This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

General Moly Breaks Ground At Mount Hope

One challenge facing all moly miners is the metal's recent price decline. Molybdenum oxide has pulled back from $14 a pound a year ago to around $11.50 today, according to data from Metal-Pages.

General, for its part, is taking the long view. “We view Mount Hope as a long-term asset,” said Kozak. "Molybdenum prices have pulled back recently, but it's important to keep in mind that this project has a 44-year life. Over the long term, we believe demand for high-grade steels will be robust and prices will improve. The characteristics moly provides, especially strength and corrosion resistance, remain essential for high-demand products like pipelines; desalinization plants; high-strength, low-weight steels increasingly used in automobiles; and aircraft parts, such as jet engines.”

He added, “emerging markets such as China, but also including India, Brazil and others, are moving up the steel production value curve. Transitioning to the production of higher-grade, moly-based steels will accelerate as they develop.”

Another plus for General is that the company has already sold the first five years of Mount Hope's production at a floor price that's above current moly prices, according to Kozak.

Cost containment remains crucial

In August 2012, the company reported that Mount Hope's capital cost estimate had risen 11 percent over its 2008 estimate, or $130 million in total. The largest increase was in owners' cost, which jumped 48 percent, or $82 million, largely due to permitting delays and higher permitting costs. Mining equipment costs rose 12 percent, while construction, material and plant facility costs increased 11 percent, largely due to higher construction labor costs and prices for specialized processing equipment.

In October, General signed a $125-million subordinated debt facility with Hanlong (USA) Mining Investment, a subsidiary of Sichuan Hanlong Group of China, which General expects will meet the higher funding requirements.

“We remain laser-focused on managing costs,” said Kozak. “One advantage the Mount Hope project maintains is that it doesn't require many of the expensive add ons that often lead to cost blowouts. There is a big pool of experienced miners in the region, so we don't need a fly-in/fly-out workforce. Also, Mount Hope has access to water and power. We have good transportation links, including a two-lane highway a few miles from the mine and rail service in the vicinity that links all the way to the Port of Oakland.”

2 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,288.81 -91.60 -0.56%
S&P 500 1,888.51 +1.75 0.09%
NASDAQ 4,271.38 +12.9420 0.30%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs