ArcelorMittal to Acquire Equity Stake in General Moly
11/21/2007 - ArcelorMittal signs agreement to acquire a 12.6% equity stake in General Moly, as well as a letter of intent to enter a long-term off-take agreement for approximately 6.5 million pounds per year of molybdenum.
ArcelorMittal has signed an agreement to acquire a 12.6% equity stake in General Moly, Inc. for a total consideration of US$70 million. The acquisition represents 10% of General Moly’s fully diluted shares.
General Moly, a U.S.-based molybdenum mineral development, exploration and mining company, is currently preparing its Mt Hope project for production, which is expected to commence in the second half of 2010. Central Nevada-based Mt Hope—General Moly’s primary asset—is supplemented by a second molybdenum property, the Hall-Tonopah project, also located in central Nevada. With these two properties, the company's aim is to become the largest primary molybdenum producer worldwide by the middle of the next decade.
In addition to the equity purchase, ArcelorMittal has signed a letter of intent to enter into a long-term off-take agreement. This agreement, subject to final documentation, would allow for the supply of approximately 6.5 million pounds per year of molybdenum—representing 26% of ArcelorMittal's anticipated annual required consumption—for five years. The off-take agreement would begin once Mt Hope commences production.
With the acquisition, ArcelorMittal will become the second-largest shareholder of the company. The funds will be primarily utilized in the development of General Moly's Mt Hope molybdenum project.
The stock purchase is expected to close, subject to customary conditions, within 30 days.
