TORONTO - Shares of Moly Mines gained more than 30 per cent after the Australian mining company said it is negotiating possible off-take agreements with a number of parties, which may also result in it selling an equity stake in the company.
The miner is seeking to sign an off-take agreement to secure sales from its Spinifex Ridge iron ore project, which is expected to begin production in early 2010.
Under such a deal a buyer agrees to purchase output from a particular project at predetermined prices and conditions over a number of years.
An off-take agreement, coupled with the sale of an equity stake, would allow Moly Mines to refinance a $150 million debt facility that is due Oct. 31.
It would also allow the company to move forward on the construction of its flagship molybdenum project at the same location.
Shares of Moly Mines closed up 32 per cent at C$1.07 on the Toronto Stock Exchange on Wednesday after rising as high as C$1.18 during the session.
According to a Bloomberg report, Derek Fisher, the managing director of Moly Mines said he expects the company to have some kind of agreement signed off in the next few weeks.
"Certainly we are getting interest, but there is nothing at a material stage at all at this time," said Natalie Frame a spokeswoman for the company.
The company is receiving interest from Chinese parties that are interested in securing iron ore supplies to feed the demand of steel mills within China.
Analysts and bankers say that Chinese state-owned and privately held metals firms are on the prowl for acquisition and financing deals with Australia's small and medium-cap miners of base metals and iron ore.
MOL Price at posting:
97.0¢ Sentiment: Buy Disclosure: Held
