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Press release from Business Wire

General Moly Announces Second Quarter 2011 Results

Wednesday, August 03, 2011

General Moly Announces Second Quarter 2011 Results08:30 EDT Wednesday, August 03, 2011 LAKEWOOD, Colo. (Business Wire) -- General Moly, Inc. (the "Company") (NYSE Amex and TSX: GMO) announced its unaudited financial results for the second quarter ended June 30, 2011. Net loss for the three months ended June 30, 2011 was approximately $5.4 million ($0.06 per share), compared to a loss of $3.2 million ($0.04 per share) for the year ago period. Net loss for the six months ended June 30, 2011 was approximately $9.5 million ($0.10 per share), compared to a loss of $6.0 million ($0.08 per share) for the year ago period. Our cash balance at the end of the second quarter was approximately $59 million compared to approximately $54 million at the end of 2010. During the second quarter, cash use of approximately $5 million was the result of approximately $2.1 million in development, engineering, and equipment deposit costs, approximately $2 million in General and Administrative costs, and approximately $0.9 million in debt issuance costs related to procurement of the Hanlong-sourced Chinese Bank Loan. Additionally, at June 30, 2011, the Company took a $3.4 million non-cash write down representing approximately 50% of a long-term deposit on mining equipment with the passage of a June 30, 2011 deadline for a firm purchase order. During the remainder of 2011, spending levels will largely be tied to progress toward receipt of the Mt. Hope project's permits, not including a $9 million advanced royalty payment due in the fourth quarter of 2011 under the Company's Mt. Hope lease. Financial information is included at the end of this release. MT. HOPE PROJECT FINANCING UPDATE When final permits are received, POS-Minerals Corporation (a 20% owner of the Mt. Hope project) is anticipated to fund its final $56 million initial contribution, plus 20% of all the funds the Company has spent on the Mt. Hope project at that point. The Company estimates this combined payment will be approximately $100 million. From that point forward, the project will be funded 80% by the Company and 20% by POS-Minerals Corporation. Also, within nine months after the Mt. Hope project's permits are received, pursuant to the amended Securities Purchase Agreement between the Company and Hanlong (USA) Mining Investment, Inc. (“Hanlong”), Hanlong is obligated to procure a drawable loan from a Chinese bank of not less than $665 million. Despite the increased timing and flexibility provided to Hanlong, both parties remain committed to the availability of a drawable loan as expeditiously as possible following receipt of Mt. Hope's permits and continue to work toward a two or three month availability timeframe. During the quarter, the Company completed work with a Chinese engineering firm to reformat and translate its Bankable Feasibility Study for the Chinese banks at a cost of approximately $0.9 million. Work is now focused on drafting and negotiating a specific term sheet for the Mt. Hope debt facility. When the bank loan is in place and required permits are received, the Company intends to close on Hanlong's Tranche 2 equity sale for $40 million, bringing Hanlong's share position in the Company to 25% on a fully-diluted basis. MT. HOPE PROJECT PERMITTING UPDATE The Bureau of Land Management (“BLM”) and its independent Environmental Impact Statement (“EIS”) contractor are continuing work to complete the Draft Environmental Impact Statement (“DEIS”) by incorporating and responding to comments received on May 6, 2011 from the second draft of the Mt. Hope project's Preliminary DEIS. The DEIS is currently anticipated to be completed in the third quarter and published in the Federal Register in the third or fourth quarter. Following publication of the DEIS, full permits are anticipated within six to nine months. MT. HOPE PROJECT WATER RIGHTS UPDATE On July 15, 2011, the Nevada State Engineer issued ruling 6127 granting the Company's water right applications for the use of 11,300 acre-feet annually of water for mining purposes, which will facilitate the pumping of water necessary for the Mt. Hope project's planned operations. The specific permits are anticipated to be issued following payment of statutory fees, and, following the State Engineer's approval of a Monitoring, Management, and Mitigation Plan (3M Plan), prepared in cooperation with Eureka County, the water will be available for consumptive use. The Company continues to hold discussions with area stakeholders, including Eureka County, to cooperatively develop a long-term 3M Plan. Participation, transparency and input of area stakeholders is a major goal of the 3M Plan. On July 28, 2011, Eureka County issued a press release announcing that it is considering appealing the State Engineer's decision on water rights for the Mt. Hope project. The deadline to appeal is August 15, 2011. MT. HOPE PROJECT ENGINEERING AND EQUIPMENT PROCUREMENT UPDATE The Company will restart engineering and procurement efforts following the publication of the DEIS. Although the Company has purchased and ordered most of the long-lead milling equipment, firm orders for much of the mobile mine fleet and other process equipment must still be placed. The Company had remitted $6.8 million against a contract to purchase two electric shovels in 2008. The Company took a non-cash write down of $3.4 million with the passage of the first order deadline of June 30, 2011. The Company continues discussions concerning applying previous payments to future orders, including the remaining $3.4 million tied to an order deadline of June 30, 2012. LIBERTY PROJECT UPDATE During the second quarter, the Company announced the results of 33 core holes that were not previously included in the Liberty project 2008 pre-feasibility study. These core holes are being incorporated into a revised resource estimate, which is anticipated to be released in the third quarter of 2011. The revised resource estimate will form the basis for an updated pre-feasibility study that is anticipated to be completed early next year. The Company is also initiating discussions with a variety of parties regarding investment and off-take opportunities with respect to the Liberty project. MOLYBDENUM MARKET UPDATE During the second quarter of 2011, molybdenum prices traded slightly lower and finished the quarter at $14.90 per pound, compared to $16.40 per pound at the end of last year, according to Ryan's Notes, an industry publication. Since the end of the second quarter, prices have continued to decline and are currently at approximately $14.70 per pound. The Company believes that current price declines are primarily related to seasonal steel production trends and that molybdenum demand and prices will strengthen later in the year. Additional information on the Company's second quarter 2011 results will be available in General Moly's 2011 Form 10-Q, which will be filed with the Securities and Exchange Commission and posted on the Company's website.   GENERAL MOLY, INC.(A DEVELOPMENT STAGE COMPANY)CONSOLIDATED BALANCE SHEETS(Unaudited - In thousands except per share amounts)     June 30,2011(Unaudited)December 31,2010ASSETS: CURRENT ASSETS Cash and cash equivalents $ 59,267 $ 53,571 Deposits, prepaid expenses and other current assets   660     148   Total Current Assets   59,927     53,719   Mining properties, land and water rights 137,882 133,093 Deposits on project property, plant and equipment 64,783 68,363 Restricted cash held for electricity transmission 12,005 12,005 Restricted cash held for reclamation bonds 1,133 1,133 Non-mining property and equipment, net 914 1,045 Debt issuance costs 2,197 887 Other assets   2,994       2,994   TOTAL ASSETS $281,835   $273,239   LIABILITIES, CONTINGENTLY REDEEMABLENONCONTROLLING INTEREST AND EQUITY: CURRENT LIABILITIES Accounts payable and accrued liabilities $ 2,071 $ 4,138 Accrued advance royalties 8,950 9,500 Current portion of long term debt   10,484     194   Total Current Liabilities   21,505     13,832   Provision for post closure reclamation and remediation costs 559 571 Deferred gain 800 215 Accrued advance royalties 8,950 8,950 Accrued payments to Agricultural Sustainability Trust 4,000 4,000 Long term debt, net of current portion   218     10,481   Total Liabilities   36,032     38,049       COMMITMENTS AND CONTINGENCIES       CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST   98,073     98,753     EQUITY Common stock, $0.001 par value; 200,000,000 shares authorized, 90,774,913 and 85,353,473 shares issued and outstanding, respectively 91 85 Additional paid-in capital 255,318 234,517 Accumulated deficit before exploration stage (213 ) (213 ) Accumulated deficit during exploration and development stage   (107,466 )   (97,952 ) Total Equity   147,730     136,437   TOTAL LIABILITIES, CONTINGENTLY REDEEMABLENONCONTROLLING INTEREST AND EQUITY $ 281,835   $ 273,239     GENERAL MOLY, INC.(A DEVELOPMENT STAGE COMPANY)CONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited - In thousands, except per share amounts)       Three Months EndedSix Months EndedJanuary 1, 2002(Inception ofExplorationStage) to June30, 2011June 30,2011   June 30,2010   June 30,2011     June 30,2010   REVENUES $ — $ — $ — $ — $ — OPERATING EXPENSES: Exploration and evaluation 288 180 456 308 38,589 Write downs of development and deposits 3,403 — 3,403 — 8,819 General and administrative expenses   2,291     2,985     6,228     5,703     65,755   TOTAL OPERATING EXPENSES   5,982     3,165     10,087     6,011     113,163   LOSS FROM OPERATIONS (5,982 ) (3,165 ) (10,087 ) (6,011 ) (113,163 ) OTHER INCOME / (EXPENSE) Interest and dividend income 8 5 19 6 4,060 Interest expense   (66 )   (41 )   (126 )   (41 )   (290 ) TOTAL OTHER (EXPENSE) / INCOME , NET   (58 )   (36 )   (107 )   (35 )   3,770   LOSS BEFORE INCOME TAXES (6,040 ) (3,201 ) (10,194 ) (6,046 ) (109,393 ) Income Taxes   —     —     —     —     —   CONSOLIDATED NET LOSS $ (6,040 ) $ (3,201 ) $ (10,194 ) $ (6,046 ) $ (109,393 ) Less: Net loss attributable to contingently redeemable noncontrolling interest   680     —     680     —     1,927   NET LOSS ATTRIBUTABLE TO GENERAL MOLY, INC. $ (5,360 ) $ (3,201 ) $ (9,514 ) $ (6,046 ) $ (107,466 ) Basic and diluted net loss attributable to General Moly per share of common stock $ (0.06 ) $ (0.04 ) $ (0.10 ) $ (0.08 ) $ Weighted average number of shares outstanding – basic and diluted 90,750 72,568 90,749 72,557   GENERAL MOLY, INC.(A DEVELOPMENT STAGE COMPANY)CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited - In thousands)       Six Months EndedJanuary 1, 2002(Inception ofExplorationStage) toJune 30,2011June 30,2011   June 30,2010   CASH FLOWS FROM OPERATING ACTIVITIES: Net Loss $ (10,194 ) $ (6,046 ) $ (109,393 ) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and amortization 198 184 1,430 Interest expense 126 41 290 Equity compensation for employees and directors 1,282 604 16,381 (Increase) in deposits, prepaid expenses and other (291 ) (4 ) (347 ) (Decrease) increase in accounts payable and accrued liabilities (2,655 ) (975 ) 803 (Decrease) increase in post closure reclamation and remediation costs (12 ) (25 ) 350 Write downs of development and deposits 3,403 — 8,819 Services and expenses paid with common stock — — 1,990 Repricing of warrants — 585 965 (Increase) in restricted cash held for electricity transmission   —   —     (12,005 ) Net cash used by operating activities   (8,143 )   (5,636 )   (90,717 ) CASH FLOWS FROM INVESTING ACTIVITIES: Payments for the purchase of equipment — — (1,548 ) Purchase and development of mining properties, land and water rights (4,743 ) (5,819 ) (113,450 ) Deposits on property, plant and equipment (6 ) (24,331 ) (68,090 ) Proceeds from option to purchase agreements 585 100 800 Purchase of securities — — (137 ) Increase in restricted cash held for reclamation bonds — — (642 ) Cash provided by sale of marketable securities   —   —     246   Net cash used by investing activities   (4,164 )   (30,050 )   (182,821 ) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from issuance of stock, net of issuance costs 19,412 56 227,719 Net (decrease) increase in leased assets (99 ) (89 ) 231 Payments for debt issuance costs (1,310 ) — (2,197 ) Proceeds from debt — 10,000 10,000 Cash proceeds from POS-Minerals Corporation — — 100,000 Cash paid to POS-Minerals Corporation for purchase price adjustment   —   —     (2,994 ) Net cash provided by financing activities   18,003   9,967     332,759   Net increase (decrease) in cash and cash equivalents 5,696 (25,719 ) 59,221 Cash and cash equivalents, beginning of period   53,571   48,614     46   Cash and cash equivalents, end of period $ 59,267 $ 22,895   $ 59,267   NON-CASH INVESTING AND FINANCING ACTIVITIES: Equity compensation capitalized as development $ 112 $ 472 $ 6,312 Restricted cash held for reclamation bond acquired in an acquisition — 491 Post closure reclamation and remediation costs and accounts payable assumed in an acquisition — — 263 Common stock and warrants issued for property and equipment — — 1,586 Accrued portion of deposits on property, plant and equipment 183 — 183 Accrued portion of advance royalties — — 17,900 Accrued portion of payments to the Agricultural Sustainability Trust — — 4,000   General Moly is a U.S.-based molybdenum mineral development, exploration and mining company listed on the NYSE Amex (formerly the American Stock Exchange) and the Toronto Stock Exchange under the symbol GMO. Our primary asset, our 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 our second molybdenum property, the Liberty project that is also located in central Nevada, our goal is to become the largest primary molybdenum producer by the middle of the decade. For more information on the Company, please visit our website at http://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 required permits to commence production and its ability to raise required financing, adverse governmental regulation and judicial outcomes. The closing of the Hanlong transaction and obtaining bank financing are subject to a number of conditions precedent that may not be fulfilled. 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. General MolyInvestors and Business DevelopmentSeth Foreman, 303-928-8591sforeman@generalmoly.comorMediaZach Spencer, 775-748-6059zspencer@generalmoly.comhttp://www.generalmoly.cominfo@generalmoly.com