46-50 Kings Park Road, West Perth

Western Australia 6005

PO Box 8215, Subiaco East Western Australia 6008

Telephone +61 8 9429 3300 Email info@molymines.com ABN 32 103 295 521

22 September 2016

Moly Mines Offer to Acquire Gulf Alumina

  • Gulf's key asset is a 100% owned high quality DSO Bauxite Project in QLD

  • Gulf's Directors have unanimously recommended the Offer1

  • Pre-Offer acceptances for 55.6% of Gulf's shares received

    The Board of Moly Mines Limited (ASX: MOL) ("Moly") is pleased to announce that it has entered into an Offer Implementation Agreement ("Implementation Agreement") with Gulf Alumina Limited ("Gulf"), under which it is proposed that Moly will acquire all the issued ordinary shares in Gulf (the "Offer"). The Offer will be extended to all ordinary shares in Gulf which are issued as a result of exercise of Gulf options.

    Gulf shareholders who accept the Offer will receive a combination of A$0.46 cash plus 1.4 Moly options ("Moly Options") for each Gulf share they hold.

    Strategic Rationale for the Offer

    The proposed acquisition provides Moly with the ideal opportunity to develop a low-cost mining operation at Skardon River and position itself as a leading independent supplier of low temperature Direct Shipping Ore ("DSO") bauxite into the expanding seaborne Asian markets.

  • Acquisition of a high quality DSO bauxite development project located ~90km north of the world class Weipa bauxite mine

  • Gulf undertook a Definitive Feasibility Study ("DFS") in early 2016 which has highlighted the potential for commercial extraction of the bauxite

  • Control of key onsite infrastructure in particular the existing Skardon River port

  • Significant exposure to the expanding Chinese based alumina markets, with clear focus on the more energy efficient "low temperature" alumina refineries

  • Key environmental Commonwealth and Queensland approvals are at an advanced stage

  • Leverage off Moly's previous experience in operating and developing low cost DSO operations following its successful development and mining of the Spinifex Ridge iron ore mine

  • Reinstatement of quotation of Moly shares on the ASX subject to ASX and Moly shareholder approvals

    1 In the absence of a superior proposal.

    The Offer

    The Offer will be made by way of a private, contractual offer from Moly to each Gulf shareholder. Each offer will be made on the same terms to each Gulf shareholder.

    The Board of Directors of Gulf have unanimously recommended to all Gulf shareholders that they

    ACCEPT the Offer, in the absence of a superior proposal.

    The Moly Options issued to Gulf shareholders who accept the Offer will not be quoted on the ASX and will be exercisable at A$0.16 expiring on the date that is 3 years after the issue date.

    The Offer is conditional on:

    • minimum acceptances of 50.1% of the issued capital of Gulf;

    • FIRB approval of the Offer, including the acquisition of Gulf shares;

    • approval by Moly shareholders at an EGM of resolutions under ASX Listing Rules 11.1 and

      7.1 and such other resolutions as Moly considers necessary to facilitate the Offer and the reinstatement of quotation of Moly shares on the ASX following re-compliance with Chapters 1 and 2 of the ASX Listing Rules;

    • all necessary regulatory and other approvals, consents and waivers being obtained, including ASX approval for the shares of Moly to be reinstated for quotation on the ASX; and,

    • satisfaction of other customary conditions as detailed in the Annexure to this announcement.

A summary of the key terms of the Implementation Agreement is contained in the Annexure to this announcement.

Under the Implementation Agreement, Gulf has agreed to various exclusivity arrangements with Moly for a period of 6 months. These arrangements include 'no talk' and 'no shop' obligations, and Gulf must notify Moly if it receives a competing proposal. Gulf has also granted Moly a right to provide a matching or superior proposal if Gulf receives a competing proposal.

In connection with the Offer, Moly has agreed to provide Gulf with a A$1.9 million unsecured loan facility to assist Gulf meet general working capital requirements during the Offer period. Interest is payable on amounts drawn under the loan facility at 8% p.a. A summary of the key terms of the loan facility is contained in the Annexure to this announcement.

In addition, Moly has entered into Pre-Offer Agreements with Gulf shareholders representing 55.6% of the issued capital of Gulf, requiring those Gulf shareholders to accept the Offer in respect of all their shares held (including any shares issued resulting from the exercise of their Gulf options (if any)) in the absence of a superior proposal. Each Director of Gulf who has a relevant interest in Gulf shares has entered into a Pre-Offer Agreement. A summary of the key terms of the Pre-Offer Agreements is contained in the Annexure to this announcement.

Moly will fund the cash portion of the Offer from its existing cash balance.

Indicative Timetable for implementing the Offer and Moly shareholder meeting

Despatch of Moly Notice of Meeting

late October 2016

Despatch of Offer materials and Prospectus to Gulf shareholders

late October 2016

Date of Moly General Meeting

late November 2016

Close of Offer to Gulf Shareholders

early December 2016

Reinstatement of quotation of Moly shares on ASX

mid December 2016

The timetable set out above is indicative only and may, subject to the ASX Listing Rules and any laws, be varied by Moly in its sole discretion.

Moly will be required to re-comply with Chapters 1 and 2 of the ASX Listing Rules before ASX will reinstate quotation of its shares on ASX.

If the Offer terminates or is otherwise unsuccessful, and Moly is unable to complete another transaction which enables Moly to re-comply with Chapters 1 and 2 of the ASX Listing Rules by 23 April 2017, ASX has advised Moly that it will be removed from the ASX Official List.

About Gulf Alumina

Gulf is an Australian unlisted public company with 45 shareholders which was established in 2004 to develop bauxite deposits for export to China's rapidly expanding merchant alumina refining markets.

Skardon River Project

The Skardon River project has been the subject of extensive exploration and economic studies over the past five years which resulted in Gulf undertaking a DFS in 2015. The results of the studies highlighted the potential for commercial extraction of DSO bauxite ore.

The bauxite occurs as a laterally extensive horizontal layer ranging from 0.5 to 4.0m thickness, directly below a relatively thin surface soil profile generally less than 1.0m thick. The bauxite has developed as a result of weathering and comprises a high percentage of "Gibbsitic" bauxite which is the key type of bauxite feed for "low temperature" alumina refineries many of which are located on the east coast of China. The DFS considers a mine operation based on free-dig mining of bauxite using front end loader; transport of bauxite by haul trucks between 5 and 15km to the wharf loading and stockpiling facility; transhipment down the Skardon River using self- propelled barges to the ocean going vessels located off-shore for shipment to the customer.

The current mining leases within the Skardon River Project include existing infrastructure and improvements comprising of an airstrip, port wharf, haulage and access roads, as well as civil works associated with the village services and power distribution. The DFS proposes that there will be upgrading of the infrastructure to accommodate the proposed mining and shipment operation.

Moly will provide additional information relating the work completed by Gulf at Skardon River in the coming weeks and in the Prospectus to be lodged in late October.

Figure 1 Skardon River Project tenement location and photos of existing infrastructure

Environmental Approvals

Proposed amendments to the existing Environmental Authority ("EA") at Skardon River required Gulf to submit a full EIS in late 2015. Following an extensive public consultation period, the Queensland Government (DEHP) approved the EIS and has issued draft Conditions for review prior to final approval of the EA.

Commonwealth approval under the EPBC Act has progressed in line with the bilateral agreement between the Commonwealth and Queensland governments. Final approval for the Skardon River Project is currently being determined by the Minister for the Environment.

Importantly, these approvals cover key project requirements including mining of the bauxite resource, upgrades to the existing infrastructure such as the wharf and port facilities, haulage and transhipment operations.

Moly Mines Limited published this content on 22 September 2016 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 22 September 2016 07:09:01 UTC.

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