UPDATE 1-Moly Mines to raise C$31.5 mln in equity offering

* To offer 42 mln units at C$0.75 a piece

* Offer priced at an 18.4 pct discount

* Proceeds to bring iron ore project into production



Oct 7 (Reuters) - Australia's Moly Mines Ltd said it will raise up to C$31.5 million ($29.89 million) through an equity financing to bring its Spinifex Ridge Iron Ore project into production and for working capital purposes.

The company said it will sell to a syndicate of agents, led by Paradigm Capital Inc, up to 42 million units at a price of 75 Canadian cents per unit, an 18.4 percent discount to the stock's closing price on Tuesday.

Each unit comprises an ordinary share of the company and one-third of one ordinary share purchase warrant, Moly said.

The company said it intends to use the first $25 million raised under the offering to bring the Spinifex Ridge Iron Ore project in Western Australia into production and complete engineering and design work on the 10Mt/a Spinifex Ridge Molybdenum project.

The rest of the funds will be applied to reduce the size of its restructured debt facility, the company said.

Moly's shares, which have lost more than 27 percent of their value in a month, were trading down nearly 8 percent at 85 Canadian cents Wednesday morning on the Toronto Stock Exchange. ($1=1.054 Canadian Dollar)

(Reporting by Krishna Chaithanya in Bangalore; Editing by Maju Samuel) Keywords: MOLYMINES/ ([e-mail]; within U.S. +1 646 223 8780; outside U.S. [phone]; Reuters Messaging: [e-mail]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.