Moly Mines rallies on pending feasibility study

Vancouver – News of the imminent release of a final feasibility study for its Spinifex Ridge molybdenum-copper project buoyed shares of Moly Mines (MOL-T, MOL-A) to a 23% gain in July 13th trading on strong volume.

The report is set for release after what the company describes as a minor delay caused by continuing capital and operating cost optimization studies.

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

The Spinifex Ridge deposit, located in the Pilbara region of Western Australia, 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 cut-off grade.

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

A prefeasibility study completed in early-2006 modeled an open pit mining scenario over an initial 10-year mine plan. The study looked at two plans: one mining at 12 million tonnes per year and the other at 15 million tonnes annually. Both scenarios would require two years of development time with the lower mining rate returning ten years of production life while the increased mining rate would give eight years of operation.

The 12 million tonne per annum model shows a A$551 million estimated capital cost versus A$622 million for the 15 million tonnes per year 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 additional 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 on construction of roaster facility on the proposed minesite to produce molybdenum oxide. It is anticipated that the likely availability of third party toll-roasting capacity during the initial years of the Spinifex Ridge mine allows the company to defer a full feasibility for a roaster for a few years.

Additionally, 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 on short-listed group of potential banking groups 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 to hold a 19% interest.

Shares of Moly Mines closed up $1.10 to $5.80 apiece in July 13th TSX trading. Since its October-2006 initial public offering on the TSX, the stock has seen a trading range of 95-$6.35.