Moly Mines' debt restructure conditional on equity raising
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PERTH, Aug 31 AAP August 31 2009, 5:44PM Moly Mines Ltd says it is confident it can restructure its debt and arrange financing in the near future for its projects in Western Australia.
The company must first undertake an equity raising of at least $US25 million ($A29.8 million) under the terms of a debt restructure agreement with Los Angeles-based Trust Company of the West (TCW), a subsidiary of Societe Generale Asset Management.
Moly Mines chief executive Derek Fisher said the company expected to raise a lot more than $US25 million and funds raised surplus to a planned small-scale iron ore mine development would be use to repay debt. "The capital raising will take the monkey off our back and give us a breather," Mr Fisher told AAP in an interview on Monday.
"If I can retire the whole debt - brilliant."
Moly Mines had used all of its $217.15 million in loan facilities at the end of June and held $64 million in cash.
The company and TCW have agreed to extend the maturity date of a $US150 million ($A179 million) interim financing facility by one month to November 30, it said on Monday.
They also agreed to a term sheet detailing the basis for the debt restructure.
"The term sheet is subject to a number of conditions, including undertaking a successful equity capital raising of a minimum of US$25 million to be used primarily for the development of the Spinifex Ridge iron ore project," Moly Mines said in a statement.
The company had previously aimed to start mining molybdenum at Spinifex Ridge, near Marble Bar, by mid-2009.
But it has decided to initially mine iron ore, which is also present at the project, after a sharp fall in the molybdenum price.
Mr Fisher said TCW might accept a stake in Moly Mines as payment for some of the debt.
He said iron ore mining could commence in the first quarter of 2009/10, providing early cashflow.
But the company will play it by ear before deciding to proceed with a pared-back molybdenum mine.
The molybdenum project originally had a $1.2 billion capital cost but this figure has been more than halved along with the initial scope of the planned operation, which should start producing at a rate of 10 million tonnes per annum.
"I believe financing this project is not too far away," Mr Fisher said.
He said Moly Mines was in advanced negotiations to secure port capacity at Port Hedland for its planned iron ore output.
Moly Mines shares were down 16.5 cents at $1.34.
By Rebecca Le May
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