LAKEWOOD, Colo., Aug. 14, 2017 /PRNewswire/ -- General Moly,
Inc. (the "Company" or "General Moly") (NYSE MKT and TSX: GMO)
announced its financial results for the second quarter ended
June 30, 2017 and, as previously
announced, strengthened its balance sheet through a $6.0 million private placement with its largest
shareholder AMER International Group ("AMER"), which is expected to
close next month.
Second quarter and to date highlights:
- The Company and AMER agreed to accelerate the Tranche 2 private
placement of $6.0 million of General
Moly common shares priced at the volume weighted average price
("VWAP") for the 30-day period ending August
7, 2017 of $0.41 for 14.6
million common shares with closing expected by September 30, 2017, under a second amendment to
the parties' Investment and Securities Purchase Agreement ("Amended
Investment Agreement").
- In addition, under the Amended Investment Agreement, the
Company and AMER also agreed to accelerate the Tranche 3
$10.0 million private placement at a
$0.50 price for 20.0 million common
shares and to amend certain conditions related to completion of
Tranche 3.
- During the second quarter, Corporate and Liberty Project costs
were $1.7 million, 4% higher than the
year ago quarter as a result of $0.3
million in due diligence costs evaluating base metal
acquisition opportunities with AMER. This business development work
is expensed from the Company's restricted cash reserved for such
purpose and for the procurement of a bank loan for future
development of the Mt. Hope Project. Over the full year 2017, the
Company expects to maintain the quarterly cash burn rate of
$1.5 million per quarter, excluding
further due diligence costs.
- At the Mt. Hope Project in Nevada, the Company's 80% owned joint venture
operating company Eureka Moly, LLC ("EMLLC") ended the second
quarter of 2017 with a restricted cash balance of $11.0 million (100% basis) compared to
$13.0 million at year end 2016 in a
cash reserve account. Additional cost reductions to maintenance
expenses have extended Mt. Hope's self-funding for care and
maintenance by several months into 2022.
- The Company reported a net loss for the three months ending
June 30, 2017 of $1.9 million ($0.02
per share), which is level with the same net loss for the prior
year period.
Bruce D. Hansen, Chief Executive
Officer, said, "We are well funded to continue to pursue
value-accretive joint business development opportunities in the
under-valued base metal sector with our strategic partner AMER. Our
Mt. Hope Project will advance when the molybdenum market improves
with AMER helping to procure and guarantee a Bank Loan of
approximately $700.0 million from a
major Chinese bank or banks. In the meantime, we look forward
to receiving a decision from the Nevada Supreme Court concerning
our efforts to obtain reinstatement of our permits for water rights
at the Mt. Hope Project and we continue to make progress with the
Bureau of Land Management ("BLM") on the completion of a
Supplemental Environmental Impact Statement ("EIS") for the
reissuance of our Record of Decision ("ROD"). The Notice of Intent
for the Supplemental EIS was recently published by BLM."
Table 1: Financial Summary
($ and Shares in 000,
Except Per Share and Molybdenum
Price)
|
2Q
2017
|
2Q
2016
|
2Q YOY
Variance
|
Exploration
& evaluation expenses
|
$
137
|
$
118
|
16%
|
General and
administrative expenses, including non-cash
stock compensation
|
1,586
|
1,546
|
3%
|
Total Operating
Expenses
|
1,723
|
1,664
|
4%
|
Interest
expense
|
(225)
|
(250)
|
n.a.
|
Net Loss
|
$
(1,948)
|
$
(1,914)
|
2%
|
Net Loss Per
Share
|
$
(0.02)
|
$
(0.02)
|
0%
|
Avg. Weighted Shares
Outstanding
|
111,168
|
110,568
|
1%
|
Table 2: Balance Sheet Summary
($ in 000)
|
June 30,
2017
|
Dec 31,
2016
|
Cash and Cash
Equivalents
|
$
5,289
|
$
8,470
|
Current
Assets
|
5,418
|
8,559
|
Current
Liabilities
|
1,230
|
1,520
|
Working
Capital
|
4,188
|
7,039
|
Restricted
cash held at EMLLC
|
11,046
|
13,025
|
Other
restricted cash
|
1,812
|
1,957
|
Total
Assets
|
333,227
|
337,286
|
|
|
|
Long term
debt
|
1,340
|
1,340
|
Sr.
convertible notes
|
5,687
|
5,540
|
Return of
contributions payable to POS-Minerals
|
33,641
|
33,641
|
Other
liabilities
|
12,974
|
12,912
|
Long term
liabilities
|
53,642
|
53,433
|
|
|
|
Contingently
Redeemable Non-controlling Interest
|
172,644
|
172,659
|
Total Shareholders'
Equity
|
$
105,711
|
$
109,674
|
Amended Investment Agreement with AMER
As described in the Company's August 8,
2017 news release, under the Amended Investment Agreement,
AMER and General Moly agreed to amend the warrants previously
provided to AMER, whereby the expiration of the warrants were
extended to the third anniversary of the reissuance of the ROD for
the construction and operation of the Mt. Hope Project. The number
of warrants (80 million), exercise price of $0.50 and vesting conditions for the warrants
(exercisable upon completion of the approximately $700.0 million Bank Loan for the Mt. Hope
Project) remain unchanged.
A sum of $5.5 million of the
Tranche 2 proceeds will be allocated to general corporate purposes
and $0.5 million will be directed to
the existing expense reimbursement account to cover costs related
to Mt. Hope Project financing and other jointly sourced business
development opportunities.
The Tranche 3 private placement for $10.0
million of General Moly common shares, priced at
$0.50, is conditioned on closing on
the later of (i) March 31, 2018 (or
90 days following the close of a joint business opportunity
involving use of 10.0 million shares of GMI common stock) or (ii)
90 days after reinstatement of water permits from the Nevada State
Engineer for the Mt. Hope water permits. A sum of $9.5 million of the funds will be directed to
general corporate purposes and $0.5
million will be allocated to the expense reimbursement
account described above.
Mt. Hope Permitting Update
The Company continues to support the BLM in their completion of
a Draft Supplemental EIS for the Mt. Hope Project to be advanced to
the public for review with a Notice of Availability ("NOA") in the
third quarter. The Supplemental EIS will address concerns under the
National Environmental Policy Act ("NEPA") raised by
the December 28, 2016 Opinion of the U.S Court of Appeals
for the Ninth Circuit ("Ninth Circuit"). The Ninth
Circuit reversed, on technical grounds, the U.S. District Court's
ruling on the Mt. Hope Record of
Decision, on a narrow issue related to a baseline air quality
analysis and related cumulative impact examination.
General Moly and its independent environmental management firm
have completed additional air quality analysis of direct and
cumulative impacts to air quality to address the Ninth Circuit's
concerns about the baseline assumptions in the Environmental Impact
Statement.
The Company anticipates receiving the Record of Decision by
early 2018.
Solar Energy Development Lease Option at Liberty
Project
General Moly and a subsidiary of Solar Reserve, LLC of
Santa Monica, California entered
into an Option Agreement and potential Land Lease Agreement (if the
option is exercised) for photovoltaic solar energy development
at General Moly's Liberty Project, near Tonopah, Nevada, as announced in General
Moly's news release on August 1,
2017.
The agreement provides for a three-year option to lease a
minimum of 500 acres and easements associated with vacant land
wholly owned by General Moly and will not impact the Liberty
Project's future proposed mining plans. If the option is
exercised, the parties will enter into a 30-year lease for up to
700 acres of land, with an option to extend for an additional five
years at the end of the initial lease term.
If the option is exercised for solar energy development, the
lease revenue will offset a portion of the Liberty Project's care
and maintenance costs, bolster the local economy and support
Nevada's renewable energy supply
targets.
Molybdenum Market
The U.S. molybdenum oxide price per pound has been in the
mid-$7 range recently. During the
second quarter of 2017, the U.S. molybdenum oxide price per pound
ranged from a high of $9.10 in
April 2017 to a low of $7.30 in June 2017
(source: Metal Bulletin). This is compared with the 52-week range
of a low of $6.60 per pound at
year-end 2016 and the recent high of $9.10 in April.
From the beginning of 2017 to April
2017, molybdenum prices rose on stronger demand for
stainless steel in China and
higher global steel demand, according to Roskill, a metals and
minerals research firm, based in the United Kingdom. Molybdenum demand in
China and globally had softened by
June 2017. Roskill anticipates higher molybdenum prices as
demand from the stainless steel industry rebounds in late 2017,
continuing into 2018 with expected tight supply, with a projected
growth in stainless steel production of 2.9% in 2017.
During 2016, the molybdenum market saw a slow recovery from 2015
with a range of between $5.20 and
$8.10 per pound. Led by China, stainless steel production worldwide
increased by 10.2% to 45.8 million tonnes in 2016 over 2015,
according to the International Stainless Steel Forum.
Mr. Hansen said, "The molybdenum market continues to improve and
we anticipate further improvement over the next few years. We
believe the gradual recovery in the molybdenum price is presaged by
a stabilizing oil and gas industry with increased drilling activity
in North America leading the
worldwide rise and higher steel prices, reflecting ramped up world
steel demand as the world's largest economies are all
expanding."
In July 2017, General Moly
launched a new Moly Bits blog, written by Mr. Hansen, commenting on
the expanding global market for liquid natural gas and a
stabilizing oil industry, indicating positive demand support for
molybdenum.
Mr. Hansen noted that oil and gas, chemical and petro-chemical
industries account for 30% of molybdenum end-use demand, according
to SMR Research. Molybdenum end use in automotive (15%), other
transportation (8%) and power generation (7%) account for another
30% of molybdenum demand. Excerpts from Moly Bits are provided
below:
The common bond for the
molybdenum market and the oil and gas industry is the use of steels
alloyed with molybdenum as well as molybdenum catalysts and
lubricants in the extracting, processing, refining, and
transporting of oil and gas products.
A stable and active oil
industry is supportive of molybdenum prices through rising demand
for these specialty steels and catalysts…We believe that moly
prices will strengthen over the medium term driven by increasing
steel demand from the resurgence in oil and gas drilling in
North America and the flourishing
LNG trade worldwide. …
The consensus among industry
observers, including BP and Royal Dutch
Shell, is that LNG will be the essential, low-cost fuel of
choice to meet the rising electricity demand in emerging economies.
Liquefaction technology has enabled natural gas produced in
the United States to become a
mobile product.
The Shell LNG
Outlook report projected world LNG demand to rise at 4-5%
per year from 2015 to 2030. Shell reported that in 2016, global LNG
demand was 265 million tonnes with imports by 35 countries, led by
China, Egypt and India. Compared with 2000, there were only 10
importing countries.
LNG is helping the U.S. move
towards energy independence to be a net export of total energy in
the 2020s, according to the U.S. Energy Information
Administration (EIA).
Subscribe, at no cost, on the Company's website. A subscriber
can unsubscribe at any time in the Moly Bits email.
2017 Outlook and Priorities
General Moly's priorities for the remainder of 2017 are to:
- Prudently manage financial liquidity and flexibility to sustain
the Company over the medium term, including continued stringent
cost management throughout the organization, rescheduling of
equipment procurement, and funding of current business activities
into 2018.
- Leverage the Company's technical and financial skills and
expertise to work jointly with AMER and others to identify
value-accretive acquisition opportunities with a focus on base
metal and ferro-alloy prospects in the western hemisphere;
- Effect reinstatement of the ROD, and reissuance of permits for
water rights at 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 primary molybdenum producer in the world.
Molybdenum is a metallic element used primarily as an alloy
agent in steel manufacturing. When added to steel, molybdenum
enhances steel strength, resistance to corrosion and extreme
temperature performance. In the chemical and petrochemical
industries, molybdenum is used in catalysts, especially for cleaner
burning fuels by removing sulfur from liquid fuels, and in
corrosion inhibitors, high performance lubricants and polymers.
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 Record of Decision,
ability to maintain required federal and state permits to continue
construction, and commence production, ability to raise required
project financing, ability to respond to adverse governmental
regulation and judicial outcomes, and ability to maintain and /or
adjust 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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