Mr. Bruce Hansen reports
GENERAL MOLY ANNOUNCES PRE-FEASIBILITY STUDY ON LIBERTY PROJECT INDICATING AN ESTIMATED NET PRESENT VALUE OF $538 MILLION
General Moly, Inc. has completed an updated prefeasibility study of its 100-per-cent-owned
Liberty project, which estimates production, capital and operating cost
parameters along with project economics. An NI 43-101-compliant report
containing further information on the Liberty project will be filed on
SEDAR.
Highlights of the prefeasibility study include:
-
Two project development scenarios including an optimized scenario (the
unconstrained model) that disturbs federal Bureau of Land Management
(BLM) land within the first year of development and a second
scenario (the constrained model) limiting disturbance to private
land for the initial three years of production. The goal of the
constrained model is to initiate operations and accelerate project
cash flow while allowing time to complete federal permitting;
-
After-tax, net present value of $538-million for the
unconstrained model, discounted at 8 per cent;
-
Internal rate of return of 19.7 per cent and capital payback of 3.8
years from initial production for the unconstrained model;
-
Anticipated molybdenum production of approximately 20 million pounds
per year and anticipated copper production of approximately 17 million
pounds per year on average over the first five years for the
unconstrained model;
-
Anticipated molybdenum cash costs, inclusive of copper byproduct
credits, of $5.71 per pound over the first five years for the
unconstrained model;
-
Anticipated average mill grades of 0.094 per cent molybdenum and 0.101 per cent copper
over the first five years for the unconstrained model;
-
598 million pounds of molybdenum and 534 million pounds copper
estimated to be produced over a 42-year mine life including 26 years
of primary mining and 16 years of low-grade production for the
unconstrained model;
-
Estimated initial capital expenditures of $556-million (in 2011
dollars), excluding working capital and bonding requirements for the
unconstrained model.
Bruce D. Hansen, chief executive officer, said: "I am very pleased with
the outcome of the Liberty prefeasibility study update. Our Liberty
project continues to represent a world-class moly property and one that
provides General Moly shareholders with a significant growth profile as
we continue to focus on building the world's largest publicly traded
primary moly company. While our immediate focus remains on finalizing
the Mt. Hope project's permitting and financing, our team will also
advance Liberty toward production.
"Although we used a $2.50-per-pound copper price assumption in our
resource and economic models, I should note that at current copper
prices near $3.50 per pound, operating costs at Liberty would be below
$5 per pound moly over the first five years of operations and the
project's NPV would increase to approximately $630-million, or $5.71 per
fully diluted share (including shares anticipated to be issued to
Hanlong), which is over 60 per cent higher than our current share price,
completely ignoring the $1.2-billion net present value of Mt. Hope."
The prefeasibility study was completed by M3 Engineering & Technology
Corp. with supporting work from Independent Mining Consultants (IMC).
Molybdenum and copper production rates
Based on the unconstrained model, the Liberty project is anticipated to
produce an average of 20.4 million pounds of moly and 16.7 million
pounds of copper over the initial five years of operations and 18.7
million pounds of moly and 17.2 million pounds of copper over the first
10 years of operations.
Unconstrained scenario 5 years 10 years 20 years LOM
Average Mo mill grade (%) 0.094 0.087 0.085 0.068
Average Cu mill grade (%) 0.101 0.103 0.102 0.077
Mill Mo recovery (%) 82.9 82.4 83.8 78.8
Mill Cu recovery (%) 66.7 66.7 66.7 66.7
Roaster Mo recovery (%) 99.2 99.2 99.2 99.2
Molybdenum (million lb) 20.4 18.7 18.8 14.2
Copper (million lb) 16.7 17.2 17.1 12.7
Constrained scenario
Average Mo mill grade (%) 0.086 0.084 0.083 0.068
Average Cu mill grade (%) 0.101 0.090 0.103 0.077
Mill Mo recovery (%) 78.1 80.5 82.9 78.9
Mill Cu recovery (%) 66.7 66.7 66.7 66.7
Molybdenum (million lb) 17.8 17.8 18.2 14.2
Copper (million lb) 16.8 15.1 17.4 12.7
Project economics
Baseline project economics for both scenarios were calculated using $15-per-pound molybdenum and $2.50-per-pound copper prices.
The Liberty project remains more sensitive to changes in moly prices
than to changes in copper prices.
UNCONSTRAINED AND CONSTRAINED MODEL
(in millions of U.S. dollars at an 8-per-cent discount rate)
Moly prices
$10.00 $12.50 $15.00 $17.50 $20.00
Unconstrained
model
Copper prices $1.50 ($118) $169 $442 $710 $973
$2.00 ($65) $218 $490 $758 $1,019
$2.50 ($12) $267 $538 $805 $1,065
$3.00 $40 $316 $586 $851 $1,019
$3.50 $91 $365 $634 $897 $1,154
Constrained
model
Copper prices $1.50 ($170) $114 $384 $639 $891
$2.00 ($118) $164 $430 $684 $936
$2.50 ($67) $212 $476 $729 $980
$3.00 ($15) $260 $521 $773 $1,024
$3.50 $36 $307 $565 $817 $1,068
Capital and operating costs
Constructing the Liberty project is anticipated to cost approximately
$556-million (2011 dollars) for the unconstrained model and $573-million
for the constrained mode. Other indirect capital costs include working
capital requirements, reclamation bonding requirements of approximately
$14-million, and $6-million payment due to the Liberty property's
previous owner upon commencement of mining operations. Capital costs
have increased from the April, 2008, prefeasibility study primarily as a
result of industry cost inflation. The entire difference in capital
estimates between the two models relates to increased preproduction
stripping in the constrained model to stay within the private land
boundary.
Mine equipment $104,018
Plant 252,687
Roaster 41,857
EPCM 46,138
Contingency 55,701
Preproduction stripping 33,487
Owners' cost 39,476
--------
Subtotal 573,363
Final property purchase 6,000
Reclamation bond 13,691
Prepaid power 8,000
--------
Total $601,054
========
The capital estimate contains nearly $57-million (including a proportion
of contingency, EPCM and owners' cost) for the construction of a
molybdenum roaster capable of roasting 23 million pounds annually.
As with Mt. Hope, constructing a roasting facility
rather than toll roasting the molybdenum concentrate is anticipated to
be an NPV positive investment, but the company will make a final
investment decision based on the evaluation of future market conditions
and toll roasting availability and costs.
Sustaining capital for the Liberty project is anticipated to be $309-million over the life of the mine, primarily reflecting mining equipment
replacement and continuing tailings dam expansions.
Total cash costs for the unconstrained model are anticipated to average
$5.71 per pound and $6.05 per pound over the first five and 10 years of
operations, respectively, net of byproduct credits. For the constrained
model, cash costs are anticipated to average $6.65 per pound and $6.74
per pound over the first five and 10 years of operations, respectively, net
of byproduct credits.
5 years 10 years 20 years LOM
Unconstrained model ($/lb)
Mining cost $3.00 $3.18 $3.07 $2.74
Milling cost 3.43 3.74 3.73 4.83
Roasting cost 0.42 0.42 0.42 0.42
Laboratory cost 0.07 0.08 0.08 0.11
Copper TCRCs 0.29 0.33 0.32 0.32
Mine G&A 0.55 0.60 0.60 0.70
Copper credit (2.05) (2.29) (2.28) (2.24)
Total cash cost 5.71 6.05 6.05 6.98
Constrained model ($/lb)
Mining cost 3.61 3.49 3.12 2.72
Milling cost 3.92 3.94 3.85 4.83
Roasting cost 0.42 0.42 0.42 0.42
Laboratory cost 0.08 0.08 0.08 0.11
Copper TCRCs 0.34 0.30 0.34 0.32
Mine G&A 0.63 0.63 0.62 0.70
Copper credit (2.36) (2.12) (2.39) (2.23)
Total cash cost 6.65 6.74 6.15 6.96
ANTICIPATED MINING COSTS ON A PER-TON ORE BASIS
5 years 10 years 20 years LOM
Unconstrained model ($/st ore)
Mining cost $ 4.73 $ 4.55 $4.39 $3.02
Milling cost 5.39 5.36 5.34 5.33
Roasting cost 0.66 0.60 0.60 0.46
Laboratory cost 0.12 0.11 0.11 0.12
Copper TCRCs 0.46 0.47 0.46 0.35
Mine G&A 0.86 0.86 0.85 0.78
Copper credit (1.68) (2.11) (2.07) (2.00)
Total cost per ton ore 10.54 9.84 9.69 8.06
Constrained model ($/st ore)
Mining cost 4.97 4.74 4.33 3.00
Milling cost 5.39 5.36 5.34 5.33
Roasting cost 0.58 0.57 0.58 0.46
Laboratory cost 0.12 0.11 0.11 0.12
Copper TCRCs 0.46 0.41 0.47 0.35
Mine G&A 0.86 0.86 0.85 0.78
Copper credit (2.22) (1.80) (2.28) (2.00)
Total cost per ton ore 10.15 10.26 9.40 8.05
Mineral reserves and resources
In accordance with National Instrument 43-101 -- Standards of
Disclosure for Mineral Projects of the Canadian Securities
Administrators, the company has delineated proven and probable reserves
and indicated mineral resources. Liberty's reserves and resources, as
determined in accordance with National Instrument 43-101, are
illustrated in the mineral reserves tables. These tables reflect immaterial changes
to the mineral reserves announced by the company in October, 2011, based
on further refinement of the consultant's model.
MINERAL RESERVES, NI 43-101 DEFINITIONS
Category Ktons Total Mo grade Total Cu grade Lb moly contained Lb Cu contained
(%) (%) (millions) (millions)
Proven 136,308 0.090 0.06 245 164
Probable 405,122 0.061 0.09 494 729
Proven and
probable 541,430 0.068 0.08 739 893
MINERAL RESOURCES, NI 43-101 DEFINITIONS,
MINERAL RESOURCES CONTAIN THE ABOVE MINERAL RESERVES
Category Ktons Total Mo grade Total Cu grade Lb moly contained Lb Cu contained
(%) (%) (millions) (millions)
Measured 139,519 0.090 0.06 251.1 167.4
Indicated 507,105 0.059 0.08 598.4 811.4
Measured and
indicated 646,624 0.066 0.08 849.5 978.8
Inferred 252,647 0.040 0.13 202.1 656.9
John Marek, president of Independent Mining Consultants, from Tucson,
Ariz., and a registered professional engineer (Arizona and Colorado),
is the qualified person responsible for resource modelling and mine
planning pertaining to the Liberty project, and has reviewed the
applicable scientific and technical information set out in this news
release. M3 Engineering & Technology Corp. is the primary author of the
NI 43-101 report and has reviewed this news release.
About the Liberty project
The Liberty project has significant infrastructure already in place,
including a truck shop, offices, tailings dam and an open pit. The site
is accessed through paved roads, has fully permitted water rights and
sits adjacent to utility power. The previous mining operations, by
Anaconda and Cyprus, provide significant operating history used to
validate mining and metallurgical performance. The site is largely on
privately held ground, has no royalties, and as such provides an
opportunity for initial permitting under Nevada State agencies,
potentially avoiding more lengthy federal upfront permitting. Federal
permits will be required to fully exploit the mineral potential due to
BLM holdings near the open pit and stockpiles.
Baseline environmental studies are currently in progress to prepare
permit applications under either Nevada State or federal permitting
regulations. This early initiation of baseline studies allows for
economic optimization under two mine alternative development scenarios
considered in the study. The State permitting option allows for sooner
development of the project but higher initial capital and operating
costs. This flexibility creates a project that can be timed to take
advantage of market conditions.
We seek Safe Harbor.
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