Moly Mines Limited (TSX:MOL)(ASX:MOL) has provided the following update on progress toward the completion of the US$500M financing facility for the Spinifex Ridge Molybdenum Project.
The Term Sheet between Moly Mines, China Export and Import Bank and China Development Bank (the latter two banks referred to as "the banking syndicate") is now substantially complete. The Term Sheet describes the terms and conditions, and conditions precedent, to the drawdown of the US$466 million bank loans that have been approved by the National Development and Reform Commission. Moly Mines acknowledge the significant contribution from Hanlong Mining Investment Pty Ltd ("Hanlong") for the progress and milestones achieved to date.
Meetings were organized last week by Hanlong in Chengdu between executives of Moly Mines, the banking syndicate, Hanlong (as the facilitator and arranger of the project finance facility) and respective counsel, with the intention of finalizing the Term Sheet. Hanlong has advised Moly Mines that final revisions of the Term Sheet should be received from the banking syndicate and their legal counsel by the end of the calendar year. Subject to the outstanding matters being completed to the satisfaction of Moly Mines, the Company will proceed to execute the Term Sheet.
Last week's meetings in Chengdu follow the recent visit to Perth of senior representatives of China Development Bank and Hanlong.
Meanwhile concurrent meetings in Beijing last week between Moly Mines' executives and Chinese and Australian engineering groups have moved the draft fixed price lump sum EPC contract (Engineering, Procurement and Construction) forward.
Overall, securing the project finance loan facilities has taken longer than anticipated. Our major shareholder has advised the Company that the project finance facility documentation and approvals will not be complete to the point that it is available for drawdown by 31 January 2011 as required pursuant to the Subscription Agreement dated 19 October 2009, as amended.
The non Hanlong directors of the Company are assessing an extension to the 31 January 2011 deadline for completion and first drawdown of the project finance facilities and have sought corporate and financial advice to assist in their deliberations, and negotiations of terms satisfactory to the Company. The market will be advised in the new year of the outcome of these negotiations.