from miningnews.net - http://www.miningnews.net/storyview.asp?storyid=54266§ionsource=s0
MOLY Mines has slapped a $A622 million price tag on the development of its flagship Spinifex Ridge molybdenum project in Western Australia, significantly higher than the $A300-400 million estimated in a previous scoping study.
Moly Mines managing director Derek Fisher told MiningNews.net the study adopted a conservative approach but believes the capital cost would be reduced when the numbers are optimised during a bankable feasibility study.
"The way costs have been escalating in the Pilbara it didn't surprise us, but I told the guys to adopt a conservative approach," Fisher said. "I strongly believe the costs will come down."
Fisher brushed off the notion some investors might be scared off with the escalating capital cost.
"We've used what we believe is a conservative exchange rate of US72.5c, and with an ungeared IRR close to 30% indications are the project will be bankable," he said.
The results of a pre-feasibility study indicated a 15 million tonne per annum operation could produce more than 21 million pounds of molybdenum in concentrate annually for the first 10 years.
Cash costs have been pegged at $US3.30 ($A4.45) per pound of molybdenum, with the project estimated to have a net present value of $633 million and an ungeared internal rate of return of 29.1%, with a discount rate of 10%.
Metal prices used in the pre-feasibility study were fixed at $US12.50/lb molybdenum, $US1.10/lb copper, and $US5.75 per ounce of silver.
Moly Mines has given the green light to a BFS that will focus on a treatment facility capable of processing 12-15Mtpa to produce 16-20Mlb of molybdenum in concentrate.
The BFS is expected to be completed by the end of the year, with first production flagged for late 2008.
Spinifex Ridge has a resource of 425Mt at 0.07% molybdenum and 0.09% copper.
MOL Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
