General Moly Says Mt. Hope on Track for Late 2010 Start

In an early November update for its Mt. Hope molybdenum project, General Moly CEO Bruce D. Hansen said, “Despite the current difficult credit environment, we continue to be confident that the Mt. Hope project will be able to be financed. Given the project’s overall quality, including high grades and low operating costs, in addition to the project’s wide support from the steel industry, Mt. Hope continues to be on track to be fully permitted and financed in time for late 2010 startup.” The Mt. Hope project is an 80:20 joint venture between General Moly and Korean steel-maker Posco.

General Moly ended the September quarter with a consolidated cash balance of $121 million. Based on the current Mt. Hope project development schedule, this would fund the company through the first quarter of 2009 without new sources of capital. Credit Suisse and Barclays are working on ultimate bank project financing, which Hansen anticipates will be finalized in conjunction with the receipt of final permits in the third quarter of 2009. General Moly is also evaluating additional support from current strategic partners, the possibility of a sale of another minority interest in the project and debt from private investment groups. Subject to agreement with Posco, the company also retains the flexibility to adjust development spending and stretch out the project schedule, if increased incremental funding is not available.

The Mt. Hope mine plan now calls for production of 40 million lb/y of molybdenum, on average, over the first five years of production. Total estimated capital requirements remain in the previously announced range of $1 billion to $1.08 billion; however, declining energy prices may help lower energy-related items of the capital estimate, including freight charges and pre-stripping costs.

A previously announced estimated direct operating cost of $5.30 to $5.80/lb of molybdenum for the project was based on approximately $120/bbl oil-equivalent energy prices. At approximately $80/bbl oil prices, direct operating costs are anticipated to average $5.23/lb over the first five years.

Moly prices were in the range of $12/lb in early November, down sharply from $30–$35/lb during September.

Permitting at Mt. Hope is progressing toward a third-quarter 2009 Record of Decision.

General Moly has purchased approximately 16,000 acre-feet of existing water rights in the Kobeh valley, adjacent to the Mt. Hope project. During 2008, the company’s water exploration and evaluation program identified and tested five waterwell locations that are anticipated to be capable of producing sufficient water to meet Mt. Hope’s production needs of about 6,500 gal/min. The Nevada Division of Water Resources is expected to approve the transfer of the water rights for these locations to General Moly and the change from agricultural use to mining and milling use in the first quarter of 2009.

As featured in Womp 08 Vol 10 - www.womp-int.com