General Moly Announces Fourth Quarter and Full Year 2013 Results
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, 2013. Net loss for the three months ending December 31, 2013 was $1.6 million ($0.02 per share), compared to a net loss of $2.0 million ($0.03 per share) for the prior year period. Net loss for the full year ending December 31, 2013 was $16.3 million ($0.18 per share), compared to a loss of $9.9 million ($0.11 per share) for the prior year period.
Excluding restricted cash, the Company’s cash balance at December 31, 2013 was approximately $22 million compared to $68 million at December 31, 2012 and $26 million at September 30, 2013. The Company received approximately $1.5 million in cash proceeds during the fourth quarter from the final payment on the sale of a mining property, the release of historical reclamation bond funding, and Mt. Hope Project cost reimbursement from POS-Minerals Corporation. During the fourth quarter, cash use of $6 million was the result of $3.5 million spent on Mt. Hope Project development costs (engineering, procurement, owner’s cost, advanced royalties, and reclamation bond premiums) as well as $2.5 million in general and administrative expenses and Liberty Project related expenditures. In December 2012, the Company and POS-Minerals, as the members of Eureka Moly, LLC (“EMLLC”), agreed to hold $36 million due to the Company, of the approximately $100 million received from POS-Minerals’ December, 2012 contributions in a reserve account until the Company arranges full project financing for its 80% share of Mt. Hope Project construction cost.
Bruce D. Hansen, Chief Executive Officer of General Moly, said "We are continuing to focus on financing alternatives for the Mt. Hope Project. To support ongoing due diligence efforts, the Company updated its capital and operating costs, mine plans, and project economics for the Mt. Hope Project. General Moly also developed an optional scenario, released on February 25, 2014, which focuses on the high-grade core of the deposit that incrementally enhances project economics and demonstrates the economic viability of Mt. Hope at lower molybdenum prices. The optional scenario provides additional flexibility for pursuing financing and to support ongoing due diligence efforts. These updated operating and capital cost estimates resulted in robust economics, positioning Mt. Hope within the lower quartile of the cost curve for primary molybdenum development projects and existing primary molybdenum operations.”
Mr. Hansen added, “Looking into 2014, we are moving aggressively to obtain full Mt. Hope Project financing and then start heavy construction. We are also pushing forward with further assessment of the Liberty Project, including investigating a larger economic contribution of the copper resources in this deposit. In addition, as we proceed toward obtaining full Mt. Hope Project financing, the Company will continue to prudently manage its liquidity position."
MT. HOPE OPERATING COST ESTIMATE AND PROJECT ECONOMICS UPDATE
In December, 2013, the Company reported economics on a look forward basis for General Moly’s 80% ownership in the Mt. Hope Project, using a $15.00 per pound flat long-term molybdenum price and an 8% discount rate, resulting in an after-tax Net Present Value (“NPV”) of $707 million and an internal rate of return (“IRR”) of 17.6%. For every $1 change in the molybdenum price between $10 and $20 per pound, the after-tax NPV of the Mt. Hope Project changes by approximately $190 million. The Mt. Hope Project is NPV breakeven at an approximate $11.19 per pound molybdenum price and undiscounted cash flow breakeven (going forward excluding sunk capital) at approximately $9.80 per pound molybdenum price.
In February, 2014, the Company reported a study that considered an optional scenario which would provide ore for 24 years of mining and 30 years of milling, compared with the base plan, which provides ore for 34 years of mining and 41 years of milling. This plan eliminates waste stripping in the latter years of the mine life and develops higher ore grades during the intermediate years. The optional scenario provides the Company with flexibility to respond to a scenario of sustained lower molybdenum prices in middle and later years, after the Mt. Hope Project is developed and operating.
For the 24 total years of mining, direct operating costs for the Mt. Hope Project for this optional mine planning scenario are anticipated to average $7.24 per pound, and Costs Applicable to Sales (“CAS”) are anticipated to average $8.06 per pound. For the 30 total years of milling, direct operating costs for the Mt. Hope Project for the optional mine study are anticipated to average $7.39 per pound (compares to $7.90 base case), and CAS are anticipated to average $8.18 per pound (compares to $8.70 base case). In both instances this includes anticipated royalty payments calculated at $15.00 per pound of molybdenum.
For the optional mine plan scenario, economics on a look forward basis for General Moly’s 80% ownership in the Mt. Hope Project, using a $15.00 per pound flat long-term molybdenum price and an 8% discount rate, results in an after-tax NPV of $734 million and an IRR of 18.1%. General Moly’s 80% ownership in the Mt. Hope Project, which includes the impact of off-takes, other contractual agreements, and specific working capital assumptions, equates to $8.02 per current outstanding share. For every $1 change in the molybdenum price between $10 and $20 per pound, the after-tax NPV of General Moly’s 80% interest in the Mt. Hope Project changes by approximately $180 million. General Moly’s 80% ownership NPV breakeven price is $10.82 per pound molybdenum, and the undiscounted cash flow breakeven price (going forward excluding sunk capital) is $9.35 per pound molybdenum.
For both the December, 2013 base scenario and February, 2014 optional scenario, the Company forecasted operating costs for the Mt. Hope Project based on current labor rates and input commodity prices over the first full five years of operation to average $6.28 per pound, and CAS to average approximately $7.00 per pound, including anticipated royalty payments of approximately $0.72 per pound calculated at a $15.00 per pound molybdenum price.
MT. HOPE PROJECT WATER RIGHTS AND PERMIT APPEALS UPDATE
Two challenges of the Mt. Hope Project’s water permits were separately appealed to the Nevada Supreme Court (“Supreme Court”) and consolidated by the Supreme Court into one appeal. Briefing has been completed, and oral argument challenging the water permits is anticipated to be completed in the second quarter of 2014.
In February 2013, two parties filed a Complaint challenging issuance 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 Complaint. Briefing and probable oral argument challenging the ROD is anticipated to be completed in the second quarter of 2014.
The legal appeals have been staunchly defended and we believe the Mt. Hope Project's permits will be upheld under judicial review.
MT. HOPE PROJECT ENGINEERING AND EQUIPMENT PROCUREMENT UPDATE
Engineering is approximately 65% complete at the Mt. Hope Project. Through December 31, 2013, EMLLC has made deposits of $74.1 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 entered into 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 is estimated to remain on budget. Further, approximately 80% of planned spend on mining equipment has been committed with cancelable purchase agreements and 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 project remains in a construction-ready status pending full project financing.
Additional information on the Company’s fourth quarter and full year 2013 results will be available in General Moly’s 2013 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, | December 31, | ||||||||
| ASSETS: | |||||||||
| CURRENT ASSETS | |||||||||
| Cash and cash equivalents | $ | 21,685 | $ | 68,331 | |||||
| Deposits, prepaid expenses and other current assets | 625 | 136 | |||||||
| Total Current Assets | 22,310 | 68,467 | |||||||
| Mining properties, land and water rights | 206,251 | 170,967 | |||||||
| Deposits on project property, plant and equipment | 74,108 | 69,691 | |||||||
| Restricted cash held at EMLLC | 36,000 | 36,000 | |||||||
| Restricted cash held for electricity transmission | 12,020 | 12,013 | |||||||
| Restricted cash held for reclamation bonds | 6,332 | 6,991 | |||||||
| Non-mining property and equipment, net | 669 | 605 | |||||||
| Capitalized debt issuance and loan commitment costs | — | 17,794 | |||||||
| Other assets | 2,994 | 2,994 | |||||||
| TOTAL ASSETS | $ | 360,684 | $ | 385,522 | |||||
| LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY: | |||||||||
| CURRENT LIABILITIES | |||||||||
| Accounts payable and accrued liabilities | $ | 4,691 | $ | 10,133 | |||||
| Accrued advance royalties | 500 | 500 | |||||||
| Accrued payments to Agricultural Sustainability Trust and Hanlong | 2,000 | 4,000 | |||||||
| Current portion of long term debt | 263 | 10,906 | |||||||
| Total Current Liabilities | 7,454 | 25,539 | |||||||
| Provision for post closure reclamation and remediation costs | 1,318 | 627 | |||||||
| Deferred gain | — | 1,100 | |||||||
| Accrued advance royalties | 4,700 | 4,700 | |||||||
| Accrued payments to Agricultural Sustainability Trust | 2,000 | 2,000 | |||||||
| Long term debt, net of current portion | 538 | 661 | |||||||
| Other accrued liabilities | 875 | 875 | |||||||
| Total Liabilities | 16,885 | 35,502 | |||||||
| COMMITMENTS AND CONTINGENCIES | |||||||||
| CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST | 209,007 | 201,880 | |||||||
| EQUITY | |||||||||
| Common stock, $0.001 par value; 200,000,000 shares authorized, 91,761,249 and 91,333,092 shares issued and outstanding, respectively | 92 | 91 | |||||||
| Additional paid-in capital | 273,857 | 270,902 | |||||||
| Accumulated deficit before exploration stage | (213 | ) | (213 | ) | |||||
| Accumulated deficit during exploration and development stage | (138,944 | ) | (122,640 | ) | |||||
| Total Equity | 134,792 | 148,140 | |||||||
| TOTAL LIABILITIES, CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST, AND EQUITY | $ | 360,684 | $ | 385,522 | |||||
| GENERAL MOLY, INC. | |||||||||||||||||
| Years Ended | January 1, 2002 (Inception of Exploration Stage) to | ||||||||||||||||
| December 31, 2013 | December 31, 2012 | December 31, 2011 | December 31, 2013 | ||||||||||||||
| REVENUES | $ | — | $ | — | $ | — | $ | — | |||||||||
| OPERATING EXPENSES: | |||||||||||||||||
| Exploration and evaluation | 772 | 778 | 1,568 | 41,251 | |||||||||||||
| Write-downs of development and deposits | — | — | 3,403 | 8,819 | |||||||||||||
| General and administrative expense | 8,985 | 10,600 | 10,248 | 89,360 | |||||||||||||
| TOTAL OPERATING EXPENSES | 9,757 | 11,378 | 15,219 | 139,430 | |||||||||||||
| LOSS FROM OPERATIONS | (9,757 | ) | (11,378 | ) | (15,219 | ) | (139,430 | ) | |||||||||
| OTHER INCOME/(EXPENSE): | |||||||||||||||||
| Interest and dividend income | 2 | 6 | 21 | 4,070 | |||||||||||||
| Interest expense | (753 | ) | (548 | ) | (250 | ) | (1,715 | ) | |||||||||
| Write-off of loan commitment fees (warrant) | (11,472 | ) | — | — | (11,472 | ) | |||||||||||
| Gain on forgiveness of debt | 804 | — | — | 804 | |||||||||||||
| Constructive receipt of break fee | 10,000 | — | — | 10,000 | |||||||||||||
| Write-off of debt issuance costs | (6,420 | ) | — | — | (6,420 | ) | |||||||||||
| Realized gain from sale of mining properties | 1,292 | 2,000 | — | 3,292 | |||||||||||||
| TOTAL OTHER (EXPENSE)/INCOME, NET | (6,547 | ) | 1,458 | (229 | ) | (1,441 | ) | ||||||||||
| LOSS BEFORE INCOME TAXES | (16,304 | ) | (9,920 | ) | (15,448 | ) | (140,871 | ) | |||||||||
| Income Taxes | — | — | — | — | |||||||||||||
| CONSOLIDATED NET LOSS | $ | (16,304 | ) | $ | (9,920 | ) | $ | (15,448 | ) | $ | (140,871 | ) | |||||
| Less: Net loss attributable to contingently redeemable noncontrolling interest | — | — | 680 | 1,927 | |||||||||||||
| NET LOSS ATTRIBUTABLE TO General Moly Inc. | $ | (16,304 | ) | $ | (9,920 | ) | $ | (14,768 | ) | $ | (138,944 | ) | |||||
| Basic and diluted net loss attributable to General Moly per share of common stock | $ | (0.18 | ) | $ | (0.11 | ) | $ | (0.16 | ) | ||||||||
| Weighted average number of shares outstanding— basic and diluted | 91,568 | 91,230 | 90,588 | ||||||||||||||
| COMPREHENSIVE LOSS | $ | (16,304 | ) | $ | (9,920 | ) | $ | (14,768 | ) | $ | (138,944 | ) | |||||
| GENERAL MOLY, INC. | ||||||||||||||||
| Years Ended | January 1, 2002 (Inception of Exploration Stage) to | |||||||||||||||
| December 31, 2013 | December 31, 2012 | December 31, 2011 | December 31, 2013 | |||||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||||||
| Net loss | $ | (16,304 | ) | $ | (9,920 | ) | $ | (15,448 | ) | $ (140,871 | ) | |||||
| Adjustments to reconcile net loss to net cash used by operating activities: | ||||||||||||||||
| Depreciation and amortization | 341 | 310 | 412 | 2,295 | ||||||||||||
| Interest expense | 753 | 548 | 250 | 1,715 | ||||||||||||
| Stock-based compensation for employees and directors | 1,829 | 1,414 | 1,713 | 20,055 | ||||||||||||
| (Increase) decrease in deposits, prepaid expenses and other | (489 | ) | (31 | ) | 43 | (533 | ) | |||||||||
| Decrease in accounts payable and accrued liabilities | (8,170 | ) | (3,569 | ) | (10,761 | ) | (19,042 | ) | ||||||||
| Increase in restricted cash held for electricity transmission | (7 | ) | (8 | ) | — | (12,020 | ) | |||||||||
| Increase in post closure reclamation and remediation costs | 691 | 40 | 16 | 1,109 | ||||||||||||
| Write-off of loan commitment fees (warrant) | 11,472 | — | — | 11,472 | ||||||||||||
| Write-off of debt issuance costs | 6,420 | — | — | 6,420 | ||||||||||||
| Constructive receipt of break fee | (10,000 | ) | — | — | (10,000 | ) | ||||||||||
| Forgiveness of debt (interest on bridge loan) | (804 | ) | — | — | (804 | ) | ||||||||||
| Realized gain related to sale of mining properties | (1,292 | ) | (2,000 | ) | — | (3,292 | ) | |||||||||
| Writedowns of development and deposits | — | — | 3,403 | 8,819 | ||||||||||||
| Services and expenses paid with common stock | — | — | — | 1,990 | ||||||||||||
| Warrant repricing | — | — | — | 965 | ||||||||||||
| Net cash used by operating activities | (15,560 | ) | (13,216 | ) | (20,372 | ) | (131,722 | ) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||||||||
| Purchase and development of mining properties, land and water rights | (35,280 | ) | (20,762 | ) | (10,567 | ) | (176,864 | ) | ||||||||
| (Deposits)/refunds on property, plant and equipment | (3,689 | ) | (2,158 | ) | 177 | (73,754 | ) | |||||||||
| Proceeds from option to purchase agreement | 1,000 | 1,950 | 935 | 4,100 | ||||||||||||
| Decrease (increase) in restricted cash held for reclamation bonds | 659 | (5,858 | ) | — | (5,841 | ) | ||||||||||
| Increase in restricted cash — EMLLC | — | (36,000 | ) | — | (36,000 | ) | ||||||||||
| Cash provided by sale of marketable securities | — | — | — | 109 | ||||||||||||
| Net cash used by investing activities | (37,310 | ) | (62,828 | ) | (9,455 | ) | (288,250 | ) | ||||||||
| GENERAL MOLY, INC. | ||||||||||||||||
| Years Ended | January 1, 2002 (Inception of Exploration Stage) to | |||||||||||||||
| December 31, 2013 | December 31, 2012 | December 31, 2011 | December 31, 2013 | |||||||||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||||||||
| Proceeds from issuance of stock, net of issuance costs | 49 | 583 | 19,412 | 228,351 | ||||||||||||
| Cash proceeds from POS-Minerals Corp. | 7,127 | 103,807 | — | 210,934 | ||||||||||||
| Decrease in leased assets, net | (250 | ) | (142 | ) | (198 | ) | (260 | ) | ||||||||
| Increase in capitalized debt issuance costs | (702 | ) | (582 | ) | (2,249 | ) | (4,420 | ) | ||||||||
| Proceeds from debt | — | — | — | 10,000 | ||||||||||||
| Cash paid to POS-Minerals Corp. for purchase price adjustment | — | — | — | (2,994 | ) | |||||||||||
| Net cash provided by financing activities: | 6,224 | 103,666 | 16,965 | 441,611 | ||||||||||||
| (Decrease) increase in cash and cash equivalents, net | (46,646 | ) | 27,622 | (12,862 | ) | 21,639 | ||||||||||
| Cash and cash equivalents, beginning of period | 68,331 | 40,709 | 53,571 | 46 | ||||||||||||
| Cash and cash equivalents, end of period | $ | 21,685 | $ | 68,331 | $ | 40,709 | $ 21,685 | |||||||||
| NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||||||||||||||||
| Equity compensation capitalized as development | $ | 1,078 | $ | 639 | $ | 258 | $ 8,175 | |||||||||
| Accrued portion of advance royalties | — | 5,200 | — | 5,200 | ||||||||||||
| Accrued portion of payments to the Agricultural Sustainability Trust and Hanlong | — | 2,000 | — | 4,000 | ||||||||||||
| Installment purchase of equipment and land | 139 | 730 | — | 139 | ||||||||||||
| Accrued portion of deposits on property, plant and equipment | 728 | 1,059 | 1,691 | 728 | ||||||||||||
| Loan commitment costs | — | 12,076 | — | — | ||||||||||||
| Post closure reclamation and remediation costs, reclamation bond, and accounts payable assumed in an acquisition | — | — | — | 754 | ||||||||||||
| Common stock and warrants issued for property and equipment | — | — | — | 1,586 | ||||||||||||
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. 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 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.
Contact
General Moly
Investors:
Scott Kozak, 303-928-8591
skozak@generalmoly.com
or
Media:
Zach Spencer, 775-748-6059
zspencer@generalmoly.com
or
info@generalmoly.com
http://www.generalmoly.com