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Moly Mines financing update on Spinifex Ridge Molybdenum Project
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Friday, 24 Sep 2010
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Moly Mines Limited has provided the following update on development activities at the Spinifex Ridge Iron Ore Project and the status of the USD 500 million project financing for the Spinifex Ridge Molybdenum Project.

Spinifex Ridge Iron Ore Project - On track for first shipment December 2010:

The major milestone of the successful wet commissioning of the new Utah Point shiploader and berth at Port Hedland over this last weekend gives the Company confidence that it 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 that "This is a significant event for the new iron ore miners of the Pilbara and for Western Australia. The Port Hedland Port Authority, Atlas Iron, and POAGS Bulk Logistics are to be congratulated on this important achievement."

Moly Mines is also pleased to announce that it has awarded the final significant operations contract for the 1 million tonne per annum Spinifex Ridge Iron Ore Project. The ore haulage contract has been awarded to local Pilbara operator Bullbuck Pty Limited for the transport of the iron ore product from the mine site to the Utah Point port facilities at Port Hedland.

Bullbuck has been operating in the Port Hedland region for more than 13 years providing road haulage services to remote mining locations in the wider Pilbara region. They currently provide haulage services to Consolidated Minerals and Aditya Birla Minerals.

In recent weeks, Moly Mines has announced the award of the mining contract to BGC Contracting Pty Limited, crushing services to Rapid Crushing Pty Limited, camp facilities management to the Compass Group / Pantarlangu JV and now the ore haulage agreement. This completes the major contract awards for the operation of the Spinifex Ridge Iron Ore mine.

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 September 2010.

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 Molybdenum Project - USD 500 million project financing facility:

The Subscription Agreement dated October 19th 2009 between Moly Mines and Hanlong Mining Investment Pty Limited requires Hanlong to use best endeavors to procure a USD 500 million Project Finance Facility for the Spinifex Ridge Molybdenum Project on or before September 30th 2010. Hanlong's parent entity Sichuan Hanlong (Group) Co Limited agreed to provide, from itself or a related body corporate, a guarantee in favor of the proposed financiers.

Financing Status:
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. They have strong finance teams dedicated to the process in their Sydney, Chengdu and Beijing offices.

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 2010, 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 addition, the proposed financiers have asked Hanlong and its related companies to provide additional asset security for the Molybdenum Project. Hanlong has advised the Company that they anticipate finalizing term sheets for the Project Finance Facility in mid October 2010 with full loan documents expected to be executed during the period December 2010 to January 2011, 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. Moly Mines acknowledges the continuing high level of support and commitment of Hanlong to complete this process in the shortest possible timeframe.

New Agreements:
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 January 31st 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 January 31st 2011 approximately USD 45 million of the Shareholder Loan will be forgiven and USD 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 September 30th 2010.

The New Options will have the following terms and conditions:

1. The New Options will be exercisable at CAD 1 per share

2. The New Options will only vest if full binding documents for the Project Finance Facility are executed by January 31st 2011. If full binding documents for the Project Finance Facility are not executed by January 31st 2011, the New Options will be cancelled

3. If the New Options vest by January 31st 2011, but conditions precedent to the initial drawdown of the Project Finance Facility are not met or waived and initial drawdown is not achieved by December 31st 2011, the New Options will be cancelled

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