General Moly Inc. is awaiting higher molybdenum prices and financing to start the long-brewing Mt. Hope mining and production operation in Eureka County and is optimistic the moly prices will go up.
“We’ve had a lot of patience here. We think Mt. Hope is a world-class asset,” said General Moly Chief Executive Officer Bruce Hansen. “It’s the best undeveloped moly deposit. It’s fully permitted and shovel-ready.”
The Mt. Hope site is about 21 miles north of the town of Eureka.
The U.S. Bureau of Land Management issued the record of decision permitting the Mt. Hope mining operation in September 2019, and the state issued water permits last year, too, in July.
Hansen said once the price is higher and funds are in place, Mt. Hope can be up and running with more than 400 “high-paying jobs, and it will be a great boost to the state.”
The latest projections from the metals research, econometrics and consulting CPM Group show that molybdenum prices may be headed higher, with an expected supply shortfall over 2020-2024, with the largest supply deficit in 2021 and 2022.
CPM recently forecast a more than 30% increase in moly prices that would put the average price at more than $12.50 a pound this year and more than $13.50 per pound in 2021, prices that could make Mt. Hope construction possible. CPM also projects an average real price of $13.88 per pound and a nominal price of $17.02 for the years 2026-2030.
The price was in the range of $9.60 per pound on Jan. 21 but continually fluctuates.
“We think it’s encouraging,” Hansen said during a telephone interview. “It’s all about the price environment. We think it’s sustainable above $12.”
Projections are for 44 years of mine life and close to 40 million pounds of production per year. Hansen said once it is fully operational, Mt. Hope will be better able to weather the ups and downs of the molybdenum price. The direct operational cost is slightly less than $7 a pound, he said.
“The company plans to operate in a safe and environmental manner. It won’t use cyanide, the tailings will be relatively benign, and it will be a great asset for generations,” said Hansen.
The moly price was better when mining at Mt. Hope was first proposed. General Moly filed its plan of operations for Mt. Hope with the BLM in 2006.
The price was in excess of $30 per pound in 2004 into 2008, but when the stock market fell and the economy sunk in 2008, the price plunged below $10 per pound, Hansen said.
“It ultimately rebounded to $17-$18 a pound, and then it went down again and recovered in late 2014-early 2015 to $15,” before falling again, he said.
The Mt. Hope project didn’t develop when hoped because of the moly price and other factors, such as battles over water rights and protests over the years filed by Great Basin Resource Watch and the Western Shoshone Defense Project.
The most recent action was when Great Basin Resource Watch and the Western Shoshone Defense Project filed a complaint in the U.S. District Court in Reno against the U.S. Department of Interior and the BLM asking for an immediate injunction against developing Mt. Hope.
The complaint was originally filed Oct. 31, 2019, and the two organizations filed an amended complaint on Dec. 17, 2019, to add Progressive Leadership Alliance of Nevada as a plaintiff.
They claim the agencies violated the National Environmental Protection Act and the Federal Land Policy and Management Act. They say the BLM’s 2019 record of decision for Mt. Hope failed to meet the requirements of federal law and didn’t comply with an earlier appeals court ruling.
Hansen said General Moly “looks forward to defending the work done by the BLM.” He said General Moly hasn’t filed as an intervenor but would be available to help the BLM.
Still, Mt. Hope construction can start while a legal battle is in progress, and the mine can operate while any additional analysis is underway, he said.
The BLM’s 2019 record of decision on Mt. Hope followed completion of a supplemental EIS that BLM completed after a ruling by the 9th Circuit Court of Appeals in earlier legal protests by Great Basin Resource Watch and the Western Shoshone Defense Project.
The circuit court in December 2016 vacated the BLM’s November 2012 record of decision approving the Mt. Hope mining project, after the U.S. District Court in Nevada upheld the BLM’s record of decision in August 2014.
The court’s decision was over BLM findings on air quality, and the supplemental EIS looked at those issues.
“We think the BLM did extremely well addressing the issues that came out of the Court of Appeals in 2017,” Hansen said.
Mt. Hope also received approval from the state engineer in 2019 after the Nevada Environmental Commission rejected an appeal over a water pollution control permit.
One of the concerns aired at that commission meeting came from Glenn Miller, a retired University of Nevada, Reno, environmental sciences professor who raised concerns about acid drainage into the pit lake that would form after mining ends. The Nevada Department of Environmental Protection disagreed that Mt. Hope posed a threat to groundwater.
General Moly had reached a settlement in 2019 with ranchers in Kobeh Valley who protested water rights. The initial payment from General Moly was $1 million into a trust account pending the state engineer’s release of water permits.
There were earlier water battles, including from Eureka County, but the natural resources manager for the county, Jake Tibbitts, said on Jan. 30 that “from the perspective of Eureka County, we are satisfied with the effort of General Moly to work with us and the ranchers and farmers that formally protested on resolving water protests.
“Eureka County always supports any mining done right and looks forward to continuing a good working relationship with General Moly should that project get off the ground. There are a lot of moving pieces we have to work through if the project moves ahead, including water monitoring, management and mitigation, housing, bolstering local services like education, law enforcement, emergency response etc.,” he wrote in an email.
“There are a lot of unknowns, but we believe General Moly will work hard with us to make sure any adverse impacts are minimized,” Tibbitts said.
From a community perspective, he said many are strongly supportive of Mt. Hope, but many in the ranching, farming and outdoors businesses “have mixed feelings and some concern.”
Once construction begins, General Moly expects the work to take 30 to 36 months to complete, and there could be 900 people employed during the construction period, according to Hansen.
General Moly is continuing the efforts to obtain financing for its 80% share of Mt. Hope. The 20% owner of Mt. Hope is POS-Minerals Corp., a subsidiary of POSCO of South Korea.
Amer International Group Co. Ltd. has a $4.3 million placement with General Moly out of $10 million earlier pledged, but Amer and General Moly came to a resolution that makes Amer General Moly’s largest shareholder and requires a commitment from Amer to help secure up to $700 million in financing with Chinese banks for Mt. Hope.
“It’s a commitment to work together to source financing,” Hansen said.
Amer also has the option after $100 million in financing obtained through its efforts to enter into a moly supply agreement and receive a small discount on moly production.
China produces almost 50% of the world’s steel and about 32% of the world’s moly, so China must use moly from other countries to meet its steel demands, he said.
According to a Jan. 21 news release from General Moly, Rio Tinto’s Brigham Canyon copper mine at Salt Lake City also produces moly, as do Grupo Mexico mines and mines in Chile.
The only molybdenum production in Nevada now is the intermittent production at the Robinson Mine near Ely. Hansen said Robinson has the capacity for 1 million to 1.5 million pounds of moly.
“They turn it off and on depending on the ore grades and moly prices,” he said about Robinson.
While patiently waiting for construction at Mt. Hope, General Moly has a small office in Lakewood, Colo., an office in Elko and a couple of technicians at the company’s Liberty property in Nye County. Hansen said there are 12 people, including himself. The company also uses contractors.
General Moly still owns the Liberty property near Tonopah that is on care and maintenance and the storage site for mill equipment that will be used at Mt. Hope. The moly deposit at Liberty is half the size of Mt. Hope’s, and Hansen said he sees Liberty as a follow up to Mt. Hope.
General Moly hasn’t permitted Liberty for moly mining, but most of it is on private land. Permitting at first would be through the state, and an EIS with the BLM would be needed before expansion.
Liberty, which is in Nye County, was a copper mine, first developed by Anaconda in the late 1970s and later acquired by Cypress Minerals, which shut it down. Equatorial Minerals then bought the site, and General Moly acquired it in 2006-2007 as a 100%-owned property.
“It requires relatively low expenditures, about a half million dollars a year,” Hansen said. “It’s under a reclamation and closure permit.”
Liberty still has a truck shop, warehouse, office building, electricity and wells, but the copper processing facilities were removed and sold. General Moly stores ore cores from Mt. Hope at Liberty, along with $90 million in equipment for Mt. Hope.
General Moly also “spent some money and time” in 2018 focused on exploring a series of skarn deposits to the southeast of the main moly body at Mt. Hope, looking for silver, copper and zinc.
“We had good success expanding zinc and found a fair amount of silver, but not at the level to do a preliminary economic assessment,” Hansen said.
He said the deposits of minerals other than moly have value, but he believes the true value would be to mine that area concurrent to mining for moly or after the main body of moly is mined. With the infrastructure in place “there is good upside. It’s an asset.”
The Mt. Hope site covers roughly 12 square miles.
Hansen said moly is important to the steel industry, especially specialty steels.
“Virtually any steel in oil and gas has some degree of moly.”
Molybdenum is primarily used as an alloy agent in steel manufacturing. Moly enhances steel’s strength and inhibits corrosion in the oil and gas sector and is used for desalination plants. Moly is used in catalysts, especially for cleaner burning fuels by the removal of sulfur from liquid fuels.
A little history
General Moly began efforts to permit Mt. Hope years ago, filing a plan of operations with the BLM in 2006. The company also acquired water rights in 2006 and 2007 in Kobeh Valley in anticipation of developing Mt. Hope, which was expected to use 7,000 gallons per minute during mining operations but recycle the water used in milling.
The company held community meetings at the Eureka Opera House in 2011 and 2012 to update residents about the proposed project, which General Moly then expected to start soon.
U.S. Bureau of Land Management’s Battle Mountain District held open houses on the draft EIS in February 2012, and received more than 300 comments, mostly in support of the Mt. Hope Project. At that time, the BLM expected to release the final EIS and record of decision by the end of 2012, according to the spring 2012 edition of the Mining Quarterly.
In 2013, the company reported progress with initial activities at Mt. Hope and had hopes of starting construction in the summer of that year, according to summer 2013 Mining Quarterly.
General Moly suffered a setback that year, however, when the Chinese Development Bank suspended work on a $665 million loan.
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