General Moly, Inc. (the "Company") (NYSE MKT and TSX: GMO), a U.S.-based molybdenum mineral development, exploration and mining company, announced that the Company and Hanlong (USA) Mining Investment, Inc. (“Hanlong”) have terminated the parties’ Securities Purchase Agreement (“Purchase Agreement”). In addition, a related stockholder agreement with Hanlong terminated by its terms. The Purchase Agreement, entered into in March, 2010, provided the opportunity for Hanlong to purchase the Company’s stock in two $40 million tranches. The first $40 million tranche stock purchase of 11.9 million shares was completed in December, 2010. A condition precedent for Hanlong to make the second $40 million tranche stock purchase was the obligation to deliver a $665 million Bank Loan to fund the construction of the Company’s portion of the Mt. Hope Project through a Chinese bank. The Bank Loan was to be made available for initial drawdown within the time period of nine months following the Company obtaining the Record of Decision (“ROD”) for the Mt. Hope Project from the U.S. Bureau of Land Management. The ROD was obtained on November 16, 2012; therefore the Bank Loan availability was due August 16, 2013.
Bruce D. Hansen, Chief Executive Officer of General Moly, said, “While we are disappointed that we will not complete this transaction, it is in our shareholders’ best interests to terminate the agreements with Hanlong. We are focusing all our efforts on discussions with other parties that have expressed interest in advancing the full financing for the Mt. Hope Project.”
Mr. Hansen added, “We believe that the fully permitted and construction ready Project is significantly more advanced today than when the Hanlong agreement was reached in 2010, and we are actively engaging with other potential strategic partners both in and outside of China to develop Mt. Hope."
Under the separate Bridge Loan Agreement with Hanlong also entered into in March, 2010, Hanlong provided up to a $20 million loan to the Company available in two equal tranches. The first $10 million tranche was drawn in March, 2010 – and the second tranche, which was never drawn, was cancelled by agreement of the parties in March, 2013. In accordance with the Bridge Loan Agreement the parties intend to offset the Company’s obligation to repay the $10 million first tranche against Hanlong’s obligation to pay the $10 million break fee.