LAKEWOOD, Colo., May 5, 2016 /CNW/ -- General Moly, Inc. (the
"Company" or "General Moly") (NYSE MKT and TSX: GMO) The Company
finished the first quarter with a strong cash balance of
approximately $15.8 million and
$17.2 million in restricted cash. The
Company remains positioned with financial liquidity to fund its
current business activities and working capital needs into early
2018.
First quarter highlights:
- The Company continued to lower the cash burn rate for Corporate
spend and Liberty Project costs to $2.0
million in the quarter versus $3.0
million spent in the first quarter of 2015, as it prudently
manages liquidity. Corporate and Liberty spending is
estimated to be lowered further and is projected to average about
$1.7 million per quarter going
forward.
- Mt. Hope Project's joint venture operating company Eureka Moly,
LLC ("EMLLC") ended the first quarter with a balance of
$14.7 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 focused efforts throughout the quarter on working
jointly with its long-term strategic partner AMER International
Group ("AMER") in assessing value-accretive acquisition
opportunities concentrated on base metal prospects in North America.
Announcing its financial results for the first quarter ended
March 31, 2016 today, the Company
reported a net loss for the three months ending March 31, 2016 of $2.1
million ($0.02 per share),
compared to a net loss of $3.8
million ($0.04 per share) for
the prior year period. The decrease in quarterly net loss was
primarily due to the Company's cost-cutting measures.
During the first quarter, cash use of $3.4 million, sourced from both restricted and
unrestricted funds, was the result of $0.6
million of Mt. Hope Project's EMLLC owners' costs,
$0.2 million of Liberty Project
costs, $0.8 million in retention
incentive payouts from agreements dated 2014 and 2015, and
$1.8 million in general and
administrative expenses.
Bruce Hansen, Chief Executive
Officer, remarked, "We continue to evaluate value-accretive,
acquisition opportunities jointly with AMER, for our mutual
benefit. Further, we continue to take decisive actions that
better position our Company to advance the development of the Mt.
Hope Project when market conditions improve. Through our
management restructuring and cost reduction programs, we have
achieved additional reductions in our Corporate spend and Liberty
Project care and maintenance costs, and we remain focused on
working toward the reinstatement of our water rights for the Mt.
Hope Project."
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 had received
approval from the Bureau of Land Management to lower the
reclamation financial guarantee requirement from $75.1 million to $2.8 million, based on the
current limited state of disturbance at the Mt. Hope Project in
late 2015. 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 $4.3 million net
return of collateral.
Table 1: Financial Summary
($ and Shares in
000)
|
1Q
2016
|
1Q
2015
|
1Q YOY
Variance
|
Exploration
& evaluation expenses
|
$ 546
|
$ 117
|
367%
|
General and
administrative expenses, including non-cash stock
compensation
|
1,362
|
2,986
|
-54%
|
Total Operating
Expenses
|
1,908
|
3,103
|
-39%
|
Interest
expense
|
(249)
|
(561)
|
-56%
|
Net Loss
|
$ (2,157)
|
$ (3,784)
|
-43%
|
Net Loss Per
Share
|
$ (0.02)
|
$ (0.04)
|
-50%
|
Avg. Weighted Shares
Outstanding
|
110,356
|
93,052
|
19%
|
|
Note: Exploration and evaluation expenses are substantially
higher in 2016 due to leach pad maintenance and repair performed at
the Liberty Project during that time period. No such work was
performed in 2015.
|
Table 2: Balance Sheet Summary
($ in 000)
|
March 31,
2016
|
December 31,
2015
|
Cash and Cash
Equivalents
|
$
15,836
|
$
13,047
|
Current
Assets
|
16,003
|
13,197
|
Current
Liabilities
|
2,723
|
2,404
|
Working
Capital
|
13,280
|
10,793
|
Restricted
cash held at EMLLC
|
14,687
|
16,636
|
Other
restricted cash
|
2,501
|
6,782
|
Total
Assets
|
345,015
|
346,311
|
|
|
|
Long term
debt
|
1,479
|
1,517
|
Sr.
convertible notes
|
5,382
|
5,316
|
Return of
contributions payable to POS-Minerals
|
33,884
|
33,884
|
Other
liabilities
|
12,936
|
12,523
|
Long term
liabilities
|
53,681
|
53,240
|
|
|
|
Contingently
Redeemable Non-controlling Interest
|
173,261
|
173,265
|
Total Shareholders'
Equity
|
$
115,350
|
$
117,402
|
Mt. Hope Project Water Rights and Permits
Update
In November 2015, the Nevada
Supreme Court issued its Remittitur to the Nevada State District
Court ("District Court") for the County of Eureka for further
proceedings consistent with its September
2015 Order that reversed and remanded the District Courts'
decisions upholding the Nevada State Engineer's approval of the
Monitoring, Management and Mitigation ("3M") Plan and water
permits. In March 2016, the
Nevada State District Court issued an Order in March 2016 vacating the Monitoring, Management,
and Mitigation ("3M") Plan, denying the applications and vacating
the water permits issued by the State Engineer. The State Engineer
has filed an appeal to the Nevada Supreme Court concerning the
District Court's interpretation of the Supreme Court's Opinion and
the District Court's exercise of executive authority in violation
of Nevada's Constitution and
Statutes. The Company has filed a similar appeal to the
Nevada Supreme Court, and has also filed a Motion to Alter or Amend
Judgment with the District Court, requesting the District Court
amend its Order and remand the water permits and 3M Plan to the
State Engineer to allow further proceedings to address the issues
raised by the Nevada Supreme Court.
Notwithstanding the pendency of the appeals to the Nevada
Supreme Court and the Motion to Amend or Alter Judgment, the
Company will move forward as expeditiously as possible in 2016 to
reobtain its water permits with the new applications that it filed
with the State Engineer in October
2015, following the Supreme Court's September
Order. In hearings to be held before the State
Engineer, the Company will provide additional evidence of its
ability to successfully mitigate any potential impacts to water
rights in Kobeh Valley that could result from the Mt. Hope
Project's new applications for water use.
Mr. Hansen said, "We look forward to supporting our new
applications and demonstrating that our mitigation approach will
mitigate 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 courts and
the State Engineer to protect senior water rights
holders."
2016 Outlook and Priorities
As was discussed in the Company's 2015 year-end financial
results news release, 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 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, as
well as adverse governmental regulation and judicial outcomes such
as 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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SOURCE General Moly, Inc.