General Moly Announces Second Quarter 2013 Results

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 second quarter ended June 30, 2013. Net loss for the three months ended June 30, 2013 was $14.3 million ($0.16 per share), compared to a loss of $2.7 million ($0.03 per share) for the year ago period. The primary reason for the $14.3 million net loss during the second quarter was an $11.5 million non-cash charge relating to the May 14, 2013 warrant cancellation associated with the mutually terminated $125 million subordinated debt agreement between the Company and Hanlong (USA) Mining ("Hanlong").

Excluding restricted cash, the Company's cash balance at June 30, 2013 was approximately $35 million compared to $68 million at December 31, 2012 and $57 million at March 31, 2013. During the second quarter, cash use of $24 million was the result of Mt. Hope Project development costs (site clearing and grubbing, pipeline development, cultural clearance and engineering) as well as general and administrative expenses partially offset by the receipt of $2 million in contribution payments from POS-Minerals Corporation. In December 2012, 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.


Bruce D. Hansen, Chief Executive Officer of General Moly, said, "We have spent the past few months in discussions with a number of potential strategic partners and investors as we explore a variety of financing alternatives including equity investments, project level investments and debt financings to determine which would provide the best outcomes for our shareholders in the current market."

Mr. Hansen added, "While we expect the financing process to take time, the Company has received interest from potential strategic investors both in and outside of China. Multiple parties have signed non-disclosure agreements and are currently engaged in due diligence on the project."

Mr. Hansen concluded, "As we proceed towards full financing at Mt. Hope, the Company will continue to prudently manage our unrestricted cash position of $35 million at the end of the second quarter with an additional $36 million in restricted cash. Steps we have taken to trim our cash burn rate include significantly reducing construction activities and engineering expenditures at Mt. Hope and deferring payments on equipment orders."

MT. HOPE PROJECT CONSTRUCTION UPDATE

Substantial progress has been made with regards to preliminary construction activities at the Mt. Hope project site including cultural clearance, clearing and grubbing, wood harvesting, and the development of early construction water. Kautz Environmental Consultants has completed adequate field mitigation so that once financing is secured construction can proceed unencumbered by cultural sites. 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. Further activities have been substantially reduced as a result of the delay in financing for the Mt. Hope Project and will resume as alternative financing becomes available.

MT. HOPE PROJECT WATER RIGHTS AND PERMIT APPEALS UPDATE

In 2012, the Nevada State Engineer ("State Engineer") completed issuance of all water permits for the Mt. Hope Project and approved the Company's Monitoring, Management and Mitigation Plan ("3M Plan"). In April, 2013, the 3M Plan was challenged in an appeal and the appeal was rejected by the Nevada State District Court ("District Court"). The Petitioners recently filed an appeal of the District's Court Order to the Nevada Supreme Court, and Petitioners' opening briefs were filed July 26th, 2013. EMLLC response brief is due August 26th, 2013.

The water permits were also challenged in an appeal to the District Court by Eureka County and two parties of water rights holders in Diamond and Kobeh Valley, and the appeal was rejected by the District Court in June, 2012. The Petitioners thereafter filed an appeal to the Nevada Supreme Court. Briefing has recently been completed including appearances by Amicus Curiae supportive of the Company and the State Engineer's position. The Nevada Supreme Court has consolidated the 3M Plan appeal and the water permits appeal. Presently, the Supreme Court has not issued a ruling or set a hearing date for the appeal, until the 3M Plan matter is fully briefed later in the 3rd quarter of 2013. 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 Bureau of Land Management ("BLM") in the U.S. District Court in Nevada, seeking relief under the National Environmental Policy Act and other federal laws challenging issuance of the Record of Decision ("ROD") for the Mt. Hope Project. EMLLC has intervened and along with the federal government filed its opposition to the Motion for a Preliminary Injunction. The Court set oral argument regarding the Motion for a Preliminary Injunction on September 3, 2013. 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 is approximately 65% complete at the Mt. Hope Project. Through June 30, 2013, EMLLC has made deposits of $73.0 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 has entered into a letter of intent for the purchase of two electric shovels.

EMLLC is planning the placement of firm orders for other mining and process equipment pending timing of full project financing. Approximately 70% of the planned spend on process equipment has been defined through hard bids and purchase orders and is estimated to remain on budget. Further, approximately 75% of planned spend on mining equipment has been committed with cancelable purchase agreements and is also estimated to remain on budget. Some of the committed spend is subject to Producer Price Index-based escalation and additional holding costs if there are extended delays, and some agreements would be subject to cancellation. The project remains in a construction-ready status pending final 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 second quarter of 2013, molybdenum prices traded between $10.23 and $11.25 per pound, and are currently trading at $9.30 per pound amid a sluggish demand environment.

Additional information on the Company's second 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.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
 

June 30,
2013
(Unaudited)

December 31,
2012

ASSETS:
CURRENT ASSETS
Cash and cash equivalents $ 34,716 $ 68,331
Deposits, prepaid expenses and other current assets   791   136  
Total Current Assets   35,507   68,467  
Mining properties, land and water rights - Note 4 199,044 170,967
Deposits on project property, plant and equipment 73,032 69,691
Restricted cash held at EMLLC 36,000 36,000
Restricted cash held for electricity transmission 12,017 12,013
Restricted cash held for reclamation bonds 6,991 6,991
Non-mining property and equipment, net 764 605
Capitalized debt issuance costs 6,420 17,794
Other assets   2,994     2,994  
TOTAL ASSETS $ 372,769 $ 385,522  
LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY:
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 6,341 $ 10,133
Accrued advance royalties 500 500
Accrued payments to Agricultural Sustainability Trust and Hanlong 2,000 4,000
Current portion of long term debt   11,047   10,906  
Total Current Liabilities   19,888   25,539  
Provision for post closure reclamation and remediation costs 1,729 627
Deferred gain 1,400 1,100
Accrued advance royalties 5,200 4,700
Accrued payments to Agricultural Sustainability Trust 2,000 2,000
Long term debt, net of current portion 680 661
Other accrued liabilities   875   875  
Total Liabilities   31,772   35,502  
 
COMMITMENTS AND CONTINGENCIES - Note 11    
CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST   208,535   201,880  
 
EQUITY
Common stock, $0.001 par value; 200,000,000 shares authorized, 91,550,674 and 91,333,092 shares issued and outstanding, respectively 92 91
Additional paid-in capital 272,523 270,902
Accumulated deficit before exploration stage (213 ) (213 )
Accumulated deficit during exploration and development stage   (139,940 )   (122,640 )
Total Equity   132,462   148,140  
TOTAL LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY $ 372,769 $ 385,522  
 
 
GENERAL MOLY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited - In thousands, except per share amounts)
     
Three Months Ended Six Months Ended

January 1, 2002
(Inception of
Exploration
Stage) to June
30, 2013

June 30,
2013

 

June 30,
2012

June 30,
2013

 

June 30,
2012

 
REVENUES $ $ $ $ $
OPERATING EXPENSES:
Exploration and evaluation 217 156 334 324 40,813
Write downs of development and deposits 8,819
General and administrative expenses   2,352     2,457     4,874     5,382     85,249  
TOTAL OPERATING EXPENSES   2,569     2,613     5,208     5,706     134,881  
LOSS FROM OPERATIONS (2,569 ) (2,613 ) (5,208 ) (5,706 ) (134,881 )
OTHER INCOME / (EXPENSE)
Interest and dividend income 1 4,069
Interest expense (260 ) (64 ) (721 ) (128 ) (1,683 )
Write off of loan commitment fees (warrants) (11,472 ) (11,472 ) (11,472 )
Realized gain from sale of mining properties           100         2,100  
TOTAL OTHER (EXPENSE) / INCOME , NET   (11,732 )   (2,677 )   (12,092 )   (128 )   (6,986 )
LOSS BEFORE INCOME TAXES (14,301 ) (2,677 ) (17,300 ) (5,834 ) (141,867 )
Income Taxes                    
 
CONSOLIDATED NET LOSS $ (14,301 ) $ (2,677 ) $ (17,300 ) $ (5,834 ) $ (141,867 )
Less: Net loss attributable to contingently redeemable noncontrolling interest          

   

    1,927  
 
NET LOSS ATTRIBUTABLE TO GENERAL MOLY, INC. $ (14,301 ) $ (2,677 )

$

(17,300

)

$

(5,834

)

$ (139,940 )
Basic and diluted net loss attributable to General Moly per share of common stock $ (0.16 ) $ (0.03 )

$

(0.19

)

$

(0.06

)

Weighted average number of shares outstanding - basic and diluted 91,547 91,223 91,538 91,199
 
COMPREHENSIVE LOSS $ (14,301 ) $ (2,677 ) $ (17,300 ) $ (5,834 ) $ (139,940 )
 
 
GENERAL MOLY, INC.
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - In thousands)
   

 

Six Months Ended

January 1, 2002
(Inception of
Exploration
Stage) to
June 30,
2013

June 30,
2013

 

June 30,
2012

CASH FLOWS FROM OPERATING ACTIVITIES:  
Net Loss $ (17,300 ) $ (5,834 ) $ (141,867 )
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 196 209 2,150
Interest expense 721 128 1,683
Equity compensation for employees and directors 1,113 995 19,339
(Increase) in deposits, prepaid expenses and other (655 ) (22 ) (699 )
(Decrease) increase in accounts payable and accrued liabilities (6,676 ) 777 (17,548 )
Increase in post closure reclamation and remediation costs 1,102 40 1,520
Write downs of development and deposits 8,819
Services and expenses paid with common stock 1,990
Repricing of warrants 965
Write off of loan commitment fees (warrants)

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