【China Molybdenum Industry News Network】

The disruption in the financing process for its Mt. Hope project caused a sharp correction in the share price of General Moly, Inc.

Based in Lakewood, Colorado, General Moly is focused on bringing its 80 percent owned Mt. Hope molybdenum project into production. Molybdenum is used in metallurgical applications such as alloys, with the rest of molybdenum used as compounds in chemical applications.

The company also owns 100 percent of the Liberty project, for which it aims to start a bankable feasibility study. Both projects are located in Nevada.

General Moly continues to work with Hanlong to secure an additional Chinese strategic partner to advance financing for the Mt. Hope project. General Moly believes a Chinese partner is the best route to finance the project due to the advanced stage of negotiations with the China Development Bank.

"We believe any upside potential for the shares will remained capped until there is clarity on who will provide project financing and when," RBC Capital Markets analyst Fraser Phillips said in a client note.

On March 20, General Moly announced that legal counsel had suspended work on the $665 million term loan being negotiated with the China Development Bank until further notice. The suspension was related to media reports that Mr. Liu Han, Chairman of Hanlong, was detained by Chinese authorities.

Work on cultural clearance, clearing and grubbing, wood harvesting, and development of early construction water progressed as planned. Areas for the mine, process plant, and tailings dam have been substantially cleared in preparation for earthworks. Ames Construction has completed four miles of water pipeline (8 miles planned in total) to supply construction water to the plant site.

On February 2013, a Motion of Preliminary Injunction was filed challenging the Record of Decision (ROD) issued for the Mt. Hope project. General Moly has filed its opposition to the motion. Currently neither has a hearing date nor a ruling has been given. General Moly believes the ROD complies with all federal statutes and rules.

"Engineering is approximately 64% complete. Most of the long-lead milling equipment, haul trucks, and mine production drills have been ordered or purchased. General Moly has also entered into a letter of intent to purchase electric shovels," Phillips said.

General Moly had $56.9 million in cash at the end of the first quarter versus $68.3 million at the end of the fourth quarter of 2012. During the quarter, the company spent a total of $16 million on Mt. Hope and G&A.

Mt. Hope remains an attractive project from a long term perspective and the project's "hedging" arrangements are a positive in the current market environment. On top of that, the Liberty project could yield value in due course. However, upside potential for the shares will be limited until financing can be arranged for the Mt. Hope project.

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