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General Moly Announces Second Quarter 2015 Results

LAKEWOOD, Colo.--(BUSINESS WIRE)--Aug. 4, 2015-- General Moly, Inc. (the "Company" or “General Moly”) (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, 2015. Net loss for the three months ended June 30, 2015 was $6.8 million ($0.07 per share), compared to a loss of $2.8 million ($0.03 per share) for the year ago period.

Excluding restricted cash, the Company’s cash balance at June 30, 2015 was $18 million compared to $13 million at December 31, 2014 and $16 million at March 31, 2015. In June 2015, General Moly announced an agreement which will allow the transition to the provider’s network services by terminating the existing third-party transmission contracts to provide power to the Mt. Hope Project. With the agreement, Eureka Moly, LLC (“EMLLC”), of which General Moly is an 80% member, received a return of approximately $7.9 million net of termination costs, expenses and consideration to the transmission providers. In January 2015, the Company and POS-Minerals Corporation (“POS-Minerals”), as the members of EMLLC, announced an agreement that provided access to the $36 million reserve account for Mt. Hope dedicated spend. During the second quarter, cash use of $6 million was the result of $3 million spent on Mt. Hope Project development costs (including owner’s cost, reclamation bond premiums and $2 million towards completing the purchase of electrical transformers) and $3 million in general and administrative expenses. With the jointly developed revised long-term budget to maintain the Mt. Hope Project in its permitted, construction ready status, the EMLLC members agreed in January that the budget will be entirely funded by the reserve account, until at least through 2020. Thus, the reserve account should cover anticipated operating expenses, and committed equipment purchase obligations until the Company’s full financing for the Mt. Hope Project construction is obtained.

In April 2015, General Moly announced an Investment and Securities Purchase Agreement with AMER International Group (“AMER”), a private, China-based multinational company that is one of the world’s largest advanced materials, fine machining, and downstream metals refining providers, (ranked #295 on the 2014 Fortune Global 500 list), to create a strategic partnership and equity investment to assist with General Moly’s ability to secure full project financing for the Mt. Hope Project.

Bruce D. Hansen, Chief Executive Officer, said, “The Company made significant strides to advance development of the fully permitted Mt. Hope Project and improve our liquidity profile in the second quarter. AMER is an enthusiastic and committed partner who will become a major shareholder of General Moly and has agreed to work with the Company to procure and ultimately guarantee a senior secured term loan of approximately $700 million for development of the Mt. Hope Project.”

Mr. Hansen continued, “The proceeds from the termination of the transmission agreement, combined with the previously announced $8.5 million private placement financing and a January agreement with POS-Minerals Corporation to use restricted cash of up to $36 million for the benefit of the Mt. Hope Project, provides the Company with a significantly improved project and corporate liquidity profile, even before considering the funding anticipated from the closing of the AMER transaction, while fully maintaining the Mt. Hope Project’s construction-ready status.”

Mr. Hansen concluded, “The Company remains focused on procuring full construction financing for the Mt. Hope Project. Given that the transaction with AMER was recently approved at our Annual Meeting of Stockholders, we are coordinating closely to address the remaining conditions for closing the Investment and Securities Purchase Agreement. When this is complete, the Company will begin leveraging AMER’s equity investment and debt capacity to further advance financing for the Mt. Hope Project.”

STRATEGIC PARTNERSHIP WITH AMER INTERNATIONAL GROUP

On April 17, 2015, the Company and AMER announced an Investment and Securities Purchase Agreement that will also create a strategic partnership and equity investment to assist with General Moly’s ability to secure full project financing for the Mt. Hope Project. Pursuant to the Investment and Securities Purchase Agreement, AMER agreed to purchase 40 million common shares of General Moly, priced using the trailing 90-day volume weighted average price (“VWAP”) of $0.50 on April 17, 2015.

Upon closing of the equity investment, AMER and General Moly will also enter into a stockholder agreement allowing AMER to nominate two Directors to General Moly’s then eight member Board of Directors. After drawdown of the Mt. Hope project financing loan, AMER will nominate a third director to General Moly’s then seven member Board of Directors. The stockholder agreement will also relate to, among other things, AMER’s ability to acquire and transfer General Moly shares.

AMER has agreed to work with General Moly to procure and support a Bank Loan of approximately $700 million from one or more major Chinese banks for development of the Mt. Hope Project. AMER will guarantee the Mt. Hope project financing loan, which is anticipated to have normal and customary covenants and security arrangements.

When drawdown of the approximately $700 million Bank Loan becomes available and documentation is complete, warrants to purchase 80 million common shares of General Moly will vest and become exercisable by AMER using the trailing 90-day VWAP of $0.50 from the date the investment agreement was signed. All conditions to complete the warrants transaction must be completed no later than April 17, 2017.

AMER and General Moly also agreed on terms to a definitive agreement that would provide a one-time option exercisable simultaneously with Bank Loan execution to purchase the balance of General Moly’s share of Mt. Hope molybdenum production, estimated to be approximately 16.5 million pounds annually, for the first five years of production, and 70% of General Moly’s annual share of Mt. Hope molybdenum production thereafter at a cost of spot price less a slight discount.

MT. HOPE PROJECT ENGINEERING AND EQUIPMENT PROCUREMENT UPDATE

Engineering is approximately 65% complete at the Mt. Hope Project. Through June 30, 2015, EMLLC has made deposits of $85.5 million on equipment orders compared to $74.2 million at the end of 2014.

EMLLC has now ordered or purchased most of the long-lead milling equipment, haul trucks and mine production drills, and has a letter of intent for the purchase of two electric shovels.

EMLLC continues to work with long-lead vendors to manage the timing of contractual payments for milling and electrical equipment. In April 2015, EMLLC made a $2.4 million payment due to the manufacturer of two 230kV primary transformers. The payment was funded with cash from the EMLLC reserve account described above. Final payments against milling and electrical equipment orders totaling $2.0 million are expected to be made by early 2017.

Approximately 70% of the planned spend on process equipment has been defined through hard bids and purchase orders and the cost for this equipment is estimated to remain on budget. Further, approximately 80% of planned spend on mining equipment has been committed with cancelable purchase orders, the cost for which is also estimated to remain on budget. Some of the mining equipment 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 Mt. Hope Project remains in a construction-ready status pending full project financing.

Additional information on the Company’s second quarter 2015 results will be available in General Moly’s 2015 Form 10-Q, which will be filed with the Securities and Exchange Commission and posted on the Company’s website.

     

GENERAL MOLY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)

 

June 30,
2015
(Unaudited)

December 31,
2014
ASSETS:
CURRENT ASSETS
Cash and cash equivalents $ 17,963 $ 13,269
Deposits, prepaid expenses and other current assets 737 698
Total Current Assets 18,700 13,967
Mining properties, land and water rights 218,767 216,595
Deposits on project property, plant and equipment 85,452 74,151
Restricted cash held at EMLLC 17,880 36,000
Restricted cash held for electricity transmission 12,021
Restricted cash held for reclamation bonds 5,004 5,358
Non-mining property and equipment, net 444 519
Debt Issuance Costs 202 441
Other assets 2,994 2,994
TOTAL ASSETS $ 349,443 $ 362,046
LIABILITIES, CRNCI, AND EQUITY:
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 2,485 $ 4,633
Accrued advance royalties 500 500
Current portion of long term debt 255 290
Total Current Liabilities 3,240 5,423
Provision for post closure reclamation and remediation costs 1,260 1,276
Accrued advance royalties 5,200 5,200
Accrued payments to Agricultural Sustainability Trust 4,000 4,000
Long term debt, net of current portion 1,518 249
Senior Convertible Promissory Notes 5,596 7,763
Return of Contributions Payable to POS-Minerals 33,884
Other accrued liabilities 1,125 1,125
Total Liabilities 55,823 25,036
 
COMMITMENTS AND CONTINGENCIES
 
CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST (“CRNCI”) 174,864 210,317
 
EQUITY
Common stock, $0.001 par value; 200,000,000 shares authorized, 95,720,021 and 92,200,657 shares issued and outstanding, respectively 96 92
Additional paid-in capital 279,363 276,718
Accumulated deficit during exploration and development stage (160,703 ) (150,117 )
Total Equity 118,756 126,693
TOTAL LIABILITIES, CRNCI, AND EQUITY $ 349,443 $ 362,046
 
     

GENERAL MOLY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except per share amounts)

 
Three Months Ended Six Months Ended

June 30,
2015

 

June 30,
2014

June 30,
2015
  June 30,
2014
REVENUES $ $ $ $
OPERATING EXPENSES:
Exploration and evaluation 277 986 394 1,120
General and administrative expense 2,007 1,841 4,994 4,066
TOTAL OPERATING EXPENSES 2,284 2,827 5,388 5,186
LOSS FROM OPERATIONS (2,284 ) (2,827 ) (5,388 ) (5,186 )
OTHER INCOME / (EXPENSE):
Loss on Termination of Power Transmission Contract (4,317 ) (4,317 )
Loss on Extinguishment of Senior Convertible Notes (810 ) (930 )
Interest expense (275 ) (836 )
TOTAL OTHER (EXPENSE) / INCOME, NET (5,402 ) (6,083 )
LOSS BEFORE INCOME TAXES (7,686 ) (2,827 ) (11,471 ) (5,186 )
Income Taxes
CONSOLIDATED NET LOSS $ (7,686 ) $ (2,827 ) $ (11,471 ) $ (5,186 )
Less: Net loss attributable to CRNCI 875 885
NET LOSS ATTRIBUTABLE TO GMI $ (6,811 ) $ (2,827 ) $ (10,586 ) $ (5,186 )
Basic and diluted net loss attributable to GMI per share of common stock $ (0.07 ) $ (0.03 ) $ (0.11 ) $ (0.06 )
Weighted average number of shares outstanding — basic and diluted 95,020 91,873 94,041 91,868
 
COMPREHENSIVE LOSS $ (6,811 ) $ (2,827 ) $ (10,586 ) $ (5,186 )
 
   

GENERAL MOLY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

 
Six Months Ended
June 30,
2015
  June 30,
2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated Net Loss $ (11,471 ) $ (5,186 )
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization 120 146
Non-cash Interest expense 445
Stock-based compensation for employees and directors 592 1,023
Loss on Termination of Power Transmission Contract 218
Loss on Extinguishment of Senior Convertible Notes 930
(Increase) decrease in deposits, prepaid expenses and other (39 ) 82
(Decrease) increase in accounts payable and accrued liabilities (2,111 ) 326
(Decrease) in post closure reclamation and remediation costs (53 ) (273 )
Net cash used by operating activities (11,369 ) (3,882 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase and development of mining properties, land and water rights (2,259 ) (4,980 )
Deposits on property, plant and equipment (11,315 ) (576 )
Decrease in restricted cash 30,495 (17 )
Net cash provided (used) by investing activities 16,921 (5,573 )
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash contributions (returned to)/received from POS-Minerals (684 ) 144
Repayment of Long-Term Debt (106 ) (128 )
Stock proceeds, net of issuance costs (68 ) (4 )
Net cash (provided by) used in financing activities (858 ) 12
Net increase (decrease) in cash and cash equivalents 4,694 (9,443 )
Cash and cash equivalents, beginning of period 13,269 21,685
Cash and cash equivalents, end of period $ 17,963 $ 12,242
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equity compensation capitalized as development $ 139 $ 463
Change in accrued portion of deposits on property, plant and equipment (14 ) (552 )
Conversion of Senior Convertible Promissory Notes (2,488 )
Non-Convertible Senior Promissory Notes Issued 1,340
Return of Contributions payable to POS-Minerals 36,000
Reduction in Return of Contributions payable to POS-Minerals (2,116 )
Write off of debt issuance costs (115 )
Accrued portion of interest on convertible notes 23
Accrued portion of Advance Royalties 500
 

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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. The Company’s 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 the Company’s second project, the Liberty Project, a molybdenum and copper property 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.

Forward-Looking Statements

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 appeal of the Record of Decision and appeal of water permits and estimates related to cost of production, capital, operating and exploration expenditures. 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.

Source: General Moly

General Moly
Investors:
Scott Kozak, 303-928-8591
skozak@generalmoly.com
or
Media:
Zach Spencer, 775-397-1199
zspencer@generalmoly.com
http://www.generalmoly.com