Thats what TTM is working on as I post this. MOL, GMO, TTM next?
I really skimmed over it but this is the kind of deal that TTM is looking for. You see it can be done with very little dilution.
Look at it this way 20% of TTM is only another 10 million shares. TTM owns 100% of the Chu.

TTM has not debt. It is very likely the Chu could be opperational with only a round figure of 100 million shares. That is the frame work of these deals and it fits us to a "T".

General Moly adds Chinese partner for Mt. Hope project

2010-03-05 08:26 CT - News Release

Mr. Seth Foreman reports

GENERAL MOLY ANNOUNCES SIGNIFICANT INVESTMENT FROM HANLONG, POSCO COMMITS TO 20% MT. HOPE EQUITY INTEREST

General Moly Inc. has made a significant investment and strategic relationship with Hanlong (USA) Mining Investment Inc., a wholly owned subsidiary of Sichuan Hanlong Group (Hanlong), that is anticipated to provide full project financing for the company's 80-per-cent-owned Mt. Hope project.

Highlights of the transaction include:

• $665-million bank loan from a prime Chinese bank to be procured and guaranteed by Hanlong at an anticipated rate of LIBOR plus 2 to 4 per cent;
• $80-million equity investment in General Moly through the purchase of 25 per cent of the company's fully diluted shares, partially contingent upon completion of the $665-million bank loan;
• $20-million bridge loan to assist in Mt. Hope project restart, repayable from the proceeds of the bank loan;
• A long-term molybdenum supply offtake agreement for Hanlong from Mt. Hope production.

Bruce D. Hansen said, "I am extremely pleased to have Hanlong as a major investor and partner. This transaction with Hanlong provides superior value to our stockholders than alternative transactions we have recently evaluated. Hanlong will, in accordance with the terms and conditions of the agreement, invest $80-million in equity and procure $665-million in senior secured debt, which we believe will fully fund the Mt. Hope project. Given the robust cash flows anticipated to be generated from the Mt. Hope project, we feel we can adequately service the $665-million loan. Assuming $15-per-pound molybdenum prices, during the first full five years of production, total debt service will consume approximately 50 per cent of our anticipated cash flow after sustaining capital. Additionally, our posttransaction levered after-tax net present value (NPV) of General Moly's 80-per-cent share of Mt. Hope is estimated at $1.2-billion using an 8-per-cent discount rate at a $15-per-pound moly price growing to over $2-billion at $20-per-pound prices. Of note, these figures do not include any value for the Liberty project, which we now believe becomes increasingly viable with the Mt. Hope project financing arranged. We believe this transaction positions General Moly to reach its strategic goal of being the world's largest publicly listed pure-play moly producer with ultimate targeted production of approximately 50 million pounds per year."

Mr. Hansen added, "We would also like to express our appreciation to POSCO, our joint-venture partner at Mt. Hope, for its immense support as we have evaluated numerous financing alternatives and its commitment to remain a 20-per-cent partner in the Mt. Hope project."

Hui Xiao (Steven), president of Hanlong (USA) Mining, commented: "We are extremely pleased to invest in General Moly and we feel their Mt. Hope and Liberty projects are two of the most promising moly assets worldwide. Our investments in General Moly and Moly Mines position Hanlong to be a significant participant in the future of the molybdenum industry, which we find very attractive."

The equity issuances in connection with this transaction are subject to General Moly stockholder approval, which will be sought at the General Moly annual general meeting.

Hanlong equity investment

The $80-million equity investment will occur in two tranches. Hanlong will purchase 12.5 per cent of the company's fully diluted shares (the first tranche) for $40-million. The first tranche shares will be issued on the satisfaction of certain conditions including General Moly's receipt of stockholder approval and publication of the company's draft environmental impact statement (DEIS), which is now anticipated to occur by midyear. Additionally, Hanlong is required to obtain necessary Chinese government approvals for the transaction and to provide a comfort letter supporting the loan terms described below. The company anticipates the first tranche shares will be issued in the third or fourth quarter of this year.

Hanlong will purchase the remaining shares (the second tranche) for an additional $40-million to then give Hanlong a 25-per-cent fully diluted interest in General Moly. The second tranche shares will be issuable on the satisfaction of certain conditions including receipt of the company's record of decision (ROD) from the Bureau of Land Management (BLM) and the completion of documentation and drawdown availability related to the $665-million bank loan described below. General Moly anticipates satisfaction of the second tranche conditions early next year. All conditions to the second tranche must be completed no later than Jan. 31, 2012.

The total number of shares to be issued to Hanlong will be impacted ultimately by ArcelorMittal's election with regard to its pre-existing anti-dilution rights. The company anticipates issuing Hanlong between 27.8 million and 28.8 million shares, depending on ArcelorMittal's election with regard to its rights.

Hanlong will be represented on General Moly's board of directors with one director who will be appointed to the board upon completion of the first tranche and a second director who will be added upon completion of the second tranche.

Hanlong will have anti-dilution rights, giving it the right to purchase additional shares to maintain its 25-per-cent fully diluted interest in General Moly. Hanlong and General Moly have also executed a stockholder agreement, which, through a standstill provision, limits Hanlong's ability to acquire additional shares in General Moly without board approval and in certain circumstances governs how Hanlong will vote its shares.

Hanlong guaranteed bank loan

Hanlong will use commercial reasonable efforts to procure from a prime Chinese bank a minimum $665-million senior secured term loan (bank loan) for General Moly to assist in its financing of the Mt. Hope development costs. Hanlong will guarantee this bank loan. The interest rate on the bank loan is anticipated to be at LIBOR plus a spread of between 2 per cent and 4 per cent. The bank loan will be repaid over a minimum of 14 years from achievement of commercial production at Mt. Hope and may be prepaid at any time at the company's discretion. Hanlong will assist General Moly in negotiations with the Chinese bank and the bank loan is anticipated to have normal and customary covenants and security arrangements.

When funds can be drawn under the bank loan, General Moly will pay a $15-million arrangement fee to Hanlong as sole compensation for all upfront fees associated with the loan charged by the Chinese bank and costs incurred in connection with Hanlong's guarantee of the bank loan.

The bank loan is anticipated to close approximately two to three months following receipt of the company's record of decision from the BLM and the satisfaction of the second tranche conditions.

Break fees

A break fee is payable by either party should the transaction fail due to either party failing to meet their respective first or second tranche conditions. Hanlong's break fee is $10-million payable to General Moly and General Moly's break fee is $5-million (subject to certain adjustments) payable to Hanlong, which could be paid in General Moly shares at the company's option under certain circumstances. The break fee payable by General Moly may in certain circumstances be increased.

Bridge loan

Hanlong will provide a $20-million bridge loan to General Moly (bridge loan) available in two tranches. The first $10-million tranche will bear an interest rate of LIBOR plus 2 per cent and will be available following approval by the Chinese State Administration of Foreign Exchange (SAFE), ArcelorMittal's election with regard to its anti-dilution rights and satisfaction of other customary conditions. The second $10-million tranche bears an interest rate of 10 per cent per annum and will be available five business days following stockholder approval. All amounts outstanding under the bridge loan are repayable out of the proceeds from the bank loan. General Moly will pledge a 10 per cent interest in the Mt. Hope project to Hanlong as security supporting the bridge loan. The bridge loan will be used to finance certain project restart costs including engineering and equipment procurement efforts as permitting is advanced.

Molybdenum supply agreement

General Moly has executed offtake agreements with ArcelorMittal, SeAH Besteel and Sojitz for a total of approximately 15.5 million pounds of annual molybdenum production for the first five years of Mt. Hope's operations. During this period, Hanlong will be required to purchase the balance of General Moly's equity share of production, or approximately 16.5 million pounds annually.

Thereafter and during the rest of the original bank loan term, Hanlong will purchase the greater of 16 million pounds and 70 per cent of General Moly's share of Mt. Hope production annually. After the expiration of the original bank loan term, Hanlong will purchase that proportion of General Moly's share of Mt. Hope production equal to 2-1/2 times Hanlong's fully diluted ownership in General Moly.

The price Hanlong will pay for moly is broken down into two segments. Twenty-five per cent of the production Hanlong purchases will have payment terms similar to the previous floor price protected offtake contracts that the company has in place. These agreements include hard floor prices ranging from $12.50 to $13.50 per pound and incremental discounts above the floor price. For the remaining 75 per cent of the production Hanlong purchases, it will pay the spot price less a slight discount.

Following this transaction, General Moly will have 100 per cent of Mt. Hope's production committed for the first five years, approximately half of which contains floor price protection to help support the company's ability to service debt in periods of low molybdenum prices.

Stockholder rights plan

In conjunction with the signing of this transaction, General Moly's board of directors has adopted a stockholder rights plan that is designed to strengthen the ability of the board of directors to respond to unsolicited offers or takeover attempts and to protect the interests of General Moly's stockholders. The plan was not adopted in response to any particular unsolicited offer or takeover attempt, but to encourage potential buyers to negotiate directly with the board, and to maximize stockholder value. The plan will terminate the earlier of 30 days after the closing of the second tranche under the Hanlong agreement, and Dec. 31, 2011. Additional information on the stockholder rights plan can be found in a separate news release.

POSCO third election contribution

In conjunction with the announcement of the Hanlong transaction, POSCO has elected to retain its 20-per-cent interest in the Mt. Hope project. Based on its election, POSCO will be required to pay an additional $56-million to Eureka Moly (the LLC) at the time permits are received in addition to 20 per cent of funds spent by the LLC as of that date (the catch-up contribution). The company currently estimates that catch-up contribution to be approximately $35-million. Additionally, based on the company's expectation that Mt. Hope will not commence commercial production by Dec. 31, 2011, the LLC will be required to refund POSCO $36-million, payable Jan. 27, 2012.

ArcelorMittal participation

The company's November 2007 private placement of 8,257,000 shares with ArcelorMittal, the world's largest steel company, included certain anti-dilution rights with respect to future issuances by General Moly of common shares. ArcelorMittal is evaluating its position with respect to such anti-dilution rights with respect to the proposed Hanlong transaction. Pursuant to those rights, ArcelorMittal may have an option to participate in the first tranche and the second tranche equity issuances. If ArcelorMittal were to participate in both tranches, the company estimates that up to approximately 3.3 million additional shares could be issued to ArcelorMittal and the number of shares issued to Hanlong would increase from approximately 27.8 million to 28.8 million shares in total. The company is currently discussing with ArcelorMittal the consideration associated with its decision to participate or waive its rights.

Project NPV table

An attached table sets forth the company's estimate of the NPV of General Moly's 80-per-cent ownership interest in the Mt. Hope project, assuming the bank loan is consummated, General Moly's 100-per-cent ownership interest in the Liberty project, and the total of General Moly's ownership interest in the two projects, based upon the anticipated cash flows from each project and the metal prices set forth therein.

                                    NPV ESTIMATESMolybdenum price      Mt. Hope            Liberty                   General Molyassumption            levered NPV(1)      prefeasibility NPV(2)     corporate project NPV$    15.00            $    1,199          $          485            $           1,684$    20.00            $    2,076          $        1,006            $           3,082$    25.00            $    2,886          $        1,507            $           4,3931. Based on the bankable feasibility study (BFS) which provided data on the viability,expected economics and production and cost estimates of the Mt. Hope project The BFS wasoriginally completed in August, 2007, and was then updated in 2008 and confirmed in 2009.Assumptions include an 8-per-cent discount rate, 16-year loan term with a fixed interest rate of 6 per cent and a 14-year accelerated amortization schedule with loan paymentsbeginning only after commercial production commences at the Mt. Hope project. Allanticipated taxes, royalties, and Nevada net proceeds taxes are included as well ascertain general and administrative expenditures.  Shipping and marketing expenses areexcluded.2. Based on the Liberty prefeasibility study released in April, 2008. Assumptions include8-per-cent discount rate, after-tax, and assumes a $1.50 copper price. The project isunlevered.

Conference call

A conference call will be held this afternoon at 2 p.m. ET/noon MT to discuss the Hanlong transaction in greater detail. Call-in information is provided below. Corresponding slides will be provided on the company's website under the investor tab. Additionally, a listen-only webcast will simultaneously run on the company's website, also accessible under the investor tab.

Conference call details

Dial-in No.: 800-659-2056

International dial-in No.: 617-614-2714

Passcode: General Moly

Replay: 888-286-8010

Replay passcode: 75848605

About Sichuan Hanlong

Sichuan Hanlong is a large, privately held Chinese company with a wide portfolio of investments, including mining resource development, electricity production, infrastructure development, pharmaceutical production, food and alcoholic beverages, real estate development, environmental technology, tourism development and high-tech industries. The group has over 12,000 employees worldwide and revenues in excess of 9.5 billion renminbi in 2008. Sichuan Hanlong is well known for its philanthropic work in China, especially in its home province of Sichuan. Sichuan Hanlong's overseas interests are solely in the mining resources sector. The company has its base in Sydney, Australia, where it has built a multicultural team of mining and finance specialists.

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