Moly Mines gets shareholder nod for mine gate sale

THE BOURSE WHISPERER: Dual-listed Moly Mines (ASX/TSX: MOL) has obtained shareholder approval to proceed with a mine gate sale agreement for iron ore produced at the company’s Spinifex Ridge iron ore mine.

The agreement is with Mineral Resources (ASX: MIN) and is to come into effect from 1 July 2013.

Under the Transaction, Moly Mines’ wholly-owned subsidiary Moly Metals Australia (MMA) will sell ore from the Spinifex Ridge iron ore mine to Mineral Resources at the mine gate.

Mineral Resources will pay MMA a purchase price calculated on the basis of an agreed minimum product tonnage.

“The actual minimum product tonnage will be determined on the basis of the tonnage available under the current mine plan as at 1 July 2013,” Moly Mines explained in its ASX announcement.

“Based on current estimates the purchase price will total approximately $38 million.

“This price is payable in two instalments, mostly by a substantial upfront payment and the remainder by a final payment once the economic life of the Spinifex Ridge iron ore mine has been exhausted.

“The upfront payment will be payable in cash or Mineral Resources shares at Mineral Resources’ election on 12 July 2013.

“Mineral Resources has informed the company that it intends to pay in cash.

“The final payment is subject to adjustments to reflect the quantity and quality of iron ore mined during the term of the mine gate sale agreement.”

After settlement of the transaction, Moly Mines anticipates its cash and liquid assets position to be at least $80 million.

The company said it will be actively seeking merger and acquisition opportunities – specifically for copper and gold.

“Current market volatility, combined with a strong balance sheet, puts our company in a strong position to acquire projects,” Moly Mines said.

“The focus will be on near-term production assets where the company’s surplus cash can be applied in the short term.”

Moly Mines indicated it would avoid projects in high-sovereign risk jurisdictions; however, it also pointed out its ultimate objective is to find an appropriate project, which means that criterion will not be rigidly applied.