Kate Emery, The West Australian September 12, 2011, 9:51 am
Moly Mines, the molybdenum hopeful that became an iron ore miner last year, could diversify further while it waits for market conditions to improve enough to give the green light to its flagship Spinifex Ridge project in the Pilbara.
Moly managing director Derek Fisher said the Perth-based but Chinese- controlled company was assessing mergers acquistions activity that could include purchases in the iron ore space or a move into other commodities.
Moly has $US500 million ($471 million) in Chinese debt financing to build Australia's first molybdenum mine at Spinifex Ridge but still needs to raise between $200 million and $300 million in equity before it can draw down on the debt.
Given the volatility on global sharemarkets and a lacklustre molybdenum price, Mr Fisher said Moly was waiting for conditions to improve before pursuing an equity raising.
Mr Fisher said he also hoped for some improvement in the molybdenum price, which is trading at about $US15 a pound, or at least $US5/lb below the levels he considers ideal before Moly makes a final investment decision on Spinifex Ridge. Moly has until May to draw down on the debt facility.
"At the moment we're just sitting back," he said. "It (Spinifex Ridge) is not on the backburner by any means but I'd say we have a watching brief. I want to see a positive trend in the moly price. If anything at the moment it's probably moving down."
In the meantime, Moly is considering corporate activity. The size of any acquisition would depend on whether Moly, which had $31 million in the bank at June 30, invested alone or invested with its Chinese shareholder, Hanlong Mining.
"There are things that we could do on our own," Mr Fisher said. "We've got a fair amount of cash at the moment and by the end of the year we'll have even more."
Moly has been trying to get Spinifex Ridge up and running since 2007 but has been thwarted by the global financial crisis and subsequent weak prices for molybdenum, which is used as an ingredient to harden steel.
