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General Moly may to have to delay Mt. Hope project start

As General Moly seeks full financing for its Mt. Hope project in an unfriendly moly market, the Nevada project start-up may be delayed as engineering and administrative expenditures, along with some jobs, are cut back.

Author: Dorothy Kosich
Posted: Friday , 27 Mar 2009

RENO, NV -

The resurrection of a major molybdenum mine in Nevada may be on hold for a couple of years as General Moly announced Thursday it would reduced expenditures for the Mt. Hope project pending improvements in the molybdenum and capital markets.

General Moly CEO Bruce Hansen said, "With a cash balance of approximately $80 million or $1.11 per outstanding share, we have the capacity to continue aggressive permitting efforts, maintain efforts to secure full project financing, and secure the most critical long lead capital items for the ultimate construction of the Mt. Hope project."

"Once full financing is structured, it is expected that Mt. Hope can be constructed and in production within 20 months," he added. Mt. Hope was originally planned to begin production in 2011. The property contains 1.3 billion pounds of proven and probable molybdenum reserves.

Planned production from Mt. Hope will average approximately 40 million pounds annually for the first five years. Total mine life is projected at 44 years, with 32 years of open pit mining and processing, followed by 12 years of processing lower grade stockpiled ore

In its news release Thursday General Moly said, "Our permitting efforts will continue full-time and the company will maintain its orders for grinding, milling, and other specialty long-lead equipment, although other engineering, administrative and third-party work will be slowed."

Engineering programs, now 57% complete, will be paused. "Once a path toward ultimate funding becomes available, engineering work and equipment procurement will be restarted," the company said. Equipment orders for custom-built grinding and other process equipment will be maintained, pending on-going negotiations with vendors related to construction and delivery timelines.

"The grinding and process equipment require the longest lead times and maintaining these orders is critical to the company's ability to re-start rapidly." The total remaining payments for these items is $50 million.

Other equipment orders for non-custom items will be suspended or canceled. General Moly also plans to reduce administrative expenses by $5 million annually through a combination of compensation restructuring and jobs cutbacks.

South Korean steel manufacturer POSCO's POS Minerals subsidiary owns a 20% interest in the project.