Moly Mines rallies on pending feasibility

Vancouver — News that a final feasibility study for its Spinifex Ridge molybdenum-copper project in Australia would be released shortly lifted shares of Moly Mines (MOL-T, MOL-A) by 23% in recent trading.

The report is set for release after what the company describes as a minor delay due to “continuing capital and operating cost-optimization studies.”

Moly Mines has also begun scoping studies on a potential 50% expansion of the proposed mining rate to the 25-million-tonne-per-year level to capitalize on a strong market outlook for molybdenum.

The Spinifex Ridge deposit, located in Western Australia’s Pilbara region, hosts a measured and indicated resource of 470 million tonnes grading 0.06% molybdenum, 0.09% copper and 1.7 grams silver per tonne using a 0.02% molybdenum cutoff grade.

Since acquiring the project in 2004, Moly Mines has secured full ownership and completed more than 36,000 metres of drill- ing in 198 drill holes to confirm historic work and better define the resource.

A prefeasibility study completed in early 2006 modelled an open-pit mining scenario. The study looked at two plans: one that would see mining of 12 million tonnes per year and the other, 15 million tonnes. Both alternatives would require two years of development, with the lower mining rate returning 10 years of production and the other, eight years.

The 12-million-tonne model shows a A$551-million estimated capital cost versus A$622 million for the 15-million-tonne plan. Cash operating costs of A$9.40 and A$8.80 per tonne of ore were also tabled for the lower and higher mining rates, respectively.

Resources beyond those used in the prefeasibility study have the potential to add up to 10 years of production to the proposed operation.

Metallurgical studies indicate molybdenum and copper recoveries of about 80% and 50%, respectively.

Moly Mines also completed a separate prefeasibility study looking at building a roaster facility on the proposed mine site to produce molybdenum oxide. The company will likely be able to defer a full feasibility for a roaster by a few years since third-party toll-roasting capacity will likely be available during the initial years of production.

The company recently placed orders for long-lead time crushing and grinding equipment for delivery in early 2009.

With the final feasibility study soon to be in hand, Moly Mines will also be able to move ahead with a short-listed group of potential backers for project financing.

In a move to spin out its non-core assets, Moly Mines recently closed the sale of its gold projects in New South Wales, Australia, to Cortona Resources (CRC-A), receiving A$5 million in cash and 12 million Cortona shares for a 19% interest.