Investments Advance Development of Mt. Hope Project
LAKEWOOD, Colo.--(BUSINESS WIRE)--Nov. 3, 2015--
General
Moly, Inc. (the 'Company' or “General Moly”) (NYSE MKT and TSX:
GMO), a U.S.-based molybdenum mineral development, exploration, and
mining company, announced an agreement to amend the previously announced
Investment and Securities Purchase Agreement (“Investment Agreement”)
with AMER
International Group (“AMER”), a private, Chinese-based multinational
company that is one of the world’s largest advanced materials, fine
machining, and downstream metals refining providers, and was ranked #247
on the 2015 Fortune Global 500 list. With the amended Investment
Agreement, the parties agreed upon a three tranche investment strategy
that will create a strategic partnership and equity investment to assist
with General Moly’s ability to secure full project financing for the Mt.
Hope Project.
Highlights of the amended Investment Agreement include:
-
Tranche 1 of the amended Investment Agreement is a private placement
for $4 million worth of General Moly common shares, priced at $0.30.
The allocation of this $4 million private placement will be divided
evenly between general corporate purposes and an expense reimbursement
account relating to Mt. Hope financing costs and other jointly sourced
business development opportunities. In addition, AMER and General Moly
will enter into a Stockholder Agreement allowing AMER to nominate a
director to a then seven member General Moly Board of Directors, and
additional directors following the close of Tranche 3 and drawdown of
a senior secured loan (“Bank Loan”), respectively. The Stockholders
Agreement also relates to AMER’s acquisition and transfer of General
Moly shares.
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AMER and General Moly will enter into a Warrant Agreement which
provides that when drawdown of the approximately $700 million Bank
Loan becomes available and documentation is complete, 80 million
warrants to purchase common shares of General Moly vest and become
exercisable by AMER at a price of $0.50. All conditions to complete
the warrants transaction must be completed no later than April 17,
2017.
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Tranche 2 of the amended Investment Agreement will include a private
placement for $6 million of General Moly common shares, priced at
$0.50. The allocation of this $6 million private placement will be
divided with $5 million reserved for general corporate purposes and
additional $1 million set aside for the expense reimbursement account,
discussed above. Closing of Tranche 2 is contingent on the Nevada
State Engineer restoring permits for the Mt. Hope Project's water
rights and for the price of molybdenum to average in excess of $8/lb
for a 30 consecutive calendar day period.
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Tranche 3 of the agreement will include a private placement for $10
million of General Moly common shares, priced at $0.68. Execution of
Tranche 3 is contingent on a final adjudication of the Mt. Hope
Project's water rights through courts or settlement, if further
protests and appeals result from the issuance of the water permits,
and for the price of molybdenum to average in excess of $12/lb for a
30 consecutive calendar day period. After Tranche 3 of the agreement
is executed, AMER will nominate a second Director to General Moly’s
then eight member Board of Directors.
-
The parties agreed to eliminate the condition to closing the
Investment Agreement concerning the requirement to obtain a letter of
intent from a Prime Chinese Bank endorsing the Bank Loan, discussed
below, as a result of the current molybdenum market price and recent
water rights decision from the Nevada Supreme Court, and eliminate the
requirement of the Company to obtain consent from Aperam, as Tranche 1
is being issued at $0.30, which is above the October 30, 2015 closing
price of $0.29.
The Company announced receipt of funds to successfully close Tranche 1
of the newly amended Investment Agreement on November 2, 2015, as more
fully discussed below, for the purchase of 13,333,333 shares at $0.30
totaling $4 million dollars. Tranche 2 and Tranche 3 of the Investment
Agreement may be subject to General Moly stockholder approval.
AMER had previously agreed to work with General Moly to procure and
support a Bank Loan of approximately $700 million from a major Chinese
bank or banks for development of the Mt. Hope Project when molybdenum
market conditions improve. AMER will guarantee the Bank Loan, which is
anticipated to have normal and customary covenants and security
arrangements. When drawdown of the Bank Loan becomes available, 80
million warrants to purchase common shares of General Moly will become
exercisable by AMER at $0.50. After drawdown of the Bank Loan, if AMER
owns more than 30% of the common stock of General Moly, AMER will
nominate a third Director to General Moly’s Board of Directors. Under
the amended Investment Agreement, AMER has a one-time option exercisable
simultaneously with Bank Loan execution to purchase the balance of
General Moly’s share of Mt. Hope molybdenum production, estimated to be
approximately 16.5 million pounds annually, for the first five years of
production, and 70% of General Moly’s annual share of Mt. Hope
molybdenum production thereafter.
Bruce D. Hansen, Chief Executive Officer, said, “The agreement to amend
the Investment Agreement and the funding of Tranche 1 of our partnership
with AMER, one of the world’s largest advanced materials, downstream
metals refining, and fabrication companies, is an important milestone
for the Company and a critical component of our future success.”
Mr. Hansen continued, “Although the amended Investment Agreement
contains in aggregate the same number of shares at the same price as the
initial agreement, it was restructured to reflect current realities
including what we believe to be the unsustainably low price of
molybdenum as well as the recirculation of the water rights issue.”
Mr. Hansen concluded, “As market conditions improve, this agreement will
greatly strengthen our potential to access global financial
institutions, particularly Chinese banks, to finance a significant
portion of the remaining capital necessary for the development of the
Mt. Hope Project. However, given the current molybdenum price and the
recent Nevada Supreme Court water rights decision, we believe it does
not make sense to aggressively pursue project financing at this time. In
the near-term, we expect to evaluate acquisition opportunities that we
can collectively pursue with our partner AMER. In time, we believe
molybdenum prices will return to the low-to-mid teens, a level
sufficient for Mt. Hope construction and development.”
Wang
Wenyin, Chairman of AMER International Group, said, “AMER is pleased
to create a long-term partnership with General Moly through this
strategic investment. We regard the Mt. Hope and Liberty projects as two
of the most promising molybdenum assets worldwide and highly
complementary to our copper and tungsten operations, as well as our
production of fine machining and advanced cable products. We also look
forward to leveraging General Moly’s mining finance, operations,
engineering, and construction expertise to identify and acquire other
mining assets in North America.”
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.
AMER International Group is a leading Chinese multinational company with
15,000 employees and established international headquarters in Geneva,
Europe and Singapore, Asia as well as four domestic headquarters in
Shenzhen, Beijing, Shanghai and Guangzhou. Global operations are
dedicated to enlarging and strengthening the Company’s non-ferrous
metals industrial chain. In 2015, the Fortune
Global 500, an annual ranking of the top 500 corporations worldwide
as measured by revenue, ranked AMER International Group #247.
Forward-Looking Statements
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 obtain and maintain required permits to
continue construction, commence production and its ability to raise
required project financing, adverse governmental regulation and judicial
outcomes, including the appeal of the Record of Decision and potential
future appeals of re-issued 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151103006001/en/
Source: General Moly, Inc.
General Moly:
Investors
Scott Kozak, 303-928-8591
[email protected]
or
Media
Zach
Spencer, 775-397-1199
[email protected]
Website:
http://www.generalmoly.com