A financially struggling molybdenum mineral exploration and development company took steps last week to sell a mine in Nevada as part of an effort to raise funds. Molybdenum is used as a friction modifier and to provide antiwear and extreme pressure protection in lubricants.
Lakewood, Colorado-based General Moly announced on Sept. 3 that it signed a binding letter of intent to sell its Liberty Moly LLC and assets that constitute the Liberty Project in southwestern Nevada to Pathfinder Minerals LLC. Pathfinder is a private, junior exploration and development company based in Reno.
Nevada-based Pathfinder paid $1 million in cash upon execution of the letter of intent. Upon execution of a definitive purchase agreement and transfer of title on or before Sept. 15, Pathfinder will make an additional $1 million payment. A third $1 million payment will be due to General Moly upon completion of commissioning of a production plant of any metal commodity on the property, which also has copper. General Moly will retain a 3% net smelter return royalty on molybdenum production from the property.
Wholly owned by General Moly, the Liberty Project is a molybdenum asset covering approximately 22 square miles, according to the company’s website. General Moly purchased the Liberty Project in 2006 and consolidated additional mineral claims on the site, effectively eliminating all third-party royalties, in 2007.
According to the company, molybdenum was mined on the property between 1981 and 1991, and copper production occurred there between 1995 and 2002. As a result, the company said, the site has considerable infrastructure, including a power supply, water rights, a water well systems, roads, tanks and other structures. The moly open pit at the site remains accessible.
While much of the plant area was reclaimed after the 2002 closure, General Moly said it continues other maintenance and reclamation work on the property. Although the website indicated the company expected to advance the Liberty Project to the feasibility stage depending on improved market conditions and business and financing priorities, it has since decided to sell the project as it struggles to find additional sources of funding.
General Moly cautioned in its Sept. 3 press release that the company still has a significant working capital deficit and that there remained substantial doubt about its ability to continue as a going concern. “As of the date of this news release, the company has no commitments for additional funding, and there can be no assurance that the company will be successful in obtaining the financing to complete the Mt. Hope Project, or in raising additional financing in the future on terms acceptable to the company, or at all,” the company said.
General Moly said an 80% interest in the Mt. Hope Project in central Nevada is its primary asset and that the site is considered one of the world’s largest and highest grade molybdenum deposits. General Moly’s stated goal is to become the largest primary molybdenum producer in the world.
Molybdenum is used primarily in the manufacture of steel alloys but also in a variety of chemical applications, ranging from antiwear and extreme pressure protection in lubricants to use as a catalyst in hydrocracking of petroleum fractions containing nitrogen, sulfur and oxygen. It is also used as an adhesive between enamels and metals.