Metalnewsnet 4 May ： Investors everywhere love robust, growing economies. That's because a growing economy is building and people are buying. And a growing economy like China has an extra benefit: It's a country with a huge landmass and a lot of people and it desperately needs infrastructure – roads, power, buildings, etc. So, smart investors are watching China and buying infrastructure-related investments in order to profit from that growth. One of those infrastructure-related investment commodities is molybdenum. Molybdenum can withstand extreme temperatures without changing shape and is corrosion-resistant in alloyed steels, which makes it ideal in a number of industrial uses, including use in motors and concrete reinforcing. As China builds its infrastructure, it's no surprise that they are looking for molybdenum sources to supply them and that is exactly why investors might like Australian-based Moly Mines. Moly Mines, which has offices in Australia and Canada, is listed on the Australian Stock Exchange and the Toronto Stock Exchange under the symbol MOL. 
We spoke to the Moly Mines CEO and Managing Director, Dr. Derek Fisher. Dr. Fisher is a geologist with over 4 decades of global mining industry experience. "I was educated in Australia and Canada," he told us, "and I've been involved in the junior mining scene for the last 30 years and had companies listed in Australia and Canada that I created and managed during that period." So Dr. Fisher brings a lot of experience and insight to the table. That has helped him in his latest project: "Moly Mines was created in 2003. Its main asset is a very large molybdenum project in Western Australia. There is also an iron ore deposit immediately adjacent to the molybdenum that is not geologically related to the molybdenum project but both will be under development this year. We will be shipping iron ore by the fourth quarter and the construction of the molybdenum mine will begin at that time." The company has 5 projects in various stages of development right now: The Spinifex Ridge project is both a molybdenum/copper project and the iron ore project that Dr. Fisher mentioned. There are also three other earlier stage molybdenum projects that are in the exploration phase right now. 
Their molybdenum project is a big priority because of a recent investment. Dr. Fisher explained: "We have a deal in place with a Chinese investor: a company called Hanlong, from [the Sichuan province of China], which is a private company, not a state-owned organization. We signed a deal with Hanlong in October of last year and we've just gone through a period of getting Australian government approval, shareholder approval, and Chinese government approval. It's an important investment for us. It's in the form of US$140 million in equity and US$60 million in debt." In addition to the influx of cash, Dr. Fisher adds: "They are also organizing a $500 million dollar project development loan from a Chinese bank at very favorable interest rates and a long term repayment schedule." 
They have two main focuses for the short term, one focus for each of the near-to-development mines. "We'll be mining the iron ore in the third quarter of this year and start shipping it in the fourth quarter. And for the molybdenum, we'll be completing the detailed engineering for a 10 million ton mining operation and plan to start construction by year-end… and we'll expand to 20 million tons in three or four years. All permitting and approvals are in place for both mines." This is clearly an area of expertise for Dr. Fisher who briefly describes their plans in greater detail: "We'll concentrate on the core of the molybdenum deposit and a lot of the waste material, which is low-grade ore, will be processed later. The 'waste' while mining 10 million tons this year will become ore for the 20 million ton target down the road." Once operating at their optimum range, they expect production costs to be profitable: "Once our molybdenum mine is in measurable production, our operating costs will be in the low $7/pound. And we see our iron ore production to be very profitable: On capital costs of only $12 million to produce 1 million tons of iron ore annually, we see ourselves netting $40 million or $50 million a year." This attractive profit is due in part to their proximity to highways, seaports, and to their main buyer, China. 
So, why might investors be interested in Moly Mines? For the same reason we listed at the very beginning. Dr. Fisher explained: "[Hanlong] is taking a very Chinese view on molybdenum. They believe molybdenum prices will be higher in the future because Chinese demand for the metal is rising. The urbanization, modernization, and industrialization of China is going to be going on for a long time into the future and they cannot possibly produce enough metal for their own use. China produces about 20% to 30% of the world's molybdenum up until last year. Last year, they became a net importer of molybdenum for the first time in history. That's a paradigm shift in the world molybdenum scene. What's more, about 10% of the steel China is using is alloyed steel while the rest of the world is using about 15%, so China is looking to catch up. Hanlong is sending a strong message." 
And it's not just molybdenum that's hot. Their iron ore is popular, too. "We get approached once a week for our iron production." One last point of interest to investors is Moly Mine's production schedule. Dr. Fisher explained: "We're building two mines this year. That's interesting for a company to be building two mines in one year. And one of them will be in production by the end of the year at a very low capital cost and producing a significant profit." 
China is a growing story that investors are noticing and trying to invest in and one of the ways they can do that is through a molybdenum investment in Moly Mines. |
Phone:+86-28-6676 5966 Fax:+86-28-6676 5966-1
You are here: