Market Overview

General Moly Signs $125 Million Subordinated Debt Facility


General Moly (NYSE: GMO), a U.S.-based molybdenum mineral development, exploration and mining company, announced that the Company has signed a binding agreement with Hanlong (USA) Mining (“Hanlong”) to provide a $125 million subordinated debt facility supplementing a previously announced $665 million Chinese sourced term loan that is being negotiated with China Development Bank (“CDB”). The Company had previously announced a letter of intent related to this facility with Hanlong on August 1, 2012.

Bruce D. Hansen, Chief Executive Officer of General Moly, said, “The Company continues to receive tremendous support from Hanlong in funding the Mt. Hope Project, and we look forward to continuing our work with Hanlong in completing the senior term loan with China Development Bank. We are pleased to have completed this very important component of our Mt. Hope Project finance plan.”

The terms of the subordinated debt facility with Hanlong include the initial availability of $75 million (Tranche A) during the Mt. Hope Project's construction period. An additional $50 million (Tranche B) becomes available for the 6 month period post commercial production. The $125 million facility can be reduced to the extent equipment is leased. Consideration to Hanlong will include a fee of $6.25 million, payable upon closing of the CDB term loan or other financing of at least $8 million, plus warrants with a 2.5 year maturity to purchase ten million shares of our common stock. The warrants have been priced at a 15% premium to the past 10 day volume weighted average price (VWAP), which results in a warrant strike price of $4.23 per share. Both Tranche A & B, if drawn, will mature in 5 years from the Mt. Hope Project's achievement of commercial production and will have mandatory prepayments of 50% of the Company's free cash flow, after the senior CDB term loan's debt service. Advances under the subordinated debt facility are subject to a number of conditions precedent, including signing and funding of the CDB terms loan.

The Hanlong facility will be subordinated to the CDB term loan, with similar covenants to the CDB facility, and will have an interest rate

Posted-In: News Financing


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