Molybdenum ('Mo') is a commodity in high demand worldwide, for use in both its pure form and as an alloying agent for the production of specialty steel products. Prices are likely to remain strong for the foreseeable future, with Chinese imports of the commodity on the rise (see Molybdenum information).

Hodges has the option to earn a 90% interest in Moliagul, a major Mo and gold prospect in northern Victoria, Australia. In the past, the area has been subject to sporadic mining and exploration for both commodities. Although the deposit is characterised by widespread mineralisation associated with stockwork veining along the margins of a granodiorite host, historically Mo production has been limited. Very little modern exploration has been undertaken and an extensive adjacent geochemical anomaly remains to be tested.

Project location

The main Mo zone at Moliagul has substantial open-cut potential. Prospectivity in the surrounding area also appears good.

Moreover, Moliagul contains a subsidiary target of regional gold mineralised structures extending over several kilometres, with little or no modern exploration in the area to date.

Access to the area is good, with the majority of the tenement encompassing either state forest or broad-acre wheat/sheep farming land. The climate is temperate, the terrain varies from plains to hilly and the main area of mineralisation occurs as a northwest-trending ridge less than 400 metres above sea level.

Although Mt Moliagul lies partly within a Goldfield Heritage Reserve, it is not associated with the heritage features of that reserve and exploration and mining are permitted.

A native title Indigenous Land Use Agreement (ILUA) has been in place since early 2006.

Within the Moliagul project area, historic drilling, mapping and soil and rock surveys (in the 1980s) highlighted a zone of marked Mo-bearing stockwork veining along the margins of the Moliagul granite, a granodiorite stock intruded into the western margins of the Tarnagulla pluton.

Soil geochemistry

Drill plan

Moliagul Drill Core (pdf 916kb)

Drill sections MM-6 and PMM-1 with Mo values

While much of the drilling by previous operators was based on geological mapping of the area, some more successful holes (the MM series, drilled later) were targeted on induced polarization anomalies. This included the last hole drilled prior to Hodges' exploration. That hole, MM-6, returned an extraordinarily wide intercept - 195 metres at 715 parts per million ('ppm') Mo - from surface. Significantly, the hole was terminated in mineralisation.

Significant drill intercepts include the following.

• MM-6: 195 metres @ 715 ppm (EOH in mineralisation), including
  - 49 metres @ 0.11% and
  - 14 metres @ 0.11%
• PMM-1: 36 metres @ 0.16%
• H 3 D: 15.3 metres @ 0.19%
• PMM-1: 10 metres @ 0.17%
• MM-1: 10 metres @ 0.12%

An extensive soil/rock geochemical target east-southeast of MM-6 (main target area) is largely undrilled.

The Moliagul Project includes numerous gold prospects along three or more major, north-south trending, weakly magnetic structures, each several kilometres in strike length. Historically, the area's goldfield has been dominated by alluvial production, and it was the discovery site of the largest alluvial nugget ever discovered, the Welcome Stranger. Past explorers developed little understanding of the primary source mineralisation; hence, little or no modern hard-rock exploration has occurred.

Hodges has exercised its option to acquire 90% of the Moliagul molybdenum and gold project. For more details, please refer to the Company's latest announcements.

Hodges believes that the Moliagul Project has real potential to host a significant resource of economic Mo, especially in view of concerns over the future supply of this commodity. Indeed, a supply shortfall is forecast. China, for example, formerly a major supplier, is becoming a net importer as it further expands its oil pipeline infrastructure, where Mo will be used in high-specification steel alloys. In North America too, demand for Mo to produce higher-strength steel for the oil and auto industries is escalating at the same time as production of the commodity as a byproduct of South America's copper mines is decreasing.

Moreover, Mo has been the focus of substantial capital-raisings in the recent past: China Molybdenum raised US$1 billion on the Hong Kong Exchange, and Blue Pearl Limited purchased the Thompson Creek Mo assets for US$575 million. Meanwhile, Moly Mines Limited has conducted a full feasibility study into developing the AU$1.1 billion Spinifex Ridge deposit in Western Australia.