Before bonding and pre-paid items the capital cost estimate increased by $176 million or 17%. The reclamation bonding requirement grew by $10 million to a forecasted $75 million, representing a 15% increase, offset by an estimate that $56 million of the bonding requirement can now be funded through a surety arrangement, based on advanced discussions with surety providers.The anticipated capital requirements for the Mt. Hope Project are divided into cost categories in the following table:
|Mt. Hope Project Capital Requirements|
|Construction, materials & plant facilities||523||582|
|Owners cost, pre-stripping, camp||169||251|
|Taxes, freight, commissioning spares||68||74|
|Equipment Suspension costs||-||11|
|Bonding and pre-paid items||115||69|
|Total Capital Requirement||$1,154||$1,284|
The Hanlong facility will be subordinated to the CDB term loan, with similar covenants to the CDB facility, and will have an interest rate of LIBOR +4%.As announced on February 16, 2012, CDB has confirmed the basic terms underlying a proposed $665 million term loan to finance the Mt. Hope Project, including a CDB intention to lend $399 million and arrange a consortium of Chinese and international banks to fund the remaining balance. The term loan is anticipated to carry a maturity of 12 years including a 30 month grace period to allow for the construction of the Mt. Hope Project. The interest rate will remain subject to market conditions and Chinese government policy until loan documentation is completed later this year. The Company and Hanlong are continuing to work with CDB with a target of having the term loan completed, approved and available to the Company shortly after receipt of the Mt. Hope Project’s operating permits. Once the CDB term loan is in place and required permits are received, the Company intends to close on Hanlong’s Tranche 2 equity purchase for $40 million, bringing Hanlong’s share position in the Company to 25% on a fully-diluted basis prior to the warrants referred to above. When final permits are received, POS-Minerals Corporation (a 20% owner of the Mt. Hope Project) is anticipated to fund its final $56 million initial contribution, plus 20% of all costs the Company has spent on the Mt. Hope Project to date. The Company estimates this combined payment will be approximately $100 million. Thereafter, the Mt. Hope Project will be funded 80% by the Company and 20% by POS-Minerals Corporation. Bruce D. Hansen, Chief Executive Officer of General Moly, said “I am very pleased that the Mt. Hope Project has not seen the type of extraordinary escalation in its capital estimate as other projects have recently realized. Although an 11% increase is not an insignificant amount, we have benefited by the advanced engineering and scope definition for the Mt. Hope Project, and the fact that the 2008 estimate was completed pre-financial crisis, along with the previously purchased or contracted major long lead items that have not been subject to significant price escalation.
“We will continue to review our capital estimate as we approach construction which remains on track following receipt of the final permits anticipated by the end of the year.” Hansen continued, “General Moly continues to receive tremendous support from Hanlong in funding the project, and we look forward to closing this facility with Hanlong and completing the senior loan with China Development Bank.”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. Our 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 our second molybdenum property, the Liberty project that is also located in central Nevada, our goal is to become the largest primary molybdenum producer by the middle of the decade. For more information on the Company, please visit our website at http://www.generalmoly.com. 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 required permits to commence production and its ability to raise required financing, adverse governmental regulation and judicial outcomes. The closing of the Hanlong equity purchase transaction is subject to a number of conditions precedent that may not be fulfilled. The bank financing and subordinated loans are subject to final negotiation and satisfaction of conditions precedent. 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.