Herbert Smith Freehills has advised Moly Mines Limited on its proposed mine gate sale for iron ore produced at the Company’s Spinifex Ridge Iron Ore Mine with Mineral Resources Limited.
Moly Metals Australia Pty Ltd, a wholly owned subsidiary to Moly Mines, will sell ore from the Spinifex Ridge Iron Ore Mine to Mineral Resources at the mine gate. The transaction is subject to approval of Moly’s shareholders at an extraordinary general meeting to be held in June 2013.
The purchase price for this transaction has been calculated on the basis of an agreed minimum product tonnage and will total approximately A$38 million, which is payable in two separate instalments. Under the agreement, Mineral Resources will operate the mine to the end of the mine life.
The Herbert Smith Freehills team was led by Perth partner Justin Little and senior associate Michael Basanovic.
Justin Little commented:
“We are delighted to have advised Moly on this significant transaction and to leverage our experience in advising on commodity sale agreements generally and, in particular, on mine-gate sale agreements. This transaction continues an emerging trend in the iron ore sector which has seen mine-gate sale arrangements being used with greater frequency as a way for junior and mid-tier companies to commercialise their projects. The Moly transaction continues this trend, although importantly, represents one of the first occasions that an operating mine has transitioned from a direct export project to a mine-gate sale arrangement.”
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