Bruce Hansen has been racking up the frequent flyer miles in recent months as he scrambles to secure funding for a massive molybdenum mine in Eureka County.
Hansen, chief executive officer of General Moly, a company based at Lakewood, Colo., has made three trips to China since April after the chairman of General Moly’s primary investor, Liu Han of Sichuan Hanlong Group, was detained by police in Beijing. Han’s arrest stalled a $665 million financing deal through China Development Bank that General Moly had been banking on to fund its billion-dollar Mt. Hope molybdenum mine.
General Moly said last week that it terminated all agreements with Hanlong, which provided $10 million in funding to General Moly in March of 2010. Repayment of that loan was negated by a $10 million breakup fee, Hansen says.
“Ever since we had the issue with Hanlong and the detainment of their founder, our discussions with China Development Bank were suspended. Subsequently, we have been pursuing other opportunities within China because China Development Bank indicated that if we could get another Chinese strategic partner they would re-engage in terms of providing the loan.”
Initial construction at Mt. Hope already has begun. More than 1,800 acres had been cleared and grubbed, and preliminary infrastructure such as water lines and ponds has been installed.
General Moly may face an uphill battle securing financing for Mt. Hope. A number of Chinese-based entities continue to look at the project, Hansen says, but potential investment in the project is hampered by low molybdenum prices and a sagging global steel industry. Molybdenum is used predominately as an alloy in speciality steel products.
“This is going to take some time,” Hansen says.
General Moly also is pursuing domestic financing options through investment banks and project investment firms.
“We are looking at virtually every kind of conceivable finance option that could be available to us and evaluating those from the standpoint of what provides maximum shareholder value,” he says.
General Moly ended the second quarter June 30 with $35 million in unrestricted cash and $36 million in restricted cash at the joint-venture level. It has delayed further development at the Mt. Hope site to maintain its cash position.
“We are continuing to focus on reducing our costs while focusing on maintaining our team,” Hansen says. “We have taken actions to reduce our spend level in terms of reducing activity at the site to a minimal level. But things could turn and we could be back in the ground restarting post a financing solution.”
Development costs at Mt. Hope are estimated to be roughly $1.27 billion, of which about $255 million already has been invested. General Moly seeks upwards of $800 million in project financing, with its joint-venture partner, POSCO, providing the rest of the nearly $1 billion remaining project costs.
NNBW staff
