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Despite the positive water permit news, shares of the company were down more than 10 percent as of midday on Monday.
Molybdenum-focused General Moly (TSX:GMO,NYSEAMERICAN:GMO) has secured the required water permits for its Mount Hope project located in Central Nevada.
The company’s period of judicial review related to the water permits has also expired, with no objections or requests for additional information received by General Moly.
Despite the positive water permit news, shares of the company were down more than 10 percent as of midday on Monday (July 29).
The slip in share price was likely the result of looming uncertainty about tranche three financing from the company’s largest investor, AMER International Group.
Originally the plan was for AMER to invest US$10 million for 20 million common shares priced at US$0.50 each upon General Moly’s receipt of its water permits. However, now AMER is reconsidering the deal.
“AMER has provided (General Moly) 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),” reads a Monday (July 29) press release.
General Moly remains resolute in its defense.
“The company believes such assertions to be inaccurate and wholly without merit,” states the announcement.
If AMER pulls its financing, General Moly will not have enough money to advance the project to the next stage. To offset the effects of the potential cancelation of the financing, the US-based metals company will look into other cash-generating options, including asset sales, short-term financing options and the possibility of seeking bankruptcy protection.
Chinese company AMER is a non-ferrous metals and manufacturing conglomerate. To date, AMER has purchased US$10 million in company shares through two private placements since 2015.
Shares of General Moly were down 12.5 percent on Monday, trading at C$0.41.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
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