General Moly Details Mount Hope Joint Venture with Posco
12/19/2007 - General Moly enters into a letter of intent with Posco that will give the right to acquire a 20% interest in General Moly’s Mount Hope molybdenum project in exchange for $170-million in equity contributions.
General Moly, Inc. has entered into a letter of intent with Posco that will give Posco the right to acquire a 20% interest in General Moly’s Mount Hope molybdenum project. The deal is subject to negotiation and execution of final documentation.
According to the letter of intent, Posco is to support the joint venture with $170 million in equity contributions beginning with a $50-million payment upon signing of definitive documentation, and a second $50-million payment on July 1, 2008. A final, $70-million payment is to be made upon receipt of all material permits required to initiate full construction of the Mount Hope Project, which is expected to happen in the first quarter of 2009. Posco intends to invest in the Joint Venture through its Canadian subsidiary, Posco-Canada, and a Korean domestic subsidiary.
In return for its investment, Posco will receive rights to 20% of production from the Mount Hope Project, and will be responsible for 20% of total project capital and operating costs from January 1, 2008 onward.
“We are extremely pleased to have Posco select Mount Hope as their moly project of choice and General Moly as their moly partner of choice,” said Bruce D. Hansen, General Moly’s CEO. “We see Posco as a fantastic long-term sustainable partner as we finance and develop the world-class 1.3-billion-pound Mount Hope Project.
To facilitate the investment, General Moly intends to form a new entity that will operate the Mount Hope Project on a joint venture basis. The company anticipates working with Posco to close the transaction prior to the end of January 2008.
General Moly said it will also continue to selectively seek additional off-take arrangements, with the goal of establishing approximately 10 million pounds per year of floor-price-protected production over the first five years of production. Molybdenum for these off-take arrangements would be sourced from General Moly’s 80% of production.
“This win-win deal, combined with the equity proceeds received and off-take arrangement reached with our other strategic investor ArcelorMittal, dramatically reduces our credit risk and enhances our ability to finance the remainder of the Mount Hope development requirements,” concluded Hansen.
General Moly (formerly Idaho General Mines) is a U.S.-based molybdenum mineral development, exploration and mining company. Its primary asset, the Mount Hope Project located in central Nevada, is considered one of the world's largest and highest-grade molybdenum deposits. Combined with its second molybdenum property, the Hall-Tonopah project (which is also located in central Nevada), the company’s goal is to become the largest primary molybdenum producer by the middle of the next decade.
