NEW YORK General Moly
Inc. and Sichuan Hanlong (Group) Co. Ltd. have agreed to
terminate a $125-million loan deal that was intended to
supplement a $665-million term loan to finance the Mount Hope
molybdenum project in Nevada.
The subordinated loan agreement,
which would have become available upon receipt of the
Chinese-sourced term loan, was terminated to provide General
Moly with greater flexibility in securing an additional Chinese
strategic partner, the Lakewood, Colo.-based company said.
The termination also cancels an
arrangement fee of $6.25 million payable upon closing of the
term loan. A warrant with a two-and-a-half-year maturity to
purchase 10 million shares of General Moly common stock at
$4.23 per share also was terminated.
"Our efforts to secure such a
strategic partner are incrementally enhanced by the elimination
of these warrants, which reduces the potential for future
dilution," General Moly chief executive officer Bruce D. Hansen
said in a statement. "We are actively marketing the Mount Hope
project as a fully permitted, construction-ready, high-grade,
lower-cost molybdenum deposit supported by our joint-venture
partner, POS-Minerals (Corp.), and recently attracted a number
of parties in China who are beginning to engage in due
Hansen said the company also is
negotiating an equipment lease agreement on the mobile mining
fleet to replace all or part of the subordinated loan agreement
component of the Mount Hope project finance plan.
The company recently announced
that it was working with Chengdu, China-based Sichuan Hanlong
to secure another Chinese financing partner for Mount Hope (
amm.com, April 4) after negotiations with Sichuan
Hanlong and China Development Bank (CDB) for the $665-million
loan were suspended following the reported detention of Sichuan
Hanlong chairman Liu Han (
amm.com, March 21).
General Moly announced recently
that it was looking to "reinvigorate advanced-stage loan
negotiations with CDB" (
amm.com, May 3).
The $1.28-billion Mount Hope
project is expected to produce 40 million pounds of molybdenum