In consideration for the additional security, beyond the parent company guarantees, being offered by Hanlong that will strengthen the terms of the Project Finance Facility, Moly Mines has agreed to grant Hanlong additional time to procure the Project Finance Facility by amending the cut-off date in relation to the Financial Penalty to 31 January 2011.
The Financial Penalty described in the Subscription Agreement will now apply on this new date. That is, if the Project Financing Facility is not available in accordance with the Subscription Agreement by 31 January 2011 approximately US$45 million of the Shareholder Loan will be forgiven and US$15 million will become immediately repayable.
Further Moly Mines will, subject to shareholder approval being received at the November 2010 Annual General Meeting, issue Hanlong 35.5 million Project Finance Options to replace the options issued under the Subscription Agreement which will lapse on 30 September 2010. If full binding documents for the Project Finance Facility are not executed by 31 January 2011, the New Options will be cancelled.