NOTE 3 — MINING PROPERTIES, LAND AND WATER RIGHTS

We currently have interests in two mining properties that are the primary focus of our operations, the Mt. Hope Project and the Liberty Project. We also have certain other, non-core, mining properties that are being evaluated for future development or sale.

The Mt. Hope Project. We are currently in the process of developing the Mt. Hope Project, and have recently obtained all permits required for construction. In January 2014, the Company published an updated Technical Report on the Mt. Hope Project using Canadian Instrument NI 43-101 guidelines, which provided data on the viability and expected economics of the project. In early 2017, we re-examined the Mt. Hope proven and probable mineral reserves and updated the reserve and resource estimates using an $8.40/lb molybdenum (“Mo”) three-year backward average price. No further adjustments have been required.

The Company has also identified a potential high-grade, copper-silver exploration target along with a significant zinc mineralized area at the Mt. Hope Project site, southeast of the Mt. Hope Project’s molybdenum deposit in central Nevada (the “Cu-Ag Target”).

A high-intensity, ground-based Induced Polarization (“IP”) survey completed in February 2018 by Quantec Geoscience indicates a fairly continuous group of high chargeability anomalies that appear aligned with the recently identified Cu-Ag Target. These anomalies lie between 100 feet and 1,000-plus feet from the surface and trend northeast for over 1,000 feet. The IP survey indicates that the anomalies could continue further to the north-northeast and to the south where they appear to dip to the east.

To date the preliminary Cu-Ag Target exploration work was undertaken solely by General Moly. The Company has presented the promising findings to its 20% joint venture partner at the Mt. Hope Project, POS-Minerals. Any mining operation to exploit economic mineralization will require the approval of POS-Minerals.

Geological review of historic logs and core was completed by Mine Mappers, LLC of Tucson, Arizona to update the geologic interpretation of the skarn area. Mine Mappers reviewed the geologic interpretations in conjunction with the IP results and recommended a 10-hole, 9,400 foot drilling confirmation and exploration program.

In September 2018, the Company commenced a 10 hole drill program on the patented claims at the Mt. Hope Project. The drilling program is focused on copper-silver-zinc mineralized skarns and designed to confirm and extend the target defined by historical drilling as well as test for extensions of zinc mineralization horizons which were historically mined. The drill program is was completed in late 2018 and the Company concluded that this minzeralization may have economic potential but requires further drilling and analysis and may be best explored in conjunction with or after the molybdenum project is developed.

Liberty Project. We continue to evaluate opportunities at the Liberty Project as they arise. The Liberty Project remains largely in care and maintenance at this time. In July 2014, the Company published an updated NI 43-101 compliant pre-feasibility study, which more closely examined the use of existing infrastructure and the copper potential of the property.

In February 2017, Liberty Moly entered into a lease agreement with WK Mining Ltd. (“WK”) for the lease of water rights for the purpose of mining and milling. The term of the lease is six years which WK can extend for an additional four years. As compensation for the leased water rights, WK has issued $124,000 in common shares to Liberty Moly, consisting of $100,000 at signing of the agreement and shares equal to $12,000 in both its first and second annual installments, and is required to pay an annual fee on the anniversary date of the lease in either cash or WK common shares. The third installment (due February 2020) was paid in cash.

In December, 2019, Liberty Moly, LLC (“Liberty Moly”) entered into a lease agreement with SR Minerals, Inc. (SRM) for the lease of water rights for the purpose of mining and milling. The term of the lease is five years, after which SRM can extend annually for an additional five years. As compensation for the leased water rights, SRM has paid $16,000 in cash to Liberty Moly, and is required to pay an annual fee on the anniversary date of the lease in cash.

Liberty Moly continues to work with the Nevada Division of Environmental Protection (“NDEP”) to address environmental concerns with some Liberty Project facilities acquired with the property. We have implemented remedial treatment of the Liberty pit lake and developed and implemented procedures to manage process solutions draining from the pre-existing leach pad, as required by NDEP. We may be required to treat the pit lake again, and/or revise our systems to manage heap leach solution. At this time we are working with NDEP to reasonably estimate the scope and costs of addressing these issues.

Other Mining Properties. We also have mining claims and land purchased prior to 2006 which consist in part of (a) six patented mining claims known as the Chicago-London group, located near the town of Murray in Shoshone County, Idaho and (b) 34 unpatented mining claims in Marion County, Oregon, known as the Detroit property. The costs associated with these claims and properties are minimal and primarily relate to claim fees and property taxes. Historically, our efforts at these properties were minimal and consumed no significant financial resources. The total book value of these properties was approximately $0.1 million and the Company has retained production royalties of 1.5% of all net smelter returns on future production from two undeveloped properties in Skamania County, Washington and Josephine County, Oregon, which were sold in 2012 and 2013, respectively. The Chicago-London property ((a) above) was sold in January 2020.

Summary. The following is a summary of mining properties, land and water rights at March 31, 2020 and December 31, 2019 (in thousands):


	At		At
	March 31,		December 31,
	2020		2019
Mt. Hope Project:
Development costs	$	179,672	$	179,356
Mineral, land and water rights		23,396		23,423
Advance royalties		33,488		32,988
Total Mt. Hope Project		236,556		235,767
Total Liberty Project		8,289		8,370
Other Properties		0		0
Total	$	244,845	$	244,137

Development costs of $179.7 million as of March 31, 2020 include hydrology and drilling costs, expenditures to further the permitting process, capitalized salaries, project engineering costs, and other expenditures required to fully develop the Mt. Hope Project. Deposits on project property, plant and equipment of $88.0 million as of March 31, 2020 represent ongoing progress payments on equipment orders for the custom-built grinding and milling equipment, related electric mill drives, and other processing equipment that require the longest lead times.