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Print[Ferro-Alloys.com] Moly Mines has entered into a mine gate sale agreement to sell the iron ore produced at its Spinifex Ridge project to Mineral Resources.
Under the transaction, Moly Mines' wholly owned subsidiary Moly Metals will sell ore from the project to Mineral Resources which will operate the mine until the end of the mine life.
Mineral Resources will pay Moly Metals a purchase price derived on the basis of an agreed minimum product tonnage which is estimated to be around 2.4 million dry metric tonnes under the current mine plan.
Based on this the total purchase price is estimated to be around USD 38 million, which will be paid in two installments including a majority upfront payment and the rest when the economic life of the project is exhausted. The consideration can be either cash or in shares.
To enable the transaction, Moly Metals and Hanlong Metals which has an off take agreement to buy all of the iron ore produced from the Spinifex Ridge iron ore mine for the life of the project have agreed to terminate the offtake deal.
The transaction will leave Moly Mines with significant cash and liquid assets position of about AUD 83 million or about 21.5 cents per share on a fully diluted basis. The transaction is subject to Moly's shareholders approving the deal.
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