【China Molybdenum Industry News Network】

General Moly Inc. and Hanlong Mining Tuesday terminated a $125 million subordinated loan agreement.

General Moly owns 80 percent of Mt. Hope, a molybdenum mine in development about 21 miles north of the town of Eureka.

The two companies mutually agreed to terminate the agreement intended to supplement a $665 million Chinese sourced term loan for the financing of the Mt. Hope Project.Despite the changes in the finances, preliminary construction work continues at Mt. Hope.

“We still have a handful of Ames construction workers performing pre-construction activities,” said Zach Spencer, General Moly director of external communications. “Also, we continue with our cultural clearance activities.”

The subordinated loan agreement, which would have become available upon receipt of the Chinese sourced term loan, was terminated to provide General Moly with greater flexibility in securing an additional Chinese strategic partner. The termination of the subordinated loan agreement also cancels the arrangement fee of $6.25 million payable upon closing of a Chinese sourced term loan. Further, the warrant with a 2.5 year maturity to purchase 10 million shares of General Moly common stock at a strike price of $4.23 per share was terminated.

“Hanlong’s cooperation and assistance is appreciated as we move forward to secure another Chinese strategic partner capable of advancing the full financing of the Mt. Hope Project and reinvigorating advanced stage loan negotiations with China Development Bank,” said General Moly Chief Executive Officer Bruce D. Hansen.

“Our efforts to secure such a strategic partner are incrementally enhanced by the elimination of these warrants which reduces the potential for future dilution. We are actively marketing the Mt. Hope Project as a fully permitted, construction-ready, high grade and lower cost molybdenum deposit supported by our joint venture partner POS-Minerals, and recently attracted a number of parties in China who are beginning to engage in due diligence.”

Hansen said General Moly is attempting to negotiate an equipment lease agreement on the mobile mining fleet to replace all or part of the subordinated loan agreement component of the Mt. Hope Project finance plan.

General Moly reported on March 20 it was notified that China Development Bank had provided instructions to its legal counsel to suspend work on the $665 million term loan.

This suspension relates to reports that Mr. Liu Han, founder of Sichuan Hanlong Group, has been detained by Chinese authorities.

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