ELKO — General Moly’s Mt. Hope Project has hit a financial bump in the road.
General Moly announced Wednesday it, was informed that legal counsel suspended work on the $665 million Chinese sourced term loan that is currently being negotiated with China Development Bank for the development of the Mt. Hope Project until further notice.
General Moly owns 80 percent of Mt. Hope, a molybdenum mine in development about 21 miles north of the town of Eureka.
This suspension of activities relates to media reports that Mr. Liu Han, chairman of Sichuan Hanlong Group has been detained by Chinese authorities. Hanlong or an affiliate is obligated to arrange and guarantee the term loan, throughout its life.
General Moly is seeking clarification from Hanlong as to the implications for the company and will advise the market should these inquiries render any relevant information.
“We have been making good progress negotiating the term loan and are disappointed that this work has been suspended until further clarification is received from Hanlong,” said General Moly CEO Bruce D. Hansen. “We hope to re-establish Term Loan negotiations with Hanlong and CDB in the near-term, but will concurrently assess other financing alternatives.”
The company began early construction on the Mt. Hope site after receiving its record of decision in December.
“This shouldn’t affect the pre-construction,” said Zach Spencer, General Moly director of external communications. “We will continue to work on learning more. We continue to move forward with the preliminary construction effort.”
Early construction activities are progressing as planned at the Mt. Hope Project site including cultural clearance, clearing and grubbing, wood harvesting, and the development of wells and water pipelines.
“We’re disappointed the work with Hanlong had to be suspended, and we’re hoping that work can continue,” Spencer said. “However, we have other very strong partners in the project such as POSCO.”
POSCO, one of the world’s largest steel producers based in Korea, owns 20 percent of Mt. Hope.