Moly Mines hit when finance stalled

MOLY Mines has been severely punished by investors after the company warned that its Chinese shareholder had stalled financing for its flagship project.

The iron ore miner and molybdenum hopeful also flagged that projected revenue from its Spinifex Ridge project is forecast to fall as a result of the strong Australian dollar.

Shares in the Perth-based company fell 21.7 per cent yesterday to close at $1.10, after the company said it would not have access to a $US466 million ($468m) funding facility by the end of the month, as had been expected.

"The ability of the company to complete the Spinifex Ridge Molybdenum-Copper project financing process will likely be dependent on an improvement in both the foreign exchange outlook and molybdenum prices above current levels," company secretary Andrew Worland said in a statement.

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Moly Mines, which is developing the Spinifex Ridge project in Western Australia, said its 55 per cent shareholder -- China's Hanlong Mining Investment -- had advised the facility would not be ready when expected, leading the non-Hanlong directors of Moly Mines to seek legal advice.

The market will be updated on the financing facility before January 31. The molybdenum hopeful also flagged in a statement yesterday that its Spinifex Ridge project had been negatively affected by the strong appreciation in the Australian dollar against the US dollar.

"The appreciation in the Australian dollar has resulted in a projected decrease in future project revenues measured in Australian dollars at December 31, by up to 25 per cent," Mr Worland said.

The metal products from the future mine -- molybdenum, copper and silver -- are priced in US dollars, while the forecast operating costs are denominated in Australian dollars.

"This has a pronounced effect on forecast future project cashflows and the project's valuation and may present challenging economic hurdles for the project," he said.