Origo Partners has acquired a 20% equity stake in Moly World, owner of an advanced stage molybdenum exploration project in Mongolia. The investment has been made for US$10 million.

In connection with the investment, Origo’s wholly-owned commodities trading company, Origo Resources International, has been granted an offtake covering up to 20% of all possible production for the life of mine.

The project, known locally as Mandal Moly, covers an area of 2360 hectares about 40km north of Tsagaan-Uul Soum, Khuvsgul Province, in northern Mongolia.

Initial broad interpretations of the deposit provided by independent consultants Xstract Mining on behalf of the company, indicates an exploration target for the deposit to be between 120 and 180 million tonnes with a grade range of 0.12-0.18% of molybdenum.

On the basis of two independent assessments, Origo believes that the project has the potential to host a world-class molybdenum resource, benefiting from high grade and near-surface mineralization.

Molybdenum is used primarily in the production of high-strength steel alloys essential for the construction of buildings, bridges, power plants and cars. China currently uses about 50% of the world’s steel output but only around 30-35% of the world’s molybdenum.

However, as the Chinese steel industry produces increasing volumes of high value steel alloys, the latter figure is expected to rise significantly. In January 2009 China became a net importer of molybdenum for the first time and has since become the world’s largest user of molybdenum, with consumption expected to continue to outpace production.

Moly World will use the acquisition proceeds to fund further exploration work, including exploration for extensions and infill drilling in order to produce a JORC-compliant resource estimate, targeting a minimum of 300 million pounds of molybdenum by December 2011. A total of eight drilling rigs are being deployed at the project in one of the largest exploration programs currently under way in Mongolia.

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