Renegotiated Agreement Returns Nearly $8 Million to Eureka Moly, LLC
LAKEWOOD, Colo.–(BUSINESS WIRE)–Jun. 29, 2015– General Moly, Inc. (the “Company”) (NYSE MKT and TSX:GMO), a U.S.-based molybdenum mineral development, exploration and mining company, announced an agreement to terminate the existing third-party transmission contracts to provide power to the Mt. Hope Project in favor of a future arrangement for transmission under the provider’s network services agreement. With the agreement, Eureka Moly, LLC, (“EMLLC”) of which General Moly is an 80% member, will receive a return of approximately $7.9 million net of termination costs, expenses and consideration to the transmission providers.
Bruce D. Hansen, Chief Executive Officer, said, “This agreement, combined with an $8.5 million private placement financing and an agreement with POS-Minerals Corporation to use restricted cash of up to $36 million for the benefit of Mt. Hope, provides the Company with a significantly improved project and corporate liquidity profile, even before considering the funding anticipated from the closing of the AMER International Group (“AMER”) transaction, while fully maintaining the Mt. Hope Project’s construction-ready status.”
Mr. Hansen concluded, “The Company remains focused on procuring full construction financing for the Mt. Hope Project. After the transaction with our cornerstone strategic partner AMER is approved following General Moly’s 2015 Annual Meeting of Stockholders, and assuming all conditions closing the Investment Agreement are met, the Company will then begin leveraging AMER’s equity investment and debt capacity to further advance the Mt. Hope Project.”
In 2008, EMLLC paid $12.0 million into an escrow arrangement for electricity transmission services as security for the third party transmission contract. As electricity transmission was not delivered to the Mt. Hope Project by the December 1, 2014, deadline, EMLLC and the transmission providers negotiated a termination of the existing agreement in favor of arranging for transmission under the provider’s network services agreement. As a result of the termination, EMLLC will record an accounting loss of approximately $4.3M, representing termination costs, expenses, and consideration to the transmission providers. If the transmission capacity agreement was not renegotiated or terminated EMLLC would have continued forfeiture of the $12.0 million over a five-year period, according to a contractual monthly drawdown schedule that commenced in December 2014. A future arrangement for transmission under the provider’s network services agreement will assure adequate electricity for the Mt. Hope Project when needed while returning approximately $7.9 million to EMLLC net of termination costs, expenses and consideration to the transmission providers.
General Moly is a U.S.-based molybdenum mineral development, exploration and mining company listed on the NYSE MKT (formerly the NYSE AMEX) and the Toronto Stock Exchange under the symbol GMO. The Company’s primary asset, our interest in the Mt. Hope Project located in central Nevada, is considered one of the world’s largest and highest grade molybdenum deposits. Combined with the Company’s second project, the Liberty Project, a molybdenum and copper property also located in central Nevada, our goal is to become the largest pure play primary molybdenum producer in the world. For more information on the Company, please visit our website at http://www.generalmoly.com.
Statements herein that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended and Section 21E of the Securities Exchange Act of 1934, as amended and are intended to be covered by the safe harbor created by such sections. Such forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected, or implied by the Company. These risks and uncertainties include, but are not limited to, metals price and production volatility, global economic conditions, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, exploration risks and results, political, operational and project development risks, including the Company’s ability to maintain required permits to continue construction, commence production and its ability to raise required project financing, adverse governmental regulation and judicial outcomes, including appeal of the Record of Decision and appeal of water permits and estimates related to cost of production, capital, operating and exploration expenditures. For a detailed discussion of risks and other factors that may impact these forward looking statements, please refer to the Risk Factors and other discussion contained in the Company’s quarterly and annual periodic reports on Forms 10-Q and 10-K, on file with the SEC. The Company undertakes no obligation to update forward-looking statements.
Source: General Moly, Inc.