A$38m Sale of Spinifex Ridge Iron Ore Mine to Mineral Resources
On 10 May 2013, dual ASX and TSX-listed Moly Mines Limited (Moly) announced that it had reached agreement with Mineral Resources Limited (Mineral Resources) for the mine gate sale of iron ore produced at Moly’s Spinifex Ridge Iron Ore Mine.
The purchase price for the iron ore is calculated on the basis of an agreed minimum product tonnage of 2.4 million tonnes (assuming commencement of delivery at the end of June 2013) implying a total transaction value of approximately A$38 million. Under the agreement, Mineral Resources will operate the mine to the end of mine life, while Moly will retain its contractual and statutory obligations as the tenement holder.
In order to enable the mine gate sale agreement, Moly’s major shareholder, Hanlong Mining Investment (Hanlong) agreed to terminate its life of mine offtake agreement, as well as an associated parent company guarantee. As compensation, Hanlong received a one-off payment of A$1 million and a royalty of A$1.20 per tonne of ore sold. The transaction was also subject to Moly shareholder approval, which was received in June 2013.
Azure acted as corporate adviser to Moly in relation to the transaction.