General Moly - Dare to CompareIts a bit of sad read, as LWC will likely never touch this, and with only 73 million shares and 1.3 billion lbs of 0.103% low cost moly, it was only trading in the mid $2 range until major Chinese investment was announced on Friday, which caused it to jump 50%.
I sincerely hope LWC gets its act together... I am happy to see a new man at the top, but I hope he is not too closely aligned with the previous... Time for fresh thinking... I am, however, losing faith in the
currentLWC story... It might be time for something new.
Regards,
B.
General Moly has two significant primary molybdenum assets located in central Nevada: the Mt. Hope project and the Liberty project. When both these properties are in production, General Moly expects to be producing an estimated 50 million pounds of moly annually. With expected production costs well below many other projected primary moly mines, General Moly is positioned to become the world's largest primary moly producer.
Mt. Hope
The Mount Hope project, located in Eureka County, Nevada, is General Moly's primary moly property. The site contains 1.3 billion pounds of proven and probable molybdenum reserves.
Based on a Bankable Feasibility Study (BFS) completed in August 2007 and an update completed in September 2008, planned production from Mt. Hope will average approximately 40 million pounds annually for the first five years. Total mine life is projected at 44 years, with 32 years of open pit mining and processing, followed by 12 years of processing lower grade stockpiled ore. For the first five years, processed ore grades are expected to average 0.103% molybdenum. At approximately $80 per barrel oil-equivalent energy costs, direct operating costs at Mt. Hope are anticipated to be $5.29 per pound. At those energy costs and utilizing a flat $15 per pound moly price, the Company's equity after-tax Net Present Value (NPV) of the Mt. Hope project, discounted at 8%, is approximately $1.028 billion, or $14.19 per outstanding share.
Permitting, engineering and development work is well underway for the Mt. Hope project. We have ordered our long-lead milling equipment and expect to receive all our permits and to begin construction by Q3 2010. The Company estimates that production at Mt. Hope can begin approximately 20 months following the initiation of construction and the completion of financing.
General Moly owns an 80% interest in Mt. Hope, following the finalization of a joint venture agreement with POSCO, a Korean steel company and the world's third largest steel producer, in February 2008. The joint venture interest lowers General Moly's capital expenditure requirements by 20%, provides the Company with up to $156 million in proceeds, and provides General Moly with the endorsement and vested interest of a major steel company. Once Mt. Hope is in production, POSCO will take a 20% share of production and fund 20% of the mine's operating costs.
We have also signed off-take agreements with three major moly industry participants. These five-year agreements that commence once Mt. Hope begins production will provide General Moly with ready customers and moly price protection in the form of hard floor prices between $11-$13 per pound.
Mt. Hope's high grades and low production costs should yield favorable project economics and shareholder returns.
Liberty Project
The Liberty project, formerly named Hall-Tonopah, is located in Nye County, Nevada. The property is wholly owned by General Moly. The Company purchased all outstanding royalties in February 2007. Liberty contains a previously-mined molybdenum and copper deposit, and includes a pit that is open and accessible.
Based on a Pre-Feasibility Study completed in April 2008, life-of-mine production is projected to be 503 million pounds of molybdenum. Production of moly for the first five years is anticipated at 19 million pounds per year, with average ore grades of 0.091%. In addition, the site will produce 18 million pounds of copper annually over the first five years. The 33-year projected mine life includes 24 years of primary production followed by 10 years of low-grade stockpile production.
Project economics include an after-tax Net Present Value (NPV) of $514 million discounted at 8% ($356 million discounted at 10%) and an Internal Rate of Return (IRR) of 22%, with capital payback of 3.5 years from initial production, based on the pre-feasibility completed in April 2007.
The Liberty project is expected to become our second molybdenum operation, after the completion of the Mt. Hope project, with initial production dependant on market conditions.