LAKEWOOD, Colo.--(BUSINESS WIRE)--
General Moly, Inc. (the "Company") (NYSE MKT and TSX: GMO), a U.S.-based molybdenum mineral development, exploration and mining company, announced its unaudited financial results for the first quarter ended March 31, 2013. Net loss for the three months ended March 31, 2013 was $3.0 million ($0.03 per share), compared to a loss of $3.2 million ($0.03 per share) for the year ago period.
Excluding restricted cash, the Company’s cash balance at March 31, 2013 was approximately $57 million compared to $68 million at December 31, 2012. During the first quarter, cash use of $16 million was the result of Mt. Hope Project development, engineering, and procurement costs as well as general and administrative expenses partially offset by the receipt of $5 million in contribution payments from POS-Minerals Corporation. In December, the Company and POS-Minerals, as members of Eureka Moly, LLC (“EMLLC”), agreed to hold $36 million of the approximately $100 million received from POS-Minerals’ December 2012 contributions in a reserve account to maintain additional liquidity until the Company arranges full project financing.
In a previous project financing update, the Company reported that on March 20, 2013, the Company was notified that China Development Bank had provided instructions to its legal counsel to suspend work on the $665 million Term Loan. This suspension relates to reports that Mr. Liu Han, Chairman of Sichuan Hanlong Group has been detained by Chinese authorities. The Company is continuing efforts with Hanlong (USA) Mining (“Hanlong”) to secure another strategic partner to help advance the full financing of the Mt. Hope Project.
Bruce D. Hansen, Chief Executive Officer of General Moly, said "The Company made substantial progress with regards to our preliminary construction activities at Mt. Hope during the first quarter including early well field development, clearing and grubbing of terrain and cultural clearance.”
Mr. Hansen added, “We are working with Hanlong to secure another Chinese strategic partner to help advance the full financing of the Mt. Hope Project and reinvigorate advanced stage loan negotiations with China Development Bank. Our efforts to secure such a strategic partner are enhanced, given that we are advancing a fully permitted, construction-ready, high grade / lower cost molybdenum deposit along with our EMLLC partner POS-Minerals.”
Mr. Hansen concluded, “As we continue our efforts towards full financing at Mt. Hope, the Company will continue to prudently manage our unrestricted cash position of $57 million at the end of the first quarter with an additional $36 million in restricted cash.”
MT. HOPE PROJECT CONSTRUCTION UPDATE
Early construction activities progressed as planned at the Mt. Hope Project site including cultural clearance, clearing and grubbing, wood harvesting, and the development of early construction water. Kautz Environmental Consultants completed field mitigation activities for all 29 cultural sites identified in the Phase I Cultural Mitigation of the initial construction program. Official releases from the Bureau of Land Management (“BLM”) and the State Historical Preservation Office have been obtained for all 29 cultural sites and the Company has advanced into Phase II Cultural Mitigation activities. Ames Construction has cleared and grubbed approximately 1,800 acres in preparation for starting major earthworks. The mine, process plant, and tailings dam areas and associated roads have been substantially cleared. Ames Construction also has completed four miles of water pipeline (approximately 50% of total planned) to supply construction water from the permitted well field to the plant site.
MT. HOPE PROJECT WATER RIGHTS AND PERMIT APPEALS UPDATE
The Nevada State Engineer (“State Engineer”) completed issuance of all water permits for the Mt. Hope Project in January 2012, and the water became available for use following the State Engineer’s approval of the Company’s Monitoring, Management and Mitigation Plan (“3M Plan”) in June 2012, subject to a subsequent appeal of the 3M Plan to the Nevada State District Court (“District Court”). Following oral argument on April 15, 2013, the District Court denied the appeal petition favorably upholding the State Engineer’s approval of the 3M Plan. The District Court’s written Order is pending.
The water permits arising from the State Engineer’s July 2011 Ruling were appealed to the Nevada Supreme Court by Eureka County and two parties of water rights holders in Diamond and Kobeh Valley, following the District Court’s June 2012 denial of an appeal petition, affirming the State Engineer’s Ruling. Briefing has recently been completed in the Supreme Court. Presently, the Supreme Court has not issued a ruling or set a hearing date for the appeal. Notwithstanding, the water remains available to the Company for use at the Mt. Hope Project.
In February 2013, Great Basin Resource Watch and the Western Shoshone Defense Project filed a Complaint, and a Motion for Preliminary Injunction, against the U.S. Department of Interior and BLM in the U.S. District Court in Nevada, seeking relief under the National Environmental Protection Act and other federal laws challenging issuance of the Record of Decision (“ROD”) for the Mt. Hope Project. EMLLC has filed to intervene and its opposition to the Motion for a Preliminary Injunction. Presently the Court has not ruled or set a hearing date set for the motion. The process for issuing the ROD involved an exhaustive environmental analysis and review that lasted more than 6 years, and included extensive public and cooperating agency input. The Company supports the very robust and legally and technically defensible work completed by the BLM and believes that the ROD complies with all federal statutes and rules.
MT. HOPE PROJECT ENGINEERING AND EQUIPMENT PROCUREMENT UPDATE
Engineering efforts, which were paused in March 2009, were restarted in 2012 by M3 Engineering & Technology. Currently, engineering is approximately 64% complete at the Mt. Hope Project. Through March 31, 2013, EMLLC has made deposits of $71.0 million on equipment orders and has paid $12.0 million into an escrow arrangement for electricity transmission services.
EMLLC has now ordered or purchased most of the long-lead milling equipment, haul trucks, mine production drills and entered into a letter of intent for the purchase of electric shovels.
EMLLC is planning firm orders for other mining and process equipment pending timing of full financing.
MOLYBDENUM MARKET UPDATE
During 2012, molybdenum prices traded in a relatively narrow dollar range between $10.83 and $14.95 per pound, according to Ryan’s Notes, a ferro-alloy industry news and pricing publication. In the first quarter of 2013, molybdenum prices traded between $10.75 and $11.95 per pound, and are currently trading at $11.15 per pound.
Additional information on the Company’s first quarter 2013 results will be available in General Moly’s 2013 Form 10-Q, which will be filed with the Securities and Exchange Commission and posted on the Company’s website.
GENERAL MOLY, INC.
|Cash and cash equivalents||$||56,882||$||68,331|
|Deposits, prepaid expenses and other current assets||1,170||136|
|Total Current Assets||58,052||68,467|
|Mining properties, land and water rights — Note 4||190,165||170,967|
|Deposits on project property, plant and equipment||70,967||69,691|
|Restricted cash held at EMLLC||36,000||36,000|
|Restricted cash held for electricity transmission||12,015||12,013|
|Restricted cash held for reclamation bonds||6,991||6,991|
|Non-mining property and equipment, net||746||605|
|Capitalized debt issuance costs||18,087||17,794|
LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY:
|Accounts payable and accrued liabilities||$||16,326||$||10,133|
|Accrued advance royalties||500||500|
|Accrued payments to Agricultural Sustainability Trust and Hanlong||4,000||4,000|
|Current portion of long term debt||11,014||10,906|
|Total Current Liabilities||31,840||25,539|
|Provision for post closure reclamation and remediation costs||1,751||627|
|Accrued advance royalties||5,200||4,700|
|Accrued payments to Agricultural Sustainability Trust||2,000||2,000|
|Long term debt, net of current portion||741||661|
|Other accrued liabilities||875||875|
|COMMITMENTS AND CONTINGENCIES — Note 11|
|CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST||206,336||201,880|
Common stock, $0.001 par value; 200,000,000 shares authorized,
91,545,084 and 91,333,092
|Additional paid-in capital||272,035||270,902|
|Accumulated deficit before exploration stage||(213||)||(213||)|
|Accumulated deficit during exploration and development stage||(125,640||)||(122,640||)|
TOTAL LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
GENERAL MOLY, INC.
(Unaudited - In thousands, except per share amounts)
|January 1, 2002|
|Three Months Ended||(Inception of|
|Exploration and evaluation||117||168||40,596|
|Write downs of development and deposits||—||—||8,819|
|General and administrative expense||2,522||2,925||82,897|
|TOTAL OPERATING EXPENSES||2,639||3,093||132,312|
|LOSS FROM OPERATIONS||(2,639||)||(3,093||)||(132,312||)|
|OTHER INCOME / (EXPENSE)|
|Interest and dividend income||—||—||4,068|
|Realized gain from sale of mining properties||100||—||2,100|
|TOTAL OTHER INCOME / (EXPENSE), NET||(361||)||(64||)||4,745|
|LOSS BEFORE INCOME TAXES||(3,000||)||(3,157||)||(127,567||)|
|CONSOLIDATED NET LOSS||$||(3,000||)||$||(3,157||)||$||(127,567||)|
|Less: Net loss attributable to contingently redeemable noncontrolling interest||—||—||1,927|
|NET LOSS ATTRIBUTABLE TO GENERAL MOLY, INC.||$||(3,000||)||$||(3,157||)||$||(125,640||)|
|Basic and diluted net loss attributable to General Moly per share of common stock||$||(0.03||)||$||(0.03||)|
|Weighted average number of shares outstanding — basic and diluted||91,529||91,175|
GENERAL MOLY, INC.
(Unaudited - In thousands)
January 1, 2002
|Three Months Ended||
|CASH FLOWS FROM OPERATING ACTIVITIES:|
|Adjustments to reconcile net loss to net cash used by operating activities:|
|Depreciation and amortization||97||107||2,051|
|Equity compensation for employees and directors||848||810||19,074|
|(Increase) in deposits, prepaid expenses and other||(1,034||)||(4||)||(1,078||)|
|(Decrease) increase in accounts payable and accrued liabilities||(1,846||)||18||(12,718||)|
|Increase (decrease) in post closure reclamation and remediation costs||1,124||(4||)||1,542|
|Services and expenses paid with common stock||—||—||1,990|
|Repricing of warrants||—||—||965|
|Write downs of development and deposits||—||—||8,819|
|Recognition of income related to option to purchase agreement||(100||)||—||(2,100||)|
|(Increase) in restricted cash held for electricity transmission||(2||)||—||(12,015||)|
|Net cash used by operating activities||(3,452||)||(2,166||)||(119,614||)|
|CASH FLOWS FROM INVESTING ACTIVITIES:|
|Purchase and development of mining properties, land and water rights||(11,374||)||(3,330||)||(152,958||)|
|Deposits on property, plant and equipment||(1,067||)||(630||)||(71,132||)|
|Proceeds from option to purchase agreement||—||—||3,100|
|Purchase of securities||—||—||(137||)|
|(Increase) in Restricted Cash – Eureka Moly||—||—||(36,000||)|
|(Increase) in restricted cash held for reclamation bonds||—||—||(6,500||)|
|Cash provided by sale of marketable securities||—||—||246|
|Net cash used by investing activities||(12,441||)||(3,960||)||(263,381||)|
|CASH FLOWS FROM FINANCING ACTIVITIES:|
|Proceeds from issuance of stock, net of issuance costs||49||558||228,351|
|Net increase (decrease) in leased assets||130||(38||)||120|
|Decrease (increase) in capitalized debt issuance costs||(191||)||—||(3,909||)|
|Proceeds from debt||—||—||10,000|
|Cash proceeds from POS-Minerals Corporation||4,456||—||208,263|
|Cash paid to POS-Minerals Corporation for purchase price adjustment||—||—||(2,994||)|
|Net cash provided by financing activities||4,444||520||439,831|
|Net (decrease) increase in cash and cash equivalents||(11,449||)||(5,606||)||56,836|
|Cash and cash equivalents, beginning of period||68,331||40,709||46|
|Cash and cash equivalents, end of period||$||56,882||$||35,103||$||56,882|
|NON-CASH INVESTING AND FINANCING ACTIVITIES:|
|Equity compensation capitalized as development||$||237||$||181||$||7,334|
|Installment purchase of land||—||—||730|
|Accrued portion of equipment purchases and long lead deposits||7,534||—||8,593|
|Accrued portion of capitalized debt issuance costs||505||2,066||2,571|
|Restricted cash held for reclamation bond acquired in an acquisition||—||—||491|
|Post closure reclamation and remediation costs and accounts payable assumed in an acquisition||—||—||263|
|Common stock and warrants issued for property and equipment||—||—||1,586|
|Accrued portion of advance royalties||500||—||5,700|
|Accrued portion of payments to Agricultural Sustainability Trust & Hanlong||—||—||6,000|
General Moly is a U.S.-based molybdenum mineral development, exploration and mining company listed on the NYSE MKT (formerly the NYSE AMEX) and the Toronto Stock Exchange under the symbol GMO. Our primary asset, our interest in the Mt. Hope Project located in central Nevada, is considered one of the world's largest and highest grade molybdenum deposits. Combined with our second molybdenum property, the Liberty Project that is also located in central Nevada, our goal is to become the largest pure play primary molybdenum producer in the world. For more information on the Company, please visit our website at http://www.generalmoly.com.
Statements herein that are not historical facts are “forward-looking statements” within the meaning of Section 27A of the Securities Act, as amended and Section 21E of the Securities Exchange Act of 1934, as amended and are intended to be covered by the safe harbor created by such sections. Such forward-looking statements involve a number of risks and uncertainties that could cause actual results to differ materially from those projected, anticipated, expected, or implied by the Company. These risks and uncertainties include, but are not limited to, metals price and production volatility, global economic conditions, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, exploration risks and results, political, operational and project development risks, including the Company’s ability to maintain required permits to continue construction, commence production and its ability to raise required project financing, adverse governmental regulation and judicial outcomes, including recent request for preliminary injunction and appeal of the Record of Decision, and appeal of water permits. The closing of tranche 2 of the Hanlong transaction, Hanlong’s ability to procure bank financing may not be fulfilled, and the Hanlong subordinated loan is subject to satisfaction of conditions precedent. For a detailed discussion of risks and other factors that may impact these forward looking statements, please refer to the Risk Factors and other discussion contained in the Company’s quarterly and annual periodic reports on Forms 10-Q and 10-K, on file with the SEC. The Company undertakes no obligation to update forward-looking statements.