LAKEWOOD, Colo., March 13, 2018 /CNW/ -- General Moly, Inc.
(the "Company" or "General Moly") (NYSE AMERICAN and TSX: GMO)
announced its financial results for the fourth quarter and full
year ended December 31, 2017
today. The Company entered 2018 with an unrestricted cash
balance of approximately $6.7 million
at year-end 2017. With molybdenum prices increasing 26% to
$12.95 per pound in 2018 to date as
reported by Platts, the Company is well positioned as the only
western-exchange listed, pure-play molybdenum ("moly") mineral
development company with one of the world's largest moly deposits,
the Mt. Hope Project in central Nevada. The Company expects to re-obtain the
federal Record of Decision and new Nevada water permits for the Mt. Hope Project
by early 2019, and to advance its exploration of a new
copper-silver target ("Cu-Ag Target") within a 17-acre zinc
mineralized anomalous area, southeast of the Mt. Hope moly deposit, during 2018.
Fourth quarter and year-to-date highlights:
- The Company announced the closure of the Tranche 2,
$6.0 million private placement with
AMER International Group ("AMER")in October
2017;
- The Company's 80% owned joint venture company, which owns and
operates the Mt. Hope Project, Eureka Moly, LLC ("EMLLC"); ended
2017 with a balance of $9.9 million
(100% basis) in a restricted cash reserve account, and remains
self-funded through 2021 based on estimated care and maintenance
expenses;
- The Company reported the identification of a potential
high-grade Cu-Ag Target along with a significant zinc mineralized
area at the Mt. Hope Project site in a news release on March 1, 2018;
- The molybdenum price rose to $13.00/lb in early March
2018, the highest level since 2014.
The Company reported a net loss for the three months ending
December 31, 2017 of $2.0 million ($0.01
per share), compared to a net loss of $1.9
million ($0.01 per share) for
the same prior year period. Net loss for the full year ending
December 31, 2017 was $8.0 million ($0.07
per share), compared to a loss of $8.1
million ($0.07 per share) for
the same prior year period.
During the fourth quarter, cash use of $3.3 million was the result of $1.7 million at the Mt. Hope Project related to
EMLLC owners' costs, funded by the restricted cash reserve account,
and $1.6 million in the Company's
general and administrative expenses, inclusive of costs incurred at
the Liberty Project, funded by unrestricted cash. The Company
anticipates its quarterly unrestricted cash burn rate to average
approximately $1.3 million per
quarter for the full year 2018, excluding any drill program
exploring for copper, silver and zinc at the Mt. Hope Project.
The Company continues to evaluate joint business development
opportunities in base metal and ferroalloys with AMER, with
$0.8 million disbursed from the
expense reimbursement account in pursuit of such endeavor during
2018. This account within restricted cash is designed to cover
costs related to Mt. Hope Project financing and other jointly
sourced business development opportunities and was funded by a
portion of the AMER Tranche 1 and 2 private placements made in 2015
and 2017.
Bruce D. Hansen, Chief Executive
Officer, said, "We are pleased that the moly price improved during
2017, rising 52% at year-end 2017 from 2016, according to Platt's
global moly oxide prices. Moly was the second best performing metal
in 2017 amongst BMO Capital Market's universe of metals and mining
commodities and we believe the moly price recovery has future
appreciation potential. Against this rapidly improving molybdenum
market, we are making progress with our new water permit
applications and Supplemental Environmental Impact Statement and
believe receipt of a new Record of Decision and water permits could
be obtained early next year.
"In the meantime, we are also excited about the exploration
potential for copper, silver and zinc in a skarn area at the Mt.
Hope Project that was identified from our internal analysis of
decades of historical drilling and supported by the
high-chargeability zones indicated by a recent high-intensity,
ground-based Induced Polarization ("IP") survey. We plan to review
the historic logs and core to update the geologic identification of
the area in conjunction with further evaluation of the IP results
for geologic and lithological interpretation to define a new
drilling program. The scope of exploration for 2018 will be
contingent on continued positive results and will likely require
financing."
Table 1: Financial
Summary
|
|
($ and Shares in 000,
Except Per Share and Molybdenum Price)
|
2017
|
4Q
2017
|
2016
|
4Q
2016
|
YOY
Variance
|
4Q YOY
Variance
|
Exploration
& evaluation expenses
|
$
756
|
$
181
|
$
1,077
|
$
178
|
-30%
|
2%
|
General and
administrative expenses, including non-cash stock
compensation
|
6,373
|
1,619
|
6,050
|
1,560
|
5%
|
4%
|
Total Operating
Expenses
|
7,129
|
1,800
|
7,127
|
1,738
|
0%
|
4%
|
Interest
expense
|
(942)
|
(223)
|
(961)
|
(196)
|
n.a.
|
n.a.
|
Net Loss
|
$
(8,071)
|
$
(2,023)
|
$
(8,067)
|
$
(1,919)
|
0%
|
5%
|
Net Loss Per
Share
|
$
(0.07)
|
$
(0.01)
|
$
(0.07)
|
$
(0.01)
|
0%
|
0%
|
Avg. Weighted Shares
Outstanding
|
114,315
|
123,735
|
110,521
|
110,571
|
3%
|
12%
|
|
|
Table 2: Balance
Sheet Summary
|
($ in 000)
|
Dec. 31,
2017
|
Dec. 31,
2016
|
Dec. 31 YOY
Variance
|
Cash and Cash
Equivalents
|
$
6,676
|
$
8,470
|
-21.2%
|
Current
Assets
|
6,790
|
8,559
|
-20.7%
|
Current
Liabilities
|
1,102
|
1,520
|
-27.5%
|
Working
Capital
|
5,688
|
7,039
|
-19.2%
|
Restricted
cash held at EMLLC
|
9,911
|
13,025
|
-23.9%
|
Other
restricted cash
|
1,787
|
1,957
|
-8.7%
|
Total
Assets
|
335,775
|
337,286
|
-0.4%
|
|
|
|
|
Long term
debt
|
1,340
|
1,340
|
0.0%
|
Sr.
convertible notes
|
5,745
|
5,540
|
3.7%
|
Return of
contributions payable to POS-Minerals
|
33,641
|
33,641
|
0.0%
|
Other
liabilities
|
13,529
|
12,912
|
4.8%
|
Long term
liabilities
|
54,255
|
53,433
|
1.5%
|
|
|
|
|
Contingently
Redeemable Non-controlling Interest
|
172,633
|
172,659
|
0.0%
|
Total Shareholders'
Equity
|
$
107,785
|
$
109,674
|
-1.7%
|
Closure of Tranche 2 of the Private Placement with
AMER
The Company issued 14.6 million shares to the Company's largest
shareholder, AMER, upon the closure of Tranche 2 in October 2017, priced at the volume weighted
average price ("VWAP") for the 30-day period ending August 7, 2017, the date of an amendment to the
AMER Investment Agreement entered into accelerating the closure of
Tranche 2, of $0.41 per share for a
private placement of $6.0 million by
AMER. The equity sale proceeds of $5.5
million were designated for general corporate purposes,
while $0.5 million were placed in the
restricted cash expense reimbursement account to cover costs
related to Mt. Hope Project financing and other jointly sourced
business development opportunities.
The closure of this private placement is part of a broader
financing agreement, originally announced on April 17, 2015, as amended and described in the
Company's news releases of November 3,
2015 and August 8, 2017. Under
the agreement, AMER committed to provide to General Moly
$20.0 million in three tranches of
private placements in addition to assisting with procuring a
$700.0 million Chinese bank loan, for
the development of the Company's Mt. Hope Project in Nevada, that AMER will source and guarantee
when there are improved molybdenum prices over a sustained period
coupled with the receipt of water permits and Record of Decision
for the Mt. Hope Project.
Water Permit Hearing Scheduled & Supplemental EIS
Update
In other developments for the Company, the Nevada State Engineer
has scheduled a hearing beginning September
11, 2018 on the Company's new change applications for water
permits at the Mt. Hope Project. The hearing is
scheduled for eight days in Carson City. The Company intends
to submit evidence of its ability to protect senior water right
holders while it pumps the water necessary for production at the
Mt. Hope molybdenum
project. A decision from the State Engineer is anticipated by
early 2019.
In regards to progress with the draft Supplemental Environmental
Impact Statement ("EIS") for the Mt. Hope Project, the Company
continues to work with the Bureau of Land Management to address
concerns from the 2016 Order of the U.S. Court of Appeals for the
Ninth Circuit in its review of the 2012 EIS.
The Company has completed updated air quality and cumulative
impact studies, and is working to address questions posed by the
Court concerning the potential existence of public water
reserves. The Company anticipates moving forward with a draft
Supplemental EIS in compliance with public review and comment under
the National Environmental Policy Act in the second half of 2018,
followed by an anticipated Record of Decision ("ROD") approving the
Supplemental EIS in early 2019.
Mt. Hope Project Status
Engineering remains approximately 65% complete at the Mt. Hope
Project. Currently, there is no ongoing engineering and procurement
effort. The Company anticipates it will re-initiate its
engineering and procurement programs once market conditions allow
for full Mt. Hope Project financing.
Through December 31, 2017, EMLLC paid $87.9 million on equipment orders. EMLLC 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
2018 and continues to work with the respective vendors to extend
these agreements until the Company obtains financing for
construction of the Mt. Hope Project.
Exploration of Copper-Silver Target and Zinc Mineralization
at Mt. Hope
The Company has identified a potential high-grade Cu-Ag target
along with a significant zinc mineralized area at the Mt. Hope
Project site, southeast of the Mt.
Hope's molybdenum deposit in central Nevada.
A high-intensity, ground-based Induced Polarization ("IP")
survey, completed in February 2018 by
Quantec Geoscience, indicates a fairly continuous group of high
chargeability anomalies that appear aligned with the recently
identified Cu-Ag Target.
These anomalies lie between 100 feet and 1,000-plus feet from
the surface and trend northeast for over 1,000 feet. The IP survey
indicates that the anomalies could continue further to the
north-northeast and to the south where they appear to dip to the
east.
To date the preliminary exploration work was undertaken solely
by General Moly. The Company has presented the promising findings
described herein to its 20% joint venture partner at the Mt. Hope
Project, POS-Minerals Corporation a subsidiary of POSCO a large
South Korean steel company, and is the parties are discussing
value-sharing investment options. Any mining operation to exploit
economic mineralization will require the approval of
POS-Minerals.
Further exploration work proposed in 2018 will entail review of
historic logs and core to update the geologic interpretation of the
Skarn Area, potential re-assaying of historic drill samples,
further review of the IP results, and geologic and lithological
interpretation to define a new drilling program. General Moly
engaged Independent Mining Consultants of Tucson, Arizona, to support compilation and
review of the historic drill database. A full exploration
program for 2018 may be subject to additional financing. Refer to
the Company's news release dated March 1,
2018 for further information and disclosure, including the
review of technical information by a Qualified Person.
Increasing Molybdenum Prices
The global molybdenum spot price reached a recent high of
$13.00 per pound, as provided by
Platts, and has tripled from its low of $4.30 in October
2015.
Compelling market factors that the Company believes foreshadow
an industrial metals resurgence that should also benefit moly,
include a synchronized global economic expansion, further growth in
China and a late stage business
cycle with high metals' demand.
More than 70% of moly's first use is for steel production. The
World Steel Association reported that global crude steel production
increased by 5.3% to 1.7 billion metric tons in 2017 over 2016, led
by China as the world's largest
producer with 49.2% of total global production and an annual
production increase of 5.7%. World Steel also recently reported a
0.8% increase in global crude steel production in January 2018 from January
2017.
A significant consumer of steel products is the oil and gas
industry. Moly is the premier alloy to strengthen steel and make it
corrosion resistant. Baker Hughes reported that the worldwide
rig count increased 12% year-over-year in February 2018 to 2,271, including a 30%
year-over-year rise in the United
States with 969 rigs operating.
In its October 2017 molybdenum
market update, the CPM Group estimates that the supply and demand
will near equilibrium with a slight surplus in 2018 and anticipates
that the market will tip into deficit in 2019. The deficit is
expected to be exacerbated in 2020 and 2021. Such timing would
align with the potential development of the Mt. Hope Project, upon
a sustained improvement in the molybdenum price.
Further information about the moly market is described in the
Company's January 18 and March 2, 2018 news releases. Please watch for
periodic molybdenum market updates from the Company.
2018 Outlook and Priorities
General Moly's priorities for 2018 are to:
- 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 ferroalloy prospects.
- Proceed with geologic assessment and further exploration of the
potential copper-silver target and zinc mineralization at the Mt.
Hope Project;
- Continue to progress towards obtaining a ROD approving the
Supplemental EIS and the issuance of water permits for the Mt. Hope
Project.
- Prudently manage financial liquidity and flexibility to sustain
the Company over the medium term, excluding potential additional
equity investments from AMER or other potential strategic
sources.
About General Moly
General Moly is a U.S.-based molybdenum mineral development,
exploration and mining company listed on the NYSE American 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 Record of Decision,
ability to maintain required federal and state permits to continue
construction, and commence production of molybdenum, copper,
silver, lead or zinc, ability to identify any economic mineral
reserves of copper, silver, lead or zinc; ability of the Company to
obtain approval of its joint venture partner at the Mt. Hope
Project in order to mine for copper, silver, lead or zinc, ability
to raise required project financing or funding to pursue an
exploration program related to potential copper, silver, lead or
zinc deposits at Mt. Hope, 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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