General Moly reported that it has established a significant investment and strategic relationship with Hanlong (USA) Mining Investment Inc., a wholly-owned subsidiary of Sichuan Hanlong Group (Hanlong) of China. Investment resulting from the relationship is expected to provide full project funding for General Moly’s 80%-owned Mt. Hope molybdenum pro-
ject in Eureka County, Nevada.

Highlights of the agreement include a $665-million bank loan from a prime Chinese bank to be procured and guaranteed by Hanlong at an anticipated rate of Libor plus 2% to 4%; an $80-million equity investment by Hanlong in General Moly through the purchase of 25% of the company’s fully diluted shares, partially contingent upon completion of the $665-million bank loan; a $20-million bridge loan to assist in restarting Mt. Hope project development, repayable from the proceeds of the bank loan; and a long-term molybdenum supply off-take agreement for Hanlong from Mt. Hope production.

General Moly CEO Bruce D. Hansen said, “We believe this transaction positions General Moly to reach its strategic goal of being the world’s largest publicly listed pure-play moly producer, with ultimate targeted production of approximately 50 million lb/y.”

The Mt. Hope project has 1.3 billion lb of proven and probable molybdenum reserves. Based on a bankable feasibility study completed in August 2007 and an update completed in September 2008, planned production will average approximately 40 million lb/y for the first five years of operation. Total mine life is projected at 44 years, with 32 years of open-pit mining and processing, followed by 12 years of processing lower-grade stockpiled ore.

Project development at Mt. Hope was paused in March 2009 to conserve cash. The bridge loan from Hanlong will be utilized to fund certain project restart costs, including engineering and equipment procurement efforts, as permitting is advanced.

General Moly currently expects the Bureau of Land Management (BLM) to complete an administrative Draft Environmental Impact Statement for Mt. Hope mid-year 2010 and to receive its Record of Decision late in the fourth quarter of 2010 or early in the first quarter of 2011. The two final outstanding technical reports related to regional hydrology and pit lake geochemistry were completed and submitted to the BLM in late October and early November 2009, and General Moly is working to address comments on these reports received from the BLM in late 2009. The company believes the studies confirm the Mt. Hope project will have minimal long-term impact to local ground water.

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