Moly Mines has inked a preliminary deal with China Development Bank (CDB) for a strategic alliance to finance its new mining projects.

Under the strategic alliance agreement, CDB will provide financial support for projects that will be identified by Moly Mines. The deal is expected to be similar to CBD’s earlier $454m syndicated facility agreement made regarding the Spinifex Ridge molybdenum / copper project.

Furthermore, Moly Mines said it is putting its Spinifex Ridge molybdenum / copper development on hold. The company board cited low global molybdenum prices as well the high Australian dollar, which has rendered the project sub-economic.

Moly Mines CEO and managing director Dr Derek Fisher said it is disappointing that the economics do not allow the company to proceed with the Spinifex Ridge molybdenum / copper mine at this stage. Fisher added that the new strategic alliance further strengthens the excellent rapport the company has with CDB to support a platform for future growth of the company.

CDB’s financial support for new projects is subject to due diligence internal credit approval and government approvals.

CDB has asked Moly Mines to make an initial drawdown of $210m under the previously agreed SFA, which the company intends to repay within one week. The effect of the drawdown will be to reduce the funding available under the facility to $244m.

Moly Mines is currently mining four areas of iron ore mineralisation identified within the mining leases granted and acquired for the Spinifex Ridge molybdenum project.

It is engaged in the exploration and evaluation of its molybdenum, gold and tantalum ground holdings.