|
Company Implements Management Restructuring and Further Cost
Reduction Programs Designed to Preserve Liquidity While Advancing the
Mt. Hope Project
LAKEWOOD, Colo.--(BUSINESS WIRE)--Nov. 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 third
quarter ended September 30, 2015. Net loss for the three months ended
September 30, 2015 was $2.7 million ($0.03 per share), compared to net
loss of $3.2 million ($0.04 per share) for the year ago period.
Excluding restricted cash, the Company’s cash balance at September 30,
2015 was approximately $15 million compared to $13 million at December
31, 2014 and $18 million at June 30, 2015. During the third quarter,
cash use of $3 million was the result of $1 million spent on Mt. Hope
Project development costs and $2 million in general and administrative
expenses. In January 2015, the Company and POS-Minerals, as the members
of Eureka Moly, LLC (“EMLLC”), announced an agreement that provided
access to the $36 million reserve account for Mt. Hope dedicated spend.
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 while the Company seeks full
financing for the Mt. Hope Project construction. The Company also
announces a further 30% reduction of ongoing future expenses outside of
EMLLC.
On November 3, 2015, General Moly announced an amendment
to the previously announced Investment and Securities Purchase Agreement
(“Investment Agreement”) with AMER
International Group (“AMER”), a private, Chinese-based multinational
company that is one of the world’s largest advanced materials, fine
machining, and downstream metals refining providers, and was ranked #247
on the 2015 Fortune Global 500 list. With the amended Investment
Agreement, the parties agreed upon a three tranche investment strategy
that will 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 closing of this
partnership with AMER, one of the world’s largest advanced materials,
downstream metals refining, and fabrication companies, is an important
milestone for the Company and a critical component of our future
success.”
Mr. Hansen added, “As market conditions improve, this agreement will
greatly strengthen our potential to access global financial
institutions, particularly Chinese banks, to finance a significant
portion of the remaining capital necessary for the development of the
Mt. Hope Project. However, given the current molybdenum price and the
recent Nevada Supreme Court water rights decision, we believe it does
not make sense to aggressively pursue project financing at this time. In
the near-term, we expect to evaluate acquisition opportunities that we
can collectively pursue with our partner AMER. In time, we believe
molybdenum prices will return to the low-to-mid teens, a level
sufficient for Mt. Hope construction and development.”
Mr. Hansen concluded, “As we look forward, the Company has taken
decisive actions that will better position it to advance when market
conditions improve. Our recently implemented management restructuring
and cost reduction programs are focused on maintaining liquidity and
sustainability through cost reductions in engineering, administrative
and consulting expenses and trimming our ongoing Corporate and Liberty
Project care and maintenance expenditures from approximately $2.5
million per quarter to approximately $1.7 million per quarter.”
MT. HOPE PROJECT WATER RIGHTS AND PERMIT UPDATE
On September 18, 2015, the Nevada Supreme Court issued an Order that
reversed and remanded the Nevada State District Court’s Orders regarding
the Monitoring, Mitigation and Management Plan (“3M Plan”) and the water
permits, which had affirmed the State Engineer’s Orders approving the
water rights and 3M Plan for the Mt. Hope Project. On October 29, 2015
the Supreme Court issued the Order as a published Opinion. The Opinion
requires that the State Engineer identify specific mitigation measures
to avoid conflicts with existing rights when granting water permits. As
a condition of the water permits, the Company was also required to
develop, in cooperation with the County of Eureka, NV, a separate 3M
Plan. The Company prepared the 3M Plan, which was approved by the State
Engineer and while the appeals were pending the 3M Plan had been
implemented to collect information on background conditions and aquifer
response to project pumping, as well as to address mitigation measures
for impacted third-party water rights.
The Company is evaluating the Opinion to fully understand the process
and timing associated with addressing issues raised by the Supreme
Court, and will move forward as expeditiously as possible, following the
remand to the State Engineer. The Company expects to comply with the
Nevada Supreme Court Opinion and provide additional evidence of its
ability to mitigate any potential impacts to water rights in Kobeh
Valley that could result from the Mt. Hope Project’s water use.
In February 2013, two parties (“Plaintiffs”) filed a Complaint
challenging the issuance by the U.S. Bureau of Land Management of the
ROD for the Mt. Hope Project. The U.S. District Court in Nevada
(“District Court”) approved EMLLC’s request to intervene in the matter.
Following briefing by the parties the District Court denied the
Plaintiffs’ motion for summary judgment, and on August 1, 2014 entered
judgment against the Plaintiffs regarding all claims raised in the
Complaint. As anticipated, on September 22, 2014, the Plaintiffs filed
their notice of appeal to the U.S. Court of Appeals for the Ninth
Circuit. Plaintiffs submitted their Opening Brief on January 23, 2015
and the Defendants and EMLLC’s filed their Response Brief on March 27,
2015. Plaintiffs filed their Reply Brief on May 1, 2015 and all briefing
has been concluded. While the appeal is pending, the ROD remains in
effect.
MANAGEMENT RESTRUCTURING AND FURTHER COST REDUCTION PROGRAMS
In October 2015, the Company implemented management restructuring and
further cost reduction programs that are expected to lower operating
expenses by more than 30% annually, once fully implemented in early
2016. The management restructuring and cost reduction actions are
focused on maintaining liquidity and sustainability through cost
reductions in engineering, administrative and consulting expenses and
trimming ongoing Corporate and Liberty Project care and maintenance
expenditures from approximately $2.5 million per quarter to
approximately $1.7 million per quarter.
Specific provisions of the management restructuring and cost reduction
programs include:
-
A 25% reduction in workforce and the closing of the Company’s
engineering office in Tucson, AZ and local office in Eureka, NV.
-
A 15 to 25% reduction in base cash compensation for senior executives.
-
The retirement of David Chaput as Chief Financial Officer and
promotion of Lee Shumway, formerly the Company’s Controller and
Treasurer, to Chief Financial Officer. Further executive level changes
include Scott Roswell, formerly General Moly’s Corporate Counsel and
Vice President of Human Resources, assuming the title of Chief Legal
Officer.
-
Prudent focus on reducing all other expenditures including
engineering, administrative, and consulting expenses.
-
Ensuring the sustainability of Eureka Moly LLC funding through the
year 2020, via the reserve account held at EMLLC.
Lee Shumway joined General Moly in 2007, and previously served as the
Company’s Controller and Treasurer. Prior to joining the organization,
he spent 10 years in various roles at Newmont Mining including Director
of Supply Chain – Nevada Operations, and Controller – Nevada Operations,
and before that had 10 years of experience with Santa Fe Pacific Gold
and Price Waterhouse.
MT. HOPE PROJECT ENGINEERING AND EQUIPMENT PROCUREMENT UPDATE
Engineering remains approximately 65% complete at the Mt. Hope Project.
Through September 30, 2015, EMLLC has made deposits of $85.6 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. 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.
Additional information on the Company’s third 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.
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|
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|
GENERAL MOLY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except par value amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30, 2015
|
|
|
December 31, 2014
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ASSETS:
|
|
|
|
|
|
|
|
CURRENT ASSETS
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
14,671
|
|
|
$
|
13,269
|
|
Deposits, prepaid expenses and other current assets
|
|
|
|
243
|
|
|
|
698
|
|
Total Current Assets
|
|
|
|
14,914
|
|
|
|
13,967
|
|
Mining properties, land and water rights
|
|
|
|
219,922
|
|
|
|
216,595
|
|
Deposits on project property, plant and equipment
|
|
|
|
85,609
|
|
|
|
74,151
|
|
Restricted cash held at EMLLC
|
|
|
|
16,636
|
|
|
|
36,000
|
|
Restricted cash held for electricity transmission
|
|
|
|
—
|
|
|
|
12,021
|
|
Restricted cash held for reclamation bonds
|
|
|
|
4,923
|
|
|
|
5,358
|
|
Non-mining property and equipment, net
|
|
|
|
407
|
|
|
|
519
|
|
Debt Issuance Costs
|
|
|
|
169
|
|
|
|
441
|
|
Other assets
|
|
|
|
2,994
|
|
|
|
2,994
|
|
TOTAL ASSETS
|
|
|
$
|
345,574
|
|
|
$
|
362,046
|
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LIABILITIES, CRCNI, AND EQUITY:
|
|
|
|
|
|
|
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CURRENT LIABILITIES
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
2,593
|
|
|
$
|
4,633
|
|
Accrued advance royalties
|
|
|
|
500
|
|
|
|
500
|
|
Current portion of long term debt
|
|
|
|
240
|
|
|
|
290
|
|
Total Current Liabilities
|
|
|
|
3,333
|
|
|
|
5,423
|
|
Provision for post closure reclamation and remediation costs
|
|
|
|
1,170
|
|
|
|
1,276
|
|
Accrued advance royalties
|
|
|
|
5,700
|
|
|
|
5,200
|
|
Accrued payments to Agricultural Sustainability Trust
|
|
|
|
4,000
|
|
|
|
4,000
|
|
Long term debt, net of current portion
|
|
|
|
1,481
|
|
|
|
249
|
|
Senior Convertible Promissory Notes
|
|
|
|
5,423
|
|
|
|
7,763
|
|
Return of Contributions Payable to POS-Minerals
|
|
|
|
33,884
|
|
|
|
—
|
|
Other accrued liabilities
|
|
|
|
1,125
|
|
|
|
1,125
|
|
Total Liabilities
|
|
|
|
56,116
|
|
|
|
25,036
|
|
|
|
|
|
|
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COMMITMENTS AND CONTINGENCIES
|
|
|
|
|
|
|
|
|
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|
|
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CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST ('CRNCI')
|
|
|
|
173,265
|
|
|
|
210,317
|
|
|
|
|
|
|
|
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EQUITY
|
|
|
|
|
|
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Common stock, $0.001 par value; 650,000,000 and 200,000,000 shares
authorized, respectively, 95,742,698 and 92,200,657 shares
issued and outstanding, respectively
|
|
|
|
96
|
|
|
|
92
|
|
Additional paid-in capital
|
|
|
|
279,475
|
|
|
|
276,718
|
|
Accumulated deficit during exploration and development stage
|
|
|
|
(163,378
|
)
|
|
|
(150,117
|
)
|
Total Equity
|
|
|
|
116,193
|
|
|
|
126,693
|
|
TOTAL LIABILITIES, CRNCI, AND EQUITY
|
|
|
$
|
345,574
|
|
|
$
|
362,046
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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GENERAL MOLY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited - In thousands, except per share amounts)
|
|
|
|
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|
|
|
|
|
|
Three Months Ended
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2015
|
|
|
2014
|
|
|
2015
|
|
|
2014
|
REVENUES
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and evaluation
|
|
|
|
464
|
|
|
|
|
653
|
|
|
|
|
859
|
|
|
|
|
1,773
|
|
General and administrative expense
|
|
|
|
2,169
|
|
|
|
|
2,585
|
|
|
|
|
7,163
|
|
|
|
|
6,651
|
|
TOTAL OPERATING EXPENSES
|
|
|
|
2,633
|
|
|
|
|
3,238
|
|
|
|
|
8,022
|
|
|
|
|
8,424
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM OPERATIONS
|
|
|
|
(2,633
|
)
|
|
|
|
(3,238
|
)
|
|
|
|
(8,022
|
)
|
|
|
|
(8,424
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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OTHER INCOME/(EXPENSE):
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss on Termination of Power Transmission Contract
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(4,317
|
)
|
|
|
|
—
|
|
Loss on Extinguishment of Senior Convertible Notes
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
(930
|
)
|
|
|
|
—
|
|
Interest expense
|
|
|
|
(56
|
)
|
|
|
|
—
|
|
|
|
|
(892
|
)
|
|
|
|
—
|
|
TOTAL OTHER (EXPENSE)/INCOME, NET
|
|
|
|
(56
|
)
|
|
|
|
—
|
|
|
|
|
(6,139
|
)
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS BEFORE INCOME TAXES
|
|
|
|
(2,689
|
)
|
|
|
|
(3,238
|
)
|
|
|
|
(14,161
|
)
|
|
|
|
(8,424
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income Taxes
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED NET LOSS
|
|
|
$
|
(2,689
|
)
|
|
|
$
|
(3,238
|
)
|
|
|
$
|
(14,161
|
)
|
|
|
$
|
(8,424
|
)
|
Less: Net loss attributable to CRNCI
|
|
|
|
15
|
|
|
|
|
—
|
|
|
|
|
900
|
|
|
|
|
—
|
|
NET LOSS ATTRIBUTABLE TO GMI
|
|
|
$
|
(2,674
|
)
|
|
|
$
|
(3,238
|
)
|
|
|
$
|
(13,261
|
)
|
|
|
$
|
(8,424
|
)
|
Basic and diluted net loss attributable to GMI per share of common
stock
|
|
|
$
|
(0.03
|
)
|
|
|
$
|
(0.04
|
)
|
|
|
$
|
(0.14
|
)
|
|
|
$
|
(0.09
|
)
|
Weighted average number of shares outstanding — basic and diluted
|
|
|
|
95,725
|
|
|
|
|
91,884
|
|
|
|
|
94,609
|
|
|
|
|
91,873
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPREHENSIVE LOSS
|
|
|
$
|
(2,674
|
)
|
|
|
$
|
(3,238
|
)
|
|
|
$
|
(13,261
|
)
|
|
|
$
|
(8,424
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GENERAL MOLY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited - In thousands)
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
|
September 30,
|
|
|
|
2015
|
|
|
2014
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Consolidated Net loss
|
|
|
$
|
(14,161
|
)
|
|
|
$
|
(8,424
|
)
|
Adjustments to reconcile net loss to net cash used by operating
activities:
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
181
|
|
|
|
|
219
|
|
Non-cash interest expense
|
|
|
|
305
|
|
|
|
|
—
|
|
Stock-based compensation for employees and directors
|
|
|
|
759
|
|
|
|
|
1,405
|
|
Loss on Termination of Power Transmission Contract
|
|
|
|
218
|
|
|
|
|
—
|
|
Loss on Extinguishment of Senior Convertible Notes
|
|
|
|
930
|
|
|
|
|
|
Decrease in deposits, prepaid expenses and other
|
|
|
|
455
|
|
|
|
|
310
|
|
(Decrease) increase in accounts payable and accrued liabilities
|
|
|
|
(2,114
|
)
|
|
|
|
663
|
|
(Decrease) in post closure reclamation and remediation costs
|
|
|
|
(162
|
)
|
|
|
|
(274
|
)
|
Net cash used by operating activities
|
|
|
|
(13,589
|
)
|
|
|
|
(6,101
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Purchase and development of mining properties, land and water rights
|
|
|
|
(3,374
|
)
|
|
|
|
(7,042
|
)
|
Deposits on property, plant and equipment
|
|
|
|
(11,384
|
)
|
|
|
|
(746
|
)
|
Proceeds from sale of land and equipment
|
|
|
|
425
|
|
|
|
|
—
|
|
Decrease (increase) in restricted cash
|
|
|
|
31,820
|
|
|
|
|
(10
|
)
|
Net cash used by investing activities
|
|
|
|
17,487
|
|
|
|
|
(7,798
|
)
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Stock proceeds, net of issuance costs
|
|
|
|
(70
|
)
|
|
|
|
(11
|
)
|
Cash contributions (returned to)/received from POS-Minerals
|
|
|
|
(2,268
|
)
|
|
|
|
440
|
|
Repayment of Long-Term Debt
|
|
|
|
(158
|
)
|
|
|
|
(195
|
)
|
Net cash provided by financing activities:
|
|
|
|
(2,496
|
)
|
|
|
|
234
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
|
1,402
|
|
|
|
|
(13,665
|
)
|
Cash and cash equivalents, beginning of period
|
|
|
|
13,269
|
|
|
|
|
21,685
|
|
Cash and cash equivalents, end of period
|
|
|
$
|
14,671
|
|
|
|
$
|
8,020
|
|
|
|
|
|
|
|
|
|
|
NON-CASH INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Equity compensation capitalized as development
|
|
|
$
|
109
|
|
|
|
$
|
590
|
|
Accrued portion of advance royalties
|
|
|
|
500
|
|
|
|
|
500
|
|
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
|
)
|
|
|
|
—
|
|
Change in accrued portion of deposits on property, plant and
equipment
|
|
|
|
74
|
|
|
|
|
(717
|
)
|
|
|
|
|
|
|
|
|
|
|
|
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 obtain and maintain required permits to
continue construction, commence production and its ability to raise
required project financing, adverse governmental regulation and judicial
outcomes, including the appeal of the Record of Decision and potential
future appeals of re-issued 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.
View source version on businesswire.com: http://www.businesswire.com/news/home/20151104006883/en/
Source: General Moly
General Moly
Investors
Scott Kozak, 303-928-8591 [email protected] or Media Zach
Spencer, 775-397-1199 [email protected] Website:
http://www.generalmoly.com
|
|