Molybdic oxide prices to stay above $25 per lb, says Moly Mines ceo


London 21 May 2008 17:43

Molybdic oxide prices will not dip below $25 per lb in the long term,
Moly Mines ceo Dr Derek Fisher told MB on Wednesday, as he confirmed
that the company?s Spinifex Ridge project is set to come on stream in
the fourth quarter of next year.

Good demand and tight supply following years of underinvestment in new
mine production will keep prices at elevated levels, Fisher told MB.

?I don?t believe we?ll see $25 per lb molybdenum again?All of the
capacity for expansions at [copper] operations is being taken up?the
world needs new moly mines,? he said.

?There is a supply gap developing in molybdenum. The way consumption is
growing at the moment, there is not the capacity to satisfy it,? he
added, estimating that demand for molybdenum is growing at about 5% per
year.

The steel market needs the equivalent of one year?s worth of Spinifex
Ridge?s annual projected production of 24 million lbs to meet demand, he
said.

The current ban of new molybdenum mines in China will help to boost
prices in the long term and will improve demand from China for
non-Chinese product, he said.

Moly Mines is hoping to bring its long-awaited Spinifex Ridge project on
stream in the fourth quarter of next year to meet the high levels of
consumption, Fisher said.

Moly Mines announced a three-month delay to its project earlier this
year as the company worked to finalise financing and environmental
permits, but this postponement gave the company time to reassess and
subsequently double its resource estimates at the operation, Fisher told
MB.

The high molybdenum price meant company could drop its cut-off grade,
thereby doubling its original resource estimate, Fisher said.

The increased estimate gives the company ?hundreds of millions of tonnes
of low-grade [ore] to process? once the mine comes into production, he
said.

Once the mine has started, the company will look to increase the size of
its mill to 30 or 40 million tpy from 20 million tpy to accommodate the
additional resources, he said.

Plans for the mill will be drawn up as soon as possible after the mine
comes into full production, Fisher told MB.

Moly Mines will also produce 27 million lbs per year of copper and
500,000 oz per year of silver.

No offtake agreement for the company?s molybdenum and copper has been
finalised, but Fisher told MB to ?watch this space? for an announcement
regarding the company?s marketing.

Moly Mines is currently focusing on bringing its mine into production
and is not considering mergers and acquisitions for the moment, Fisher
said.

?Our whole aim is to build a mine,? he said, adding that Spinifex Ridge
should be a ?massive cash generator?.

The environmental approval should be given for the project within the
next four to six weeks, after which it will be ?full steam ahead? with
financing, which could be launched at very short notice with JP Morgan
and Morgan Stanley, Fisher told MB.

The Spinifex Ridge operation is located in the Pilbara in Western
Australia, which is very ?mine friendly?, Fisher said.

?The Pilbara is an area that the steel industry is very comfortable
with, it?s a very mining friendly state. In terms of a location to build
a big mine, this is as good as you get,? he said.

Drummed molybdic oxide was trading between $33 and ?33.70 per lb in
Europe on Wednesday.