LAKEWOOD, Colo., March 11, 2016 /PRNewswire/ -- General Moly,
Inc. (the "Company" or "General Moly") (NYSE MKT: GMO) (TSX:
GMO) entered 2016 with a long-term strategic partnership through
one of China's largest private
multinational firms and a strong cash balance of approximately
$13.0 million at year-end 2015,
approximately even with the year-end 2014 cash balance, excluding
restricted cash. The Company is well positioned with financial
liquidity to fund its current business activities and working
capital needs into early 2018.
Fourth quarter and to date highlights:
- General Moly closed a $4.0
million Tranche 1 private placement with a Chinese strategic
partner and now largest shareholder, AMER International Group
("AMER");
- There is potential further funding of Tranche 2 and 3 equity
investments by AMER totaling $16.0
million, contingent on certain conditions;
- The Company lowered the quarterly cash burn rate for Corporate
and Liberty Project costs by one-third, from the previous two
years' average to an estimated $1.7
million per quarter or $6.8
million for full year 2016. The Company forecasts that
it has the ability to fund its current business plans and working
capital into early 2018, excluding potential additional AMER equity
investments;
- Mt. Hope Project's joint venture operating company Eureka Moly,
LLC ("EMLLC") ended 2015 with a balance of $16.6 million (100% basis) in a cash reserve
account, and remains self-funded through 2020 based on projected
care and maintenance expenses. EMLLC also received a net
refund of $4.3 million (100% basis)
in February 2016 from a reduction in
reclamation funding requirements.
The Company received $4.0 million
in cash proceeds during the fourth quarter upon closing of Tranche
1 of the amended Investment and Securities Purchase Agreement
("Investment Agreement") and strategic partnership with AMER, a
non-ferrous metals and downstream industrials company, which is
ranked the 247th largest enterprise by revenues in the
world according to the Fortune Global 500.
Half of the $4.0 million was
directed to a restricted expense-reimbursement account to be used
by both the Company and AMER for procuring financing for the future
development of the Mt. Hope Project in Nevada and other jointly sourced business
development opportunities. The remaining $2.0 million is for general corporate
purposes.
Announcing its financial results for the fourth quarter and full
year ended December 31, 2015 today,
the Company reported a net loss for the three months ending
December 31, 2015 of $2.0 million ($0.02
per share), compared to a net loss of $2.5
million ($0.02 per share) for
the prior year period. The decrease in quarterly net loss was
primarily due to the Company's cost-cutting measures. Net loss for
the full year ending December 31,
2015 was $15.2 million
($0.16 per share), compared to a loss
of $11.0 million ($0.12 per share) for the prior year period. The
higher net loss in 2015 compared with 2014 was due to non-cash
losses of $4.3 million taken upon
termination of a power transmission contract at EMLLC and a
$1.0 million loss taken on
extinguishment of several of the Company's Senior Convertible
Promissory Notes.
During the fourth quarter, cash use of $3.7 million was the result of $1.2 million of Mt. Hope Project's EMLLC owners'
costs and $2.5 million in general and
administrative expenses, including one-time severance payments
related to the Company's cost-cutting measures, including a 25%
reduction in employees and contractors in October 2015.
Bruce D. Hansen, Chief Executive
Officer, said, "The amended Investment Agreement with AMER and the
closure of Tranche 1 provide the Company with an improved corporate
liquidity profile as we seek opportunities to obtain project
financing for the Mt. Hope Project. This arrangement with
AMER creates a long-term strategic partnership, demonstrating
AMER's vision of value creation at General Moly. As the
molybdenum market recovers, we will work together on the full
financing and development of the Mt. Hope Project. In the near
term, we expect to evaluate value-accretive, acquisition
opportunities to jointly pursue with AMER for our mutual
benefit."
Mr. Hansen concluded, "As we look forward, we have taken
decisive actions that better position our Company to advance
development when market conditions improve. Through our
recently implemented management restructuring and cost reduction
programs, we expect to achieve additional reductions in our
Corporate and Liberty Project care and maintenance costs by
one-third from an average of approximately $2.5 million per quarter in the past two years to
approximately $1.7 million per
quarter in 2016."
Strategic Partnership with AMER
Through the initial Tranche 1 private placement of $4.0 million, AMER has become the largest
shareholder of General Moly from its approximate 12% stake of 13.0
million common shares. AMER also received warrants to purchase 80.0
million shares at an exercise price of $0.50 per share, exercisable upon completion of a
$700.0 million senior secured term
loan (Bank Loan). The warrants and its conditions expire
April 17, 2017.
Under the amended Investment Agreement, AMER is required to
complete the Tranche 2 and Tranche 3 equity investments totaling
$16.0 million at higher prices per
share in General Moly, upon completion of certain conditions,
potentially subject to shareholder approval, as announced in the
Company's news releases in April and November 2015. Tranche 2 obligates
AMER to invest $6.0 million for 12.0
million additional shares of General Moly, subject to reinstatement
of permits for water rights at the Mt. Hope Project and 30
consecutive calendar days for the price of molybdenum to average in
excess of $8.00 per pound. Tranche 3
calls for an investment of $10.0
million, representing 14.7 million shares contingent on a
final adjudication or settlement of the Mt. Hope Project's water
rights permits, if further challenged in the Nevada courts, and for the price of molybdenum
to average in excess of $12.00 per
pound for a 30-consecutive calendar day period.
As part of the Tranche 1 investment by AMER, Tong Zhang has
joined General Moly's now seven-member Board of Directors as
announced in the Company's December
2015 news release. Mr. Zhang currently serves as AMER's
Chairman of the Overseas Investment Committee and CEO of the
International Business Group. Mr. Zhang previously held various
positions with PricewaterhouseCoopers and he has a Master's Degree
from Ohio University.
After Tranche 3, AMER has the right to nominate a second
director to the Board. After drawdown of the Bank Loan, AMER has
the right to nominate a third director to the Board.
Once there is a sustained improvement in the molybdenum market,
AMER will work with the Company to procure and guarantee the Bank
Loan from major Chinese banks for the development of the Mt. Hope
Project, subject to customary covenants and security
arrangements.
Other Financial Highlights – Refund from Lower Collateral in
Reclamation Surety
As announced previously, on February 23,
2016, EMLLC received a net refund of $4.3 million from a reduction in the collateral
held in its reclamation surety program. The Company received
approval from the Bureau of Land Management to lower the
reclamation financial guarantee requirement from $75.1 million to $2.8 million, based only on the
current limited state of disturbance at the Mt. Hope Project. The
surety bond program is now funded with a cash collateral payment of
$0.3 million, a reduction from the
$4.6 million established in
November 2012, resulting in the
$4.3 million net return of
collateral.
In January 2015, the Company and
POS-Minerals Corporation ("POS-Minerals"), which own 80% and 20%
membership interest in the Mt. Hope Project, respectively, through
EMLLC, announced an agreement to use up to $36.0 million from the restricted reserve account
to fund final equipment payments, ongoing owners' costs, and other
care and maintenance activities for the benefit of both members.
POS-Minerals is an affiliate of POSCO, a public company based in
the Republic of Korea and one of the world's largest steel
producers. POSCO is ranked the 162nd largest corporation by
revenues in the world in the Fortune Global 500. The restricted
cash held in the reserve account is funding the Mt. Hope Project's
financial requirements until such funds are exhausted or the
Company achieves full financing for construction of the Mt. Hope
Project. Any balance of reserve account cash at the time of
financing will be returned to the Company. Based on projected
future care and maintenance expenditures, EMLLC is funded through
2020 with $16.6 million in available
reserve account cash at year-end 2015.
In addition to the cash liquidity discussed above, the Company
has significant tangible asset value inherent in its 80% ownership
of $85.7 million in EMLLC assets
(primarily milling and electrical equipment), and a further
$21.1 million in other tangible
assets wholly owned by General Moly.
Table 1: Financial Summary
($ and Shares in 000,
Except Per Share and Molybdenum Price)
|
2015
|
4Q
2015
|
2014
|
4Q
2014
|
YOY
Variance
|
4Q YOY
Variance
|
Exploration
& evaluation expenses
|
$ 1,032
|
$ 173
|
$ 2,097
|
$ 324
|
-51%
|
-47%
|
General and
administrative expenses, including non-cash stock
compensation
|
8,703
|
1,541
|
8,872
|
2,221
|
-2%
|
-31%
|
Total Operating
Expenses
|
9,735
|
1,714
|
10,969
|
2,545
|
-11%
|
-33%
|
Loss on
termination of power transmission contract
|
(4,317)
|
-
|
-
|
-
|
n.a.
|
n.a.
|
Loss on
extinguishment of senior convertible notes
|
(971)
|
-
|
-
|
-
|
n.a.
|
n.a.
|
Interest
expense
|
(1,100)
|
(207)
|
(29)
|
(29)
|
n.a.
|
n.a.
|
Net Loss
|
$ (15,223)
|
$ (1,962)
|
$ (10,960)
|
$ (2,500)
|
39%
|
-22%
|
Net Loss Per
Share
|
$ (0.16)
|
$ (0.02)
|
$ (0.12)
|
$ (0.02)
|
33%
|
0%
|
Avg. Weighted Shares
Outstanding
|
97,056
|
104,299
|
91,907
|
92,005
|
6%
|
13%
|
Table 2: Balance Sheet Summary
($ in 000)
|
Dec. 31,
2015
|
Sept. 30,
2015
|
Dec. 31,
2014
|
Dec. 31 YOY
Variance
|
Cash and Cash
Equivalents
|
$
13,047
|
$
14,671
|
$
13,269
|
-1.7%
|
Current
Assets
|
13,197
|
14,914
|
13,967
|
-5.5%
|
Current
Liabilities
|
2,404
|
3,333
|
5,423
|
-55.7%
|
Working
Capital
|
10,793
|
11,581
|
8,544
|
26.3%
|
Restricted
cash held at EMLLC
|
16,636
|
16,636
|
36,000
|
-53.8%
|
Other
restricted cash
|
6,782
|
4,923
|
17,379
|
-61.0%
|
Total
Assets
|
346,475
|
345,574
|
362,046
|
-4.3%
|
|
|
|
|
|
Long term
debt
|
1,517
|
1,481
|
249
|
509.2%
|
Sr.
convertible notes
|
5,480
|
5,423
|
7,763
|
-29.4%
|
Return of
contributions payable to POS-Minerals
|
33,884
|
33,884
|
-
|
n.a.
|
Other
liabilities
|
12,523
|
11,995
|
11,601
|
7.9%
|
Long term
liabilities
|
53,404
|
52,783
|
19,613
|
172.3%
|
|
|
|
|
|
Contingently
Redeemable Non-controlling Interest
|
173,265
|
173,265
|
210,317
|
-17.6%
|
Total Shareholders'
Equity
|
$
117,402
|
$
116,193
|
$
126,693
|
-7.3%
|
Mt. Hope Project Water Rights and Permits Update
As described in the Company's September
2015 news release, the Nevada Supreme Court issued a ruling
in late September 2015 that reversed
and remanded the Decisions of the Nevada State District Court,
which had affirmed the Nevada State Engineer's ("NSE") Orders
approving the water permits and Monitoring, Management and
Mitigation Plan ("3M Plan") for the Mt. Hope Project. The Company
awaits direction from the District Court in its instruction to the
NSE regarding the Company's applications for water
permits.
Mr. Hansen said, "We look forward to supporting our applications
and demonstrating that our mitigation approach will dispel any
potential impacts to senior water right holders when we begin
pumping water for the Mt. Hope Project. We respect the
process and will comply with the direction from the District Court
and the NSE to protect senior water rights holders."
Mt. Hope Project Engineering and Equipment
Procurement
Engineering remains approximately 65% complete at the Mt. Hope
Project. There is substantially no ongoing engineering and
procurement effort. Through December 31, 2015, $85.7 million in payments on equipment orders
have been funded by EMLLC, which has now ordered or purchased most
of the long-lead milling equipment, haul trucks, and mine
production drills, and has maintained an ongoing letter of intent
preserving deposits and indexed pricing for the purchase of two
electric shovels.
Based on its current forecast, the Company does not anticipate
taking delivery of the haul trucks, drills, and electric shovels in
2016 and will work with the respective vendors to extend these
agreements annually until the Company obtains financing for
construction of the Mt. Hope Project.
The Company anticipates it will re-initiate its engineering and
procurement once market conditions allow for full Mt. Hope Project
financing.
2016 Outlook and Priorities
General Moly's priorities for 2016 are to:
- Prudently manage financial liquidity and flexibility to sustain
the Company over the medium term, including continued stringent
cost management throughout the organization and rescheduling of
equipment procurement, and to fund current business activities into
early 2018, excluding potential additional AMER investments;
- Leverage General Moly's technical and financial skills and
expertise to work jointly with AMER to identify value-accretive
acquisition opportunities with a focus on base metal prospects in
North America;
- Effect reinstatement of permits for water rights at the Mt.
Hope Project, which would lead to the Tranche 2 investment of
$6.0 million by AMER, contingent on a
molybdenum price rise to $8 per pound
for 30 consecutive calendar days;
- Maintain existing federal and state permit status for the Mt.
Hope Project.
About General Moly
General Moly is a U.S.-based molybdenum mineral development,
exploration and mining company listed on the NYSE MKT and the
Toronto Stock Exchange under the symbol GMO. The Company's primary
asset, an 80% 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 wholly-owned Liberty Project, a molybdenum and
copper property also located in central Nevada, General Moly's goal is to become the
largest pure play primary molybdenum producer in the world.
Contact:
Scott
Roswell
(303)
928-8591
info@generalmoly.com
Website: 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 a re-grant of its water permits and to maintain required
federal and state 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 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.
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