LAKEWOOD, Colo., May 8, 2018 /CNW/ -- General Moly, Inc. (the
"Company" or "General Moly") (NYSE AMERICAN and TSX: GMO) announced
its financial results today for the first quarter ended
March 31, 2018. The Company
ended the quarter with an unrestricted cash balance of
approximately $6.0 million and is
poised to benefit as the only western-exchange listed, pure-play
molybdenum ("moly") development company in the continued
strengthening of the moly market.
First quarter and year-to-date highlights:
- Results from a high-intensity, ground-based Induced
Polarization ("IP") survey identified an apparent contiguous group
of high chargeability anomalies aligned with the recently
identified high-grade copper-silver mineral zone ("Cu-Ag
Target"), at the Mt. Hope Project in central Nevada; analysis of the geophysical and
historical drilling results is ongoing to define an initial
exploration plan;
- The Company's 80%-owned joint venture company, which owns and
operates the Mt. Hope Project, Eureka Moly, LLC ("EMLLC"); ended
the quarter with a balance of $9.0
million (100% basis) in a restricted cash reserve account,
and remains self-funded through 2021 based on estimated care and
maintenance expenses;
- The moly oxide daily global spot price averaged $12.23/lb during the quarter, up 40 percent over
the average of $8.76/lb in 4Q 2017,
according to Platts;
- A revamped www.generalmoly.com website with improved
functionality and broader content, including moly market
information was rolled out recently, as announced in the Company's
news release on April 30, 2018.
The Company reported a net loss for the three months ending
March 31, 2018 of $2.6 million ($0.02
per share), compared to a net loss of $1.9
million ($0.02 per share) for
the same prior year period.
During the quarter, total cash use of $2.1 million was the result of $0.4 million spent at the Mt. Hope Project
related to EMLLC owners' costs, funded by the restricted cash
reserve account, and $1.7 million
cash spent for general and administrative expenses, inclusive of
costs incurred at the Liberty Project, funded by $1.3 million in unrestricted cash and
$0.4 million drawn from a restricted
account for business development activities. The Company's
cash balance of $6.0 million at the
end of 1Q 2018 included $0.5 million
in proceeds from the issuance of shares under an At-The-Market
equity program. As described in its March 13, 2018 news release on full year 2017
results, 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 its largest
shareholder, AMER International Group ("AMER"). In 1Q 2018,
the Company disbursed $0.4 million on
M&A activities. This restricted cash account 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 continuing our exploration efforts with
support of Dr. Mark Osterberg,
Principal Consulting Geologist, and his team at Mine Mappers, LLC,
in the evaluation of the Cu-Ag Target within a 17-acre zinc
mineralized area covering historical underground mining of
primarily zinc at the Mt. Hope Project. We continue to be excited
about the exploration potential of this skarn area of interest,
immediately adjacent to the moly deposit at Mt. Hope and expect to provide an update
announcement later this quarter regarding our initial exploration
plan. In regards to the moly price, we saw a brief downturn where
the price retraced to $11.83/lb in
mid-April before increasing to the current price of $12.40/lb, trailing the same general pattern as
the oil price, which is now at the $70/barrel mark. As long as there is a
sustainable oil industry with robust oil drilling activity and oil
and gas infrastructure investment globally, there is strong demand
for specialty steels using moly."
Table 1: Financial Summary
($ and Shares in 000,
Except Per Share and Molybdenum Price)
|
1Q
2018
|
1Q
2017
|
1Q YOY
Variance
|
Exploration
& evaluation expenses
|
$
159
|
$
137
|
16%
|
General and
administrative expenses, including non-cash stock
compensation
|
2,472
|
1,508
|
64%
|
Total Operating
Expenses
|
2,631
|
1,645
|
60%
|
Interest
expense
|
(162)
|
(288)
|
n.a.
|
Net Loss
|
$
(2,793)
|
$
(1,933)
|
44%
|
Net Loss Per
Share
|
$
(0.02)
|
$
(0.02)
|
0%
|
Avg. Weighted Shares
Outstanding
|
126,757
|
111,087
|
14%
|
|
|
|
|
Table 2: Balance Sheet Summary
($ in 000)
|
March 31,
2018
|
Dec. 31,
2017
|
QOY
Variance
|
Cash and Cash
Equivalents
|
$
5,971
|
$
6,676
|
-10.6%
|
Current
Assets
|
6,093
|
6,790
|
-10.3%
|
Current
Liabilities
|
1,072
|
1,102
|
-2.7%
|
Working
Capital
|
5,021
|
5,688
|
-11.7%
|
Restricted
cash held at EMLLC
|
9,028
|
9,911
|
-8.9%
|
Other
restricted cash
|
1,400
|
1,787
|
-21.7%
|
Total
Assets
|
333,531
|
335,775
|
-0.7%
|
|
|
|
|
Long term
debt
|
1,340
|
1,340
|
0.0%
|
Sr.
convertible notes
|
5,722
|
5,745
|
-0.4%
|
Return of
contributions payable to POS-Minerals
|
33,641
|
33,641
|
0.0%
|
Other
liabilities
|
13,517
|
13,529
|
-0.1%
|
Long term
liabilities
|
54,220
|
54,255
|
-0.1%
|
|
|
|
|
Contingently
Redeemable Non-controlling Interest
|
172,449
|
172,633
|
-0.1%
|
Total Shareholders'
Equity
|
$
105,790
|
$
107,785
|
-1.9%
|
Water Permit & Supplemental EIS Update
The Company is preparing to submit evidence of its ability to
protect senior water right holders during the future operation of
the Mt. Hope moly project at a
hearing, with the Nevada State Engineer, beginning September 11, 2018. The hearing is
scheduled for eight days in Carson City. A decision from the
State Engineer is anticipated by early 2019.
In regards to progress with the draft Supplemental Environmental
Impact Statement ("SEIS") for the Mt. Hope Project, the Company and
the Bureau of Land Management ("BLM") are in review of the draft in
preparation of its notice of availability and publication in the
Federal Register. After publication, pursuant to the National
Environmental Policy Act ("NEPA"), the public will have an
opportunity to review the proposed SEIS and offer comments to the
BLM. Following completion of the NEPA review and comments,
the Company anticipates receipt of a Record of Decision ("ROD")
approving the SEIS 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 March 31, 2018, EMLLC paid $88.0 million on equipment orders. 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 identified a potential high-grade Cu-Ag Target along
with a significant zinc mineralized area at the Mt. Hope Project
site based on a review of historical drill results and past
exploration from the 1930s to 2008. The Company then tested the
area with an IP survey in February
2018, including 2D and 3D inversions, which produced
positive results reported by the Company in its news releases on
March 1, 2018 and April 5, 2018. Refer to these news releases for
further information and disclosure, including the review of
technical information by a Qualified Person, as defined in Canadian
National Instrument 43-101.
The group of high chargeability anomalies spatially align with
the Cu-Ag Target. These anomalies lie between 100 feet and
1,000-plus feet from the surface and extend northeastward for over
1,000 feet, where they appear to dip to the east.
The Company and Mine Mappers have been evaluating the historical
drill logs and core as well as the IP results to develop an initial
exploration plan. A full exploration program, including drilling
for 2018, may be subject to additional financing.
To date the preliminary exploration work was undertaken solely
by General Moly. Any mining operation to exploit economic
mineralization will require the approval of its 20% joint venture
partner at the Mt. Hope Project, POS-Minerals Corporation, a
subsidiary of POSCO, which is a large South Korean steel
company.
Increasing Molybdenum Prices
The current moly price is $12.40/lb, which is up from $10.25/lb at year end 2017 and $6.70/lb at yearend 2016, according to Platts.
The moly price reached a high of $13.00/lb in early March
2018, which was a level last seen in 2014.
Approximately 70% of molybdenum's first use is for steel
production as moly is a premier alloy to strengthen steel and make
it corrosion resistant. Demand has been strong for moly due to
increased output of steel containing moly, driven by a continued
robust recovery of the oil and gas industry. Rising oil and gas
prices have driven higher drilling and capital investment by the
industry which creates increased specialty steel and high strength
tubular steel demand.
In addition, global economic and infrastructure growth,
particularly in China,
India and emerging economies,
remained strong through 2017 and has moderated slightly into the
first quarter of 2018. The J.P. Morgan Global Manufacturing PMI
moved up slightly to 53.5 in April
2018 from the six-month low of 53.3 in March 2018, marking 26 straight months of global
expansion.
Further information about the moly market is described in the
Company's January 18, 2018 and
March 2, 2018 news releases. Please
watch for periodic moly market updates from the Company.
2018 Outlook and Priorities
General Moly's ongoing 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 SEIS
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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SOURCE General Moly, Inc.