Moly Mines

Moly Mines (ASX/TSX:MOL), through it's 100% owned subsidiary Moly Metals Australia Pty Ltd, is the 100% owner of the Spinifex Ridge Molybdenum\Copper Project - the world's most advanced new primary molybdenum development project.

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Moly Mines shares spike on news of major strategic Chinese investor

2009-10-20 by Amy Dry

Shares in Moly Mines (ASX:MOL) have shot up more than 20c with the announcement the company had entered a subscription agreement with strategic investor Hanlong Mining Investment.

Investors in Moly Mines received the welcome news today, Canadian investors had earlier boosted the Moly Mines share price during the Canadian trading day.

Hanlong, a subsidiary of the China based privately-owned Sichuan Hanlong Group, will provide US$200 million in equity and debt funding to Perth-based Moly Mines and arrange US$500 million debt funding for its Spinifex Ridge Molybdenum/Copper Project.

At 11.15am, shares in the company had jumped 20.5c, or 16.7 per cent, to $1.43, after reaching a high of $1.545.

The news comes as a welcome relief for Moly after the company received a financial lifeline from the Trust Company of the West to restructure its debt facility with the company for financial reasons.

In August, a one month extension of the US$150 million financing facility to 30 November 2009, was given to provide time for final term sheet documentation and relieved the company of financial burden.

In the latest deal with Hanlong, the US$200 million equity and debt funding is in addition to the recently announced Institutional Placement and Share Purchase Plan.

The total funding will enable Moly Mines to repay all amounts outstanding on the TCW Financing Facility by February 2010 and could allow the commencement of the development of the 10Mt/a Spinifex Ridge Molybdenum/Copper Project as early as mid 2010.

Moly Mines chief executive Dr Derek Fisher said the agreement represented a fantastic opportunity for Moly Mines to clear the company's existing debt and build the Spinifex project.

"The Agreement will deliver shareholders the value benefits of a substantial funding package and a major project partner with a strong balance sheet, diversified operations and mining interests," Dr Fisher said.

"The company could be in the envious position of having constructed the molybdenum/copper mine at the beginning of the next metals cycle, benefitting from higher metal prices in the mine's early production years."

Dr Hui Xiao, managing director of Hanlong Mining Investment, said the company was delighted to be entering into this agreement with Moly Mines.

" We believe that as a privately held Chinese company we can offer enormous value to Moly shareholders as well as the Australian people," Mr Xiao said.

Under the terms of the Subscription Agreement Hanlong will:
- subscribe for 207.1 million shares in Moly Mines for US$140 million - being
A$0.747 per share based on an exchange rate of US$0.9048 per Australian Dollar;
- provide Moly Mines with an interest bearing US$60 million 10 year loan
- commit to procuring debt financing of US$500 million by 30 June 2010 for the
Spinifex Ridge Molybdenum/Copper Project; and
- receive 35.5 million unlisted 3 year options exercisable at CAD1.00 per share

On completion of the Subscription Agreement, the funds will be used to repay the balance of the TCW Interim Financing Facility, estimated to be US$134 million after completion of the Institutional Placement and SPP.

The remaining US$66 million will remain as free cash and will be in addition to the first US$25 million raised from the Institutional Placement and Share Purchase Plan.

Subject to conditions, the agreement is expected to be wrapped up by January 2010.