Moly Mines (ASX: MOL) is again postponing its $700-million molybdenum and copper mine projects at Spinifex Ridge in Western Australia. The company ascribed the move to falling prices of molybdenum, a key ingredient in the manufacture of steel, and the strong Australian currency.

Molybdenum was at $29,000 per tonne on Thursday, down from the peak of $40,000 in February. Although the resource is sold in U.S. dollars, the project's expenses are paid in Australian dollars.

Moly Mines pointed out that the two factors would likely not change before the $454 million syndicated facility agreement it secured with China Development Bank would expire by May 2012. A new deal calls for Moly to find a new project within the next five months.

"We're on the prowl and there's a lot out there. We've got two things that we're looking at very closely," The Sydney Morning Herald quoted Moly Managing Director Derek Fisher.

He added the firm, 56.6 per cent owned by Hanlong Mines of China, is looking into ferro alloy and specialty metal projects. Fisher said that Moly's iron ore mine in the same location will remain in operation.

"If we were in production today we'd be making money but enough to service debt - we'd have our head out of water but only just.... So we're putting it on ice," he said.

While Moly would still have access to cheap capital, CDB's new deal reduced the funds available to the miner to $244 million from $454 million.

News of the project postponement caused stocks of Moly to decline 6 per cent or by 2 cents to 31.5 cents. Moly's shares have fallen by 74 per cent from 12 months ago.

"(While) it is disappointing that the economics do not allow us to proceed with the Spinifex Ridge molybdenum and copper mine at this stage, the strategic alliance further cements the excellent rapport we have built with CDB and supports a platform of further growth," Fisher told The Australian.

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