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While the company has secured the needed approvals to break ground, financing for the project has been uncertain since mid-summer.
Industrial metals explorer General Moly (TSX:GMO,NYSEAMERICAN:GMO) now has the final federal approval needed to begin construction at the Mount Hope molybdenum project.
It received a federal record of decision (ROD) from the Bureau of Land Management on September 27, signifying the last state- and federal-level permits needed to enter the construction phase.
The Colorado-headquartered company owns an 80 percent stake in the project, located in Nevada, through its subsidiary Eureka Moly. Korean steel company POSCO (NYSE:PKX) is the parent company of POS-Minerals, which controls the remaining 20 percent interest in Mount Hope.
“We believe the Mt. Hope deposit is the best undeveloped and lowest-cost primary moly project in the world with leverage to anticipated rising moly prices from improving market fundamentals,” said Bruce Hansen, CEO and CFO of General Moly. “As we continue to closely monitor the moly market, we are encouraged by moly’s stable prices over the past two years.”
While the company has secured the needed approvals to break ground, financing has been an issue for the project, which is anticipated to produce 40 million pounds of molybdenum annually for the first five years of its 30 year mine life.
In late July, General Moly declared that its largest shareholder, AMER International, was in default after it failed to release tranche three funding.
The US$10 million in funding was to be discharged upon the receipt of water permits for Mount Hope, which General Moly secured in July 2019.
For its part, AMER alleged that General Moly had breached an agreement, and pointed to issues around US/China relations, solvency concerns and delays in acquiring the needed permits as reasons it could not release the funds.
Chinese company AMER is a non-ferrous metals and manufacturing conglomerate. To date, AMER has purchased US$10 million in General Moly shares through two private placements since 2015.
Despite the funding hiccups of the summer, General Moly remains positive about the project’s potential and its ability to secure the needed financing to advance the site.
“With the ROD now in hand, we are intensifying our efforts with our financial advisors in seeking incremental liquidity, project financing, and strategic alternatives to maximize value for our shareholders and help the local economy,” added Hansen.
After meeting with the primary holders of 2014 senior convertible notes and select management and directors, the company will defer approximately US$162,000 of interest payments due at the end of Q3.
Another US$1 million in funding may be accessed through the accelerated repayment of capital General Moly advanced to EMLLC to settle protests regarding water applications for Mount Hope.
Shares of General Moly were up 13 percent on Monday (September 30), trading at C$0.30.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.