Moly Mines is again postponing its AUD 700 million molybdenum and copper mine projects at Spinifex Ridge in Western Australia. The company explained the move to falling prices of molybdenum, a key ingredient in the manufacture of steel and the strong Australian currency.

Molybdenum was at AUD 29,000 per tonne on December 29th 2011, down from the peak of AUD 40,000 in February 2011. Although the resource is sold in US dollars, the projects expenses are paid in Australian dollars.

Moly Mines pointed out that the two factors would likely not change before the AUD 454 million syndicated facility agreement it secured with China Development Bank would expire by May 2012. A new deal calls for Moly to find a new project within the next five months.

The Sydney Morning Herald quoted Moly Managing director Mr Derek Fisher as saying that "We're on the prowl and there's a lot out there. We've got two things that we're looking at very closely."

He added that the firm, 56.6% owned by Hanlong Mines of China, is looking into ferroalloy and specialty metal projects. Mr Fisher said that Moly's iron ore mine in the same location will remain in operation. He said that "If we were in production today we'd be making money but enough to service debt we'd have our head out of water but only just. So we're putting it on ice."

While Moly would still have access to cheap capital, CDB's new deal reduced the funds available to the miner to AUD 244 million from AUD 454 million.

News of the project postponement caused stocks of Moly to decline 6% or by 2 cents to 31.5 cents. Moly's shares have gone down by 74% as compared to 12 months ago.

Mr Fisher said that "While it is disappointing that the economics do not allow us to proceed with the Spinifex Ridge molybdenum and copper mine at this stage, the strategic alliance further cements the excellent rapport we have built with CDB and supports a platform of further growth."

(Sourced from www.ibtimes.co.uk)