General Moly Declares AMER in Default

Molybdenum company General Moly (TSX:GMO,NYSEAMERICAN:GMO) has declared its largest shareholder AMER International in default after the latter failed to release the agreed upon tranche 3 private placement funding. As we reported earlier this week,  the tranche 3 funding was to be triggered upon receipt of the Mount Hope water permits by General Moly.

The company did receive the permits, however whether or not AMER would release the US$10 million for 20 million shares was uncertain.

As quoted from the press release:

The obligation of the company’s largest shareholder, AMER International Group (“AMER”) to invest US$10 million for 20 million common shares priced at US$0.50 per share (“Tranche 3”) was triggered by the Company’s receipt of the water permits from the Nevada State Engineer, as set forth in the Agreement. The company provided formal notice to AMER, which had two business days until the close of business on Tuesday, July 30, 2019 to fund and close Tranche 3.

With AMER’s default with respect to its obligation to fund Tranche 3, the Company will have inadequate cash to continue operations and will have to evaluate its options going forward, including pursuing asset sales, short-term financing options and, if unsuccessful in obtaining sufficient financing, the possibility of seeking bankruptcy protection, as stated in the Company’s July 29, 2019 news release.

As described in the July 29, 2019 news release, AMER previously provided the Company with a letter indicating that AMER is considering terminating the Agreement based on alleged uncured material adverse effects and alleged breaches of the Agreement by the Company (which include concerns related to US/China relations, concerns regarding the delay in obtaining environmental permits and solvency concerns).  The Company believes such assertions to be inaccurate and wholly without merit.

Click here to read the full announcement