LAKEWOOD, Colo., Nov. 6, 2017 /PRNewswire/ -- General Moly,
Inc. (the "Company" or "General Moly") (NYSE MKT and TSX: GMO)
announced its financial results for the third quarter ended
September 30, 2017 and reiterated
that the Company's balance sheet was strengthened through a
$6.0 million private placement with
its largest shareholder AMER International Group ("AMER"),
which closed on October 16,
2017.
Third quarter and to date highlights:
- The Company and AMER closed 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 conveyed to AMER. Of the $6.0
million in equity sale proceeds, $5.5
million is available for general corporate purposes and
$0.5 million will be held in a loan
procurement account to cover costs related to Mt. Hope Project
financing and other jointly sourced business development
opportunities.
- During the third quarter, Corporate and Liberty Project costs
were $1.4 million, excluding
$0.3 million in due diligence costs
associated with evaluating base metal acquisition opportunities
with AMER. These due diligence costs are paid from the Company's
restricted cash account reserved for such purposes and for the
future Mt. Hope financing costs. The Company is on track in
achieving its goal of maintaining a quarterly cash burn rate of
$1.5 million per quarter for the full
year 2017, 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 third
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
September 30, 2017 of $2.2 million ($0.02
per share), up $0.1 million from the
prior year period as a result of the due diligence costs described
above.
- Current cash and cash equivalents at September 30, 2017 were $3.4 million, before recognition of the
$6.0 million from the closing of
Tranche 2 under the AMER Investment Agreement.
Bruce D. Hansen, Chief Executive
Officer, said, "Our Company is well positioned for the continuing
gradual recovery of the molybdenum market. Steel demand in
China and worldwide has rebounded
strongly in 2017 underpinning molybdenum demand. Global stainless
steel production rose 14.5% year-over-year to 11.8 million tonnes
in the first quarter 2017, according to the International Stainless
Steel Forum. In the United States
and around the world, oil and gas drilling activity requiring
moly-reinforced steel has bounced back to over 2,000 operating
rigs, a level last seen two years ago. While the fourth quarter
typically reflects lower molybdenum demand from steel producers
during the winter, we believe we will continue to see higher
quarterly highs and lows in the molybdenum prices in 2019."
Table 1: Financial
Summary
|
|
($ and Shares in 000,
Except Per Share and Molybdenum Price)
|
3Q
2017
|
3Q
2016
|
3Q YOY
Variance
|
Exploration
& evaluation expenses
|
$
302
|
$
235
|
29%
|
General and
administrative expenses, including non-cash stock
compensation
|
1,660
|
1,589
|
4%
|
Total Operating
Expenses
|
1,962
|
1,824
|
8%
|
Interest
expense
|
(205)
|
(266)
|
n.a.
|
Net Loss
|
$
(2,161)
|
$
(2,086)
|
4%
|
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)
|
September 30,
2017
|
December 31,
2016
|
Cash and Cash
Equivalents
|
$
3,377
|
$
8,470
|
Current
Assets
|
3,384
|
8,559
|
Current
Liabilities
|
1,867
|
1,520
|
Working
Capital
|
1,517
|
7,039
|
Restricted
cash held at EMLLC
|
11,046
|
13,025
|
Other
restricted cash
|
854
|
1,957
|
Total
Assets
|
331,880
|
337,286
|
|
|
|
Long term
debt
|
1,340
|
1,340
|
Sr.
convertible notes
|
5,705
|
5,540
|
Return of
contributions payable to POS-Minerals
|
33,641
|
33,641
|
Other
liabilities
|
13,003
|
12,912
|
Long term
liabilities
|
53,689
|
53,433
|
|
|
|
Contingently
Redeemable Non-controlling Interest
|
172,638
|
172,659
|
Total Shareholders'
Equity
|
$
103,686
|
$
109,674
|
Closure of Tranche 2 of the Amended Investment Agreement with
AMER
As described in the Company's October 16,
2017 news release, under the Amended Investment Agreement,
AMER and General Moly announced the closure of the second tranche
of the parties' three-tranche financing agreement, originally
announced in 2015.
With the previous closure of Tranche 1 and the issuance of 13.3
million shares in November 2015, and
the closure of Tranche 2 and the issuance of 14.6 million shares,
AMER now holds an approximately 22% outstanding interest. The
closure of these two investment tranches with AMER is part of a
broader financing agreement announced in April 2015.
Additionally, AMER has committed to complete the third of the three
tranche private placements, described below, as well as to procure
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.
The third tranche is a $10.0
million private placement for 20 million shares, priced at
$0.50 and conditioned upon the
reissuance of water permits for the Mt. Hope Project or the earlier
completion of a joint business opportunity involving issuance of
more than 10.0 million shares of GMI common stock. Tranche 3 may be
subject to General Moly stockholder approval, as described
below.
Mt. Hope Permitting Update
Work is continuing of the draft SEIS for the Mt. Hope Project to
be advanced to the public for review and comment pursuant to a
Notice of Availability ("NOA"). The SEIS will incorporate the
additional air quality analysis completed by the Company and its
independent environmental management firm to 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 . The Ninth Circuit reversed, on
technical grounds, the U.S. District Court's ruling on the Mt. Hope
ROD, on a narrow issue related to a baseline air quality analysis
and related cumulative impact examination.
The Company anticipates receiving the ROD in the first half of
2018.
Mt. Hope Water Rights Update
On September 27, 2017, the Nevada
Supreme Court issued its Opinion affirming the Nevada District Court's March 2016 Order which vacated the water permits
concerning the Mt. Hope Project. The Company and the Nevada
State Engineer had challenged the District Court's Order last
year.
In late 2015 and 2016 the Company filed new water applications
with the Nevada State Engineer for the full quantity of water
necessary to construct and operate the Mt. Hope Project.
Action on these applications was pending, awaiting the decision
that was presented by the Nevada Supreme Court last month. The
Company has requested a hearing before the Nevada State Engineer to
proceed on these applications to change the point of diversion for
use at the Mt. Hope Project. The Company will also present
evidence of its ability to protect the interests of senior water
right holders in the basin in support of these change
applications.
Molybdenum Market
Since the beginning of the year, the U.S. molybdenum oxide price
per pound has increased 29% to the mid October price level of
$8.65. The molybdenum price was
$6.70 per pound at yearend 2016.
During the third quarter of 2017, the U.S. molybdenum oxide
price per pound generally rose from a low of $7.18 in July 2017
to a high of $8.90 in September 2017. This is compared with the 52-week
range of a high of $8.98 in
April 2017 and a low of $6.38 in November 2016.
China consumes approximately
one-third of global molybdenum demand and produces more than
one-third of global molybdenum supply. Molybdenum supply
constricted in China and the
Americas during the third quarter. Some mines in China had restricted production from
environmental inspections and poor weather conditions, while higher
output from steel mills in China
increased molybdenum demand in August and September 2017.
In a recently published Molybdenum Market Outlook Update report,
the CPM Group, a commodities research and consulting firm in
New York, noted that stronger than
expected molybdenum demand in China was driven by increased steel
production. Robust economic expansion worldwide triggered higher
steel output in 2017, benefitting molybdenum demand.
While global molybdenum demand is projected to increase 4.8% to
535 million pounds in 2017 over 2016, worldwide molybdenum supply
is now projected to increase to 561 million pounds in 2017 from 510
million pounds in 2016, according to CPM. During 2017, higher
molybdenum prices and depreciation of the Chinese yuan leading to
lower production costs in China
spurred increased molybdenum primary production, CPM stated. In
addition, CPM reported increased molybdenum byproduct supply from
higher production from major copper mines as copper prices
rebounded in 2017.
CPM projects that after a softer seasonal fourth quarter demand,
the molybdenum per pound price to average $9.00 in 2018 and for real prices to average
$12.81 for the period 2019 to
2022.
Roskill, a global metals and minerals research firm in the
United Kingdom, anticipates higher
molybdenum prices from strengthening demand, particularly from the
stainless steel industry, going into the end of 2017 and continuing
into 2018 with expected tight molybdenum supply, projecting that
stainless steel production will grow by 2.9% in 2017.
2017 Outlook and Priorities
General Moly's priorities for the remainder of 2017 and into
2018 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
through 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 American LLC
(formerly known as 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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