General Moly, Inc. (the "Company" or “General Moly”) (NYSE MKT and TSX: GMO), a U.S.-based molybdenum mineral development, exploration, and mining company, announced its audited financial results for the fourth quarter and full year ended December 31, 2014. Net loss for the three months ending December 31, 2014 was $2.5 million ($0.02 per share), compared to a net loss of $1.6 million ($0.02 per share) for the prior year period. Net loss for the full year ending December 31, 2014 was $11.0 million ($0.12 per share), compared to a loss of $16.3 million ($0.18 per share) for the prior year period.
Excluding restricted cash, the Company’s cash balance at December 31, 2014 was approximately $13 million compared to $22 million at December 31, 2013 and $8 million at September 30, 2014. The Company received approximately $10 million in cash proceeds during the fourth quarter from a private placement financing that closed in December 2014 and other cash receipts. During the fourth quarter, cash use of $5 million was the result of $2 million spent on Mt. Hope Project development costs (including process equipment, engineering, procurement, owner’s cost, and reclamation bond premiums) and $3 million in general and administrative expenses including severance payments. In January 2015, the Company and POS-Minerals Corporation (“POS-Minerals”), as the members of Eureka Moly, LLC (“EMLLC”), announced an agreement to use restricted cash of up to $36 million, currently being held in a reserve account, for the benefit of the Mt. Hope Project. The restricted cash will be used to fund the Mt. Hope Project’s financial requirements either until such funds are exhausted, or the Company’s full financing for construction of the Mt. Hope Mine is achieved. Any balance of restricted cash remaining at the time of financing will be returned to the Company. In addition, the Company is evaluating other reasonable funding options, use of other restricted cash, and further cost reductions.
Bruce D. Hansen, Chief Executive Officer, said, “The recent agreement with POS-Minerals and our private placement financing provides the Company with a significantly improved project and corporate liquidity profile as we bridge to project financing for Mt. Hope.”
Mr. Hansen continued, “We remain confident in the progress being made toward full Mt. Hope Project financing. Negotiations on investment agreement terms, sponsorship requirements, and indicative loan terms associated with a $700 to $750 million debt and equity package, are continuing to advance, with strong interest from a private Chinese industrial company and a large Chinese bank in advancing the fully permitted, construction-ready project. The Company is also continuing to explore other potential strategic options.”
Mr. Hansen concluded, “Looking into 2015 and beyond, our improved liquidity position substantially enhances the Company’s ability to support the Mt. Hope Project, including maintaining our permits and other care and maintenance needs while preserving the ability to rapidly restart construction activities when full financing is achieved. In addition, the Company will continue to prudently manage its liquidity position, and expects non-Mt. Hope Project related spending of approximately $2.5 million per quarter, and will examine spending on an ongoing basis. We are continuing to progress toward our goal of becoming the largest pure play primary molybdenum producer in the world.”
AGREEMENT WITH POS-MINERALS TO UTILIZE RESERVE ACCOUNT TO FUND MT. HOPE PROJECT
In December 2012, the Company and POS-Minerals, as the members of EMLLC, agreed to hold, as restricted cash, $36 million due to the Company, of the approximately $100 million received from POS-Minerals’ December 2012 capital contributions. These funds were to be held in a reserve account until the Company arranged full project financing for its 80% share of Mt. Hope Project construction cost, or until the EMLLC management committee agreed to release the funds.
On January 21, 2015, General Moly announced an agreement with POS-Minerals to use the $36 million restricted cash for the benefit of the Mt. Hope Project. The Company, through its wholly owned subsidiary, Nevada Moly, LLC and POS-Minerals, as the members of EMLLC, will, until exhausted or the Company’s full financing for construction of the Mt. Hope Mine is achieved, use the restricted cash to fund the Mt. Hope Project’s financial requirements. Any restricted cash balance remaining at the time of financing will be returned to the Company.
With the jointly developed revised long-term budget to maintain the Mt. Hope Project in its permitted, construction ready status the EMLLC members agreed that the budget will be entirely funded by the reserve account, until at least through 2020, covering anticipated operating expenses, and committed equipment purchase obligations unless the Company’s full financing is obtained.
The reserve account held by EMLLC initially funded a reimbursement of contributions made by the members during the 4th quarter of 2014, inclusive of $0.7 million to POS-Minerals and $2.7 million to General Moly. Combined with cash already on hand, and the proceeds from the December 2014 private placement financing, the Company has augmented its unrestricted cash balance, to over $15 million as of mid-January 2015.
The members of EMLLC also agreed to amend the Limited Liability Company Agreement of EMLLC (“LLC Agreement”) to fix the date upon which POS-Minerals is entitled to receive a $36 million return on previous capital contribution to the Project, as a result of Commercial Production, as defined by the LLC Agreement, being delayed beyond December 31, 2011. With the amendment the members fixed a date of December 31, 2020, subject to the members’ subsequent agreement to further extend. Previously, the LLC Agreement provided that the return of capital contribution was tied to the date of achievement of Commercial Production at the Mt. Hope Project. The Company is obligated to fund the return of capital contribution upon the due date or, alternatively, to permit a corresponding dilution of its membership interest, as permitted by the LLC Agreement, currently estimated in the range of 4% to 5% of the joint venture.
PRIVATE PLACEMENT FINANCING
On December 26, 2014, General Moly closed a private placement of units, consisting of senior convertible notes and warrants, for gross proceeds of $8.535 million. Proceeds from the offering are to be used for maintenance of the Mt. Hope Project, the Liberty Project, and general corporate purposes.
The Company sold 85,350 units for $100 each to accredited investors, including several directors and officers of the Company. Each unit consists of one senior convertible note due 2019 (the “Notes”) with principal value of $100 and 100 five-year warrants exercisable after June 26, 2015, to purchase the Company’s common stock at $1.00 per share. The Notes, which are senior to any General Moly debt obligations, mature on December 26, 2019, and have a 10% coupon rate payable quarterly. The Notes convert into common stock at a 20% discount to the greater of (i) the trailing 30-day volume weighted average price (“VWAP”) at the date on which a Notice of Conversion is issued and (ii) the trailing 30-day VWAP as of December 26, 2014. Each Note will convert into a maximum of 100 shares per note, resulting in the issuance of 8,535,000 shares, or 9.3% of the shares that are currently outstanding. Members of General Moly’s executive management team and board of directors who participated in the offering will be restricted from converting at a price less than $0.32, the most recent closing price at the time that the Notes were issued. The Notes are mandatorily redeemable at par plus the present value of remaining coupons upon (i) the availability of cash from a financing for the Mt. Hope Project and (ii) any other debt financing by the Company. In addition, 50% of any proceeds from the sale of assets cumulatively exceeding $250,000 will be used to prepay the Notes at par plus the present value of remaining coupons. The Company has the right to redeem the Notes at any time at par plus the present value of remaining coupons. The Private Placement was negotiated by independent members of General Moly’s board of directors, none of whom participated in the transaction.
MT. HOPE PROJECT WATER RIGHTS AND PERMIT APPEALS UPDATE
Two appeals of the Mt. Hope Project’s water permits and Management, Monitoring & Mitigation (“3M”) Plan were separately filed with the Nevada Supreme Court (“Supreme Court”) and consolidated by the Supreme Court into one appeal in 2013. Briefing has been completed, and oral argument challenging the water permits and 3M Plan was heard on June 30, 2014 by the Supreme Court. A ruling is expected in the first half of 2015.
In February 2013, two parties (“Plaintiffs”) filed a Complaint challenging the issuance by the U.S. Bureau of Land Management of the Record of Decision (“ROD”) for the Mt. Hope Project. The federal District Court in Nevada (“District Court”) approved EMLLC’s request to intervene in the matter. Following briefing by the parties the District Court denied the Plaintiffs’ motion for summary judgment, and on August 1, 2014 entered judgment against the Plaintiffs regarding all claims raised in the Complaint. As anticipated, on September 22, 2014, the Plaintiffs filed their notice of appeal to the U.S. Court of Appeals for the Ninth Circuit. Plaintiffs submitted their Opening Brief on January 23, 2015 and the Defendants and EMLLC’s deadline to file their Response Brief is March 27, 2015.
All permits remain in effect. The Company will continue to vigorously defend the legal challenges to the ROD, and we believe the Mt. Hope Project's water permits, 3M Plan and ROD will be upheld after judicial review.
MT. HOPE PROJECT ENGINEERING AND EQUIPMENT PROCUREMENT UPDATE
Engineering is approximately 65% complete at the Mt. Hope Project. Through December 31, 2014, EMLLC has made deposits of $74.2 million on equipment orders and has paid $12.0 million into an escrow arrangement for electricity transmission services.
EMLLC has now ordered or purchased most of the long-lead milling equipment, haul trucks, mine production drills and has a letter of intent for the purchase of two electric shovels.
Approximately 70% of the planned spend on process equipment has been defined through hard bids and purchase orders and the cost for this equipment is estimated to remain on budget. Further, approximately 80% of planned spend on mining equipment has been committed with cancelable purchase orders, the cost for which is also estimated to remain on budget. Some of the mining equipment committed spend is subject to Producer Price Index-based escalation and additional holding costs if there are extended delays, and some agreements would be subject to cancellation. The Mt. Hope Project remains in a construction-ready status pending full project financing.
Additional information on the Company’s fourth quarter and full year 2014 results will be available in General Moly’s 2014 Form 10-K, which will be filed with the Securities and Exchange Commission and posted on the Company’s website.
GENERAL MOLY, INC. | |||||||||||
| December 31, 2014 | December 31, 2013 | ||||||||||
| ASSETS: | |||||||||||
| CURRENT ASSETS | |||||||||||
| Cash and cash equivalents | $ | 13,269 | $ | 21,685 | |||||||
| Deposits, prepaid expenses and other current assets | 698 | 625 | |||||||||
| Total Current Assets | 13,967 | 22,310 | |||||||||
| Mining properties, land and water rights | 216,595 | 206,251 | |||||||||
| Deposits on project property, plant and equipment | 74,151 | 74,108 | |||||||||
| Restricted cash held at EMLLC | 36,000 | 36,000 | |||||||||
| Restricted cash held for electricity transmission | 12,021 | 12,020 | |||||||||
| Restricted cash held for reclamation bonds | 5,358 | 6,332 | |||||||||
| Non-mining property and equipment, net | 519 | 669 | |||||||||
| Debt Issuance Costs | 441 | — | |||||||||
| Other assets | 2,994 | 2,994 | |||||||||
| TOTAL ASSETS | $ | 362,046 | $ | 360,684 | |||||||
| LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY: | |||||||||||
| CURRENT LIABILITIES | |||||||||||
| Accounts payable and accrued liabilities | $ | 4,633 | $ | 4,691 | |||||||
| Accrued advance royalties | 500 | 500 | |||||||||
| Accrued payments to Agricultural Sustainability Trust and Hanlong | — | 2,000 | |||||||||
| Current portion of long term debt | 290 | 263 | |||||||||
| Total Current Liabilities | 5,423 | 7,454 | |||||||||
| Provision for post closure reclamation and remediation costs | 1,276 | 1,318 | |||||||||
| Accrued advance royalties | 5,200 | 4,700 | |||||||||
| Accrued payments to Agricultural Sustainability Trust | 4,000 | 2,000 | |||||||||
| Long term debt, net of current portion | 249 | 538 | |||||||||
| Convertible Senior Notes | 7,763 | — | |||||||||
| Other accrued liabilities | 1,125 | 875 | |||||||||
| Total Liabilities | 25,036 | 16,885 | |||||||||
| COMMITMENTS AND CONTINGENCIES – NOTE 12 | |||||||||||
| CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST | 210,317 | 209,007 | |||||||||
| EQUITY | |||||||||||
| Common stock, $0.001 par value; 200,000,000 shares authorized, 92,200,657 and 91,761,249 shares issued and outstanding, respectively | 92 | 92 | |||||||||
| Additional paid-in capital | 276,718 | 273,857 | |||||||||
| Accumulated deficit before exploration stage | (213 | ) | (213 | ) | |||||||
| Accumulated deficit during exploration and development stage | (149,904 | ) | (138,944 | ) | |||||||
| Total Equity | 126,693 | 134,792 | |||||||||
| TOTAL LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY | $ | 362,046 | $ | 360,684 | |||||||
GENERAL MOLY, INC. | ||||||||||||||||
| Years Ended | ||||||||||||||||
| December 31, 2014 | December 31, 2013 | December 31, 2012 | ||||||||||||||
| REVENUES | $ | — | $ | — | $ | — | ||||||||||
| OPERATING EXPENSES: | ||||||||||||||||
| Exploration and evaluation | 2,097 | 772 | 778 | |||||||||||||
| General and administrative expense | 8,872 | 8,985 | 10,600 | |||||||||||||
| TOTAL OPERATING EXPENSES | 10,969 | 9,757 | 11,378 | |||||||||||||
| LOSS FROM OPERATIONS | (10,969 | ) | (9,757 | ) | (11,378 | ) | ||||||||||
| OTHER INCOME/(EXPENSE): | ||||||||||||||||
| Interest and dividend income | — | 2 | 6 | |||||||||||||
| Interest expense | (29 | ) | (753 | ) | (548 | ) | ||||||||||
| Write-off of loan commitment fees (warrant) | — | (11,472 | ) | — | ||||||||||||
| Gain on forgiveness of debt | — | 804 | — | |||||||||||||
| Constructive receipt of break fee | — | 10,000 | — | |||||||||||||
| Write-off of debt issuance costs | — | (6,420 | ) | — | ||||||||||||
| Realized gain from sale of mining properties | — | 1,292 | 2,000 | |||||||||||||
| TOTAL OTHER (EXPENSE)/INCOME, NET | (29 | ) | (6,547 | ) | 1,458 | |||||||||||
| LOSS BEFORE INCOME TAXES | (10,998 | ) | (16,304 | ) | (9,920 | ) | ||||||||||
| Income Taxes | — | — | — | |||||||||||||
| CONSOLIDATED NET LOSS | $ | (10,998 | ) | $ | (16,304 | ) | $ | (9,920 | ) | |||||||
| Less: Net loss attributable to contingently redeemable noncontrolling interest | 38 | — | — | |||||||||||||
| NET LOSS ATTRIBUTABLE TO GENERAL MOLY, INC. | $ | (10,960 | ) | $ | (16,304 | ) | $ | (9,920 | ) | |||||||
| Basic and diluted net loss attributable to General Moly per share of common stock | $ | (0.12 | ) | $ | (0.18 | ) | $ | (0.11 | ) | |||||||
|
Weighted average number of shares outstanding — basic and diluted | 91,907 | 91,568 | 91,230 | |||||||||||||
| COMPREHENSIVE LOSS | $ | (10,960 | ) | $ | (16,304 | ) | $ | (9,920 | ) | |||||||
GENERAL MOLY, INC. | ||||||||||||||||
| Years Ended | ||||||||||||||||
| December 31, 2014 | December 31, 2013 | December 31, 2012 | ||||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Net loss | $ | (10,998 | ) | $ | (16,304 | ) | $ | (9,920 | ) | |||||||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||||||||||
| Depreciation and amortization | 339 | 341 | 310 | |||||||||||||
| Interest expense | 29 | 753 | 548 | |||||||||||||
| Stock-based compensation for employees and directors | 1,718 | 1,829 | 1,414 | |||||||||||||
| Increase in deposits, prepaid expenses and other | (73 | ) | (489 | ) | (31 | ) | ||||||||||
| Increase (decrease) in accounts payable and accrued liabilities | 417 | (8,170 | ) | (3,569 | ) | |||||||||||
|
Increase in restricted cash held for electricity transmission | (1 | ) | (7 | ) | (8 | ) | ||||||||||
| (Decrease) increase in post closure reclamation and remediation costs | (122 | ) | 691 | 40 | ||||||||||||
| Write-off of loan commitment fees (warrant) | — | 11,472 | — | |||||||||||||
| Write-off of debt issuance costs | — | 6,420 | — | |||||||||||||
| Constructive receipt of break fee | — | (10,000 | ) | — | ||||||||||||
| Forgiveness of debt (interest on bridge loan) | — | (804 | ) | — | ||||||||||||
| Realized gain related to sale of mining properties | — | (1,292 | ) | (2,000 | ) | |||||||||||
| Net cash used by operating activities | (8,691 | ) | (15,560 | ) | (13,216 | ) | ||||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
|
Purchase and development of mining properties, land and water rights | (9,510 | ) | (35,280 | ) | (20,762 | ) | ||||||||||
| Deposits on property, plant and equipment | (752 | ) | (3,689 | ) | (2,158 | ) | ||||||||||
| Proceeds from option to purchase agreement | — | 1,000 | 1,950 | |||||||||||||
|
Decrease (increase) in restricted cash held for reclamation bonds | 974 | 659 | (5,858 | ) | ||||||||||||
| Increase in restricted cash — EMLLC | — | — | (36,000 | ) | ||||||||||||
| Net cash used by investing activities | (9,288 | ) | (37,310 | ) | (62,828 | ) | ||||||||||
GENERAL MOLY, INC. | ||||||||||||||||
| Years Ended | ||||||||||||||||
| December 31, 2014 | December 31, 2013 | December 31, 2012 | ||||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Proceeds from issuance of stock, net of issuance costs | (36 | ) | 49 | 583 | ||||||||||||
| Cash proceeds from POS-Minerals Corp. | 1,348 | 7,127 | 103,807 | |||||||||||||
| Repayment of Debt | (261 | ) | (250 | ) | (142 | ) | ||||||||||
| Proceeds from unit offering | 8,535 | — | — | |||||||||||||
| Increase in capitalized debt issuance costs | (23 | ) | (702 | ) | (582 | ) | ||||||||||
| Net cash provided by financing activities: | 9,563 | 6,224 | 103,666 | |||||||||||||
| (Decrease) increase in cash and cash equivalents, net | (8,416 | ) | (46,646 | ) | 27,622 | |||||||||||
| Cash and cash equivalents, beginning of period | 21,685 | 68,331 | 40,709 | |||||||||||||
| Cash and cash equivalents, end of period | $ | 13,269 | $ | 21,685 | $ | 68,331 | ||||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
| Equity compensation capitalized as development | $ | 443 | $ | 1,078 | $ | 639 | ||||||||||
| Accrued portion of advance royalties | 500 | — | 5,200 | |||||||||||||
| Accrued portion of payments to the Agricultural Sustainability Trust and Hanlong | — | — | 2,000 | |||||||||||||
| Installment purchase of equipment and land | — | 139 | 730 | |||||||||||||
| Accrued portion of deposits on property, plant and equipment | (709 | ) | 728 | 1,059 | ||||||||||||
| Loan commitment costs | 472 | — | 12,076 | |||||||||||||
* * * *
General Moly is a U.S.-based molybdenum mineral development, exploration and mining company listed on the NYSE MKT (formerly the NYSE AMEX) and the Toronto Stock Exchange under the symbol GMO. The Company’s 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 the Company’s second project, the Liberty Project, a molybdenum and copper property also located in central Nevada, our goal is to become the largest pure play primary molybdenum producer in the world. 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 maintain required permits to continue construction, commence production and its ability to raise required project financing, adverse governmental regulation and judicial outcomes, including appeal of the Record of Decision and appeal of water permits and 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.
Contacts:
Investors:
Scott Kozak, 303-928-8591
skozak@generalmoly.com
or
Media:
Zach
Spencer, 775-748-6059
zspencer@generalmoly.com
info@generalmoly.com
http://www.generalmoly.com
