Perth, Feb 20, 2006 AEST (ABN Newswire) - The Board of Moly Mines Limited (ASX: MOL) is pleased to announced it has agreed to proceed with a Bankable Feasibility Study ("BFS") at the Spinifex Ridge Molybdenum / Copper Deposit in the Pilbara of Western Australia.
The Board's decision is based on the positive outcome of the Preliminary Feasibility Study ("PFS") which demonstrated that the large molybdenum/copper resource can support a substantial, profitable, long-life, open-pit mine with operating costs per unit of molybdenum production significantly lower than long term historic unit molybdenum prices.
Moly Mines, via its wholly owned subsidiary Moly Metals Australia Pty Ltd, has recently exercised its option to acquire a 90% interest in the Spinifex Ridge project. The study examined two production scenarios, 12M and 15M tonnes per year with treatment using conventional floatation processes.
Financial Highlights of the PFS for a 15M tonne per year mining operation for the first 10 years production include:
- $633.4M NPV, 29.1% IRR pre-tax, ungeared using a 10% discount rate and life of model exchange rate of US$0.725
- US$3.30 cash operating cost per lb of Mo vs current Mo price of US$25.00 /lb Mo
- $223M per year EBITDA, averaged over first 10years
- $622M estimated capital cost
- Metal Prices used in the financial analysis
Mo - US$12.50/lb
Cu - US$1.10/lb
Ag - US$5.75/oz
The study adopts a conservative framework recognising the current costing environment in the mining industry and in particular the Pilbara. Input costs for many of the items contained within the capital cost estimate are expected to reduce as mining and processing variables are optimised during the BFS.
The BFS will focus on a treatment facility capable of processing 12 to15 million tonnes of ore per annum to produce 16 to 20 million pounds of molybdenum in concentrate. The Company believes the existing JORC compliant resource at Spinifex Ridge of 425 million tonnes @ 0.07% Mo, 0.09% Cu is sufficient for a mine life +20 years, There is also the potential to further expand the resource as the extent of the mineralisation has not been fully defined by the drilling. The Company will commence the BFS with a series of investor relations and marketing presentations during March in Australia, North America and Europe to introduce new investors to Moly Mines and update existing shareholders.
PFS DETAILS
Resources
The company expanded the drill data base for the resource from 40 holes to 82, by the drilling of a further 16,374m of mostly diamond coring. The new JORC compliant resource for the deposit as previously announced in November 2005 is:
Classification Tonnes Mo% Cu%Indicated 220 690 000 0.07 0.10Inferred 204 240 000 0.06 0.08Total 424 930 000 0.07 0.09
Mining
The nature and the physical characteristics of the resource allow mining by straight-forward open pit methods using conventional equipment and mining techniques. The study recommends that drill-and-blast, and load-and-haul contractors be used for this phase of production.
Metallurgy
The ore from the open pit will be processed through a conventional molybdenum/copper flotation circuit after crushing and SAG and ball milling.
Infrastructure
The site will require infrastructure including accommodation facilities for a FIFO workforce of some 250-300 people and have all the other necessary communications and infrastructure to support a completely self contained workforce.
Human Resources
It is expected that during the construction phase of the plant (18-21 months), a contractor workforce will be assembled that will rise to a peak of approximately 400 people transitioning through to an operational workforce of approximately 300 people. It is assumed that the construction phase will commence in late 2006 and peak in the second half of 2007, then start to diminish in the transition to the operational workforce by mid to late 2008.
Principal Consultants
The PFS has been undertaken by Moly Mines with the assistance of principal consultants:
- Worley Parsons
- Burns Rowe Worley
- Battery Limits
- Ammtec
- Outback Ecology
- Rockwater
- SRK
- George Orr & Associates
CORPORATE
The Company continues to have a tight capital structure of 30.9 million shares on issue (45.7 million fully diluted) with $9.5 million cash at bank.
Contact
PO Box 8215, Subiaco East
Western Australia 6008
Telephone +61 8 9388 5000
Facsimile +61 8 9388 5099
Email info@molymines.com
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