Moly Mines on track for world’s largest most advanced new primary moly project, production by 2013

molymines.com • 618.9429.3300

Dr Derek Fisher
CEO

Moly Mines (TSX: MOL), developer of the Spinifex Ridge Molybdenum/Copper Project in Western Australia, is on track to becoming the world’s newest producer of molybdenum. While the overall progress toward completing the financing for the mine’s construction has been slower than it hoped, Moly Mines Managing Director and CEO Derek Fisher is confident the company will meet its goal of starting production by early 2013. The mine’s target production is 10 million tonnes per annum, which will produce on average 11 million lbs of molybdenum in concentrate and 13.5 million lbs of copper in concentrate per annum for the first 10 years. Dr Fisher discusses Moly Mines’ first-mover advantage.

Resource Intelligence: Your Spinifex Ridge Molybdenum project in Australia is ready for immediate construction pending the completion of financing, but in January your biggest shareholder, China’s Hanlong Mining Investment, advised the loan facility would not be ready when expected. Could you update us on that?

Derek Fisher: The financing from Hanlong is just taking time and it’s been a longer process than anyone anticipated. We are negotiating with two Chinese banks, the China Development Bank (CDB) and the China Export and Import Bank (EXIM) for a $468-million facility. The CDB gave us a commitment letter for their portion of the financing, 50%, while EXIM have told us we will get a commitment letter from them in the next couple weeks. Getting these commitment letters is a major step forward.

RI: So you expect the full financing document to be finalized within the next few months. When will mine construction start?

DF: At the moment we are anticipating starting construction sometime mid-year. We are already planning advanced work so that we can be in a position to move onto site as soon as drawdown is available.

RI: Does the delay in financing affect your timetable?

DF: Our engineers are giving us a 20-month construction period, which gives us first production in Q1/2013. We would have liked to have been in production a little bit earlier but we’re comfortable because we’re getting financial terms from the Chinese banks that we never would have achieved from Western banks. This style of financing isn’t available in the West and the Chinese banks are stepping up to the plate. The bank syndicate are charging around 4.3% interest, which is extraordinary, with a term of 12 years. With Western banks you’re lucky to get 7% and usually with a term of five years. Hanlong is providing some of their assets as additional security.

RI: You’ve cautioned that the strong Australian dollar would hurt this project’s revenue. What do you tell investors concerned about the foreign-exchange issue?

DF: Firstly, the analysts are saying we can expect a significant increase in molybdenum prices over the next few years. Secondly, the Australian dollar is being strongly impacted by strong coal and iron-ore demand. There is a relative shortage of iron ore in the world at the moment and prices are very high but analysts are predicting that prices will come back down significantly over the next couple of years, which will see the Australian dollar coming off its highs probably in 2013. On that basis I think shareholders shouldn’t look at circumstances today, they have to look at when we’re in production.

RI: So you’re on track towards production in early 2013. Is it important for you to beat your competitors to the market?

DF: Yes it is. The molybdenum market is not that large. Being first in terms of new projects affects the ability of other companies to finance their projects. Being first is a significant advantage. What we don’t want to do is see too much production coming out because it would force molybdenum prices down. If you force the prices down, projects become un-financeable and the price will come back up. The banks will be looking closely at who gets away and who doesn’t. If we get away first, it will be more difficult for the next guy to get away and when they do, it makes it even harder for the subsequent companies.

RI: Are you in a more advanced stage than other moly explorers?

DF: Yes we are. The other ones out there are the old Climax mine that Freeport is redeveloping at a slow pace and the other one is Mount Hope in Nevada, owned by General Moly, which is still probably nine months away from receiving environmental approval. I’d say they are at least 12 months behind us.

RI: If I were an investor could you give me at least three reasons why I should take a look at Moly Mines?

DF: We are the most advanced of the new projects out there. We are anticipating higher molybdenum prices in 2013 and 2014 so we’ll be able to take advantage of those prices. We also have an iron-ore mine, which is small but highly profitable.

RI: Is there anything else you think investors should know?

DF: We are looking at other iron-ore projects around the world. Hanlong would like to build Moly Mines into a major international mining company. They certainly have the backing of the Chinese banks and have a $5-billion line of credit available to them. We’re very actively looking at other projects both in Australia and elsewhere.

Investor Highlights:

• Moly Mines has first-mover advantage among new moly developers; production by 2013
• Small but profitable iron-ore mine as upside
• Proven management