General Moly Reports First Quarter Results
LAKEWOOD, Colo., May 5, 2016 /CNW/ -- General Moly Inc. (the "Company" or "General Moly") (NYSE MKT and TSX: GMO) The Company finished the first quarter with a strong cash balance of approximately $15.8 million and $17.2 million in restricted cash. The Company remains positioned with financial liquidity to fund its current business activities and working capital needs into early 2018.
First quarter highlights:
- The Company continued to lower the cash burn rate for Corporate spend and Liberty Project costs to $2.0 million in the quarter versus $3.0 million spent in the first quarter of 2015, as it prudently manages liquidity. Corporate and Liberty spending is estimated to be lowered further and is projected to average about $1.7 million per quarter going forward.
- Mt. Hope Project's joint venture operating company Eureka Moly, LLC ("EMLLC") ended the first quarter with a balance of $14.7 million (100% basis) in a cash reserve account, and remains self-funded through 2020 based on projected care and maintenance expenses. EMLLC also received a net refund of $4.3 million (100% basis) in February 2016 from a reduction in reclamation funding requirements.
- The Company focused efforts throughout the quarter on working jointly with its long-term strategic partner AMER International Group ("AMER") in assessing value-accretive acquisition opportunities concentrated on base metal prospects in North America.
Announcing its financial results for the first quarter ended March 31, 2016 today, the Company reported a net loss for the three months ending March 31, 2016 of $2.1 million ($0.02 per share), compared to a net loss of $3.8 million ($0.04 per share) for the prior year period. The decrease in quarterly net loss was primarily due to the Company's cost-cutting measures.
During the first quarter, cash use of $3.4 million, sourced from both restricted and unrestricted funds, was the result of $0.6 million of Mt. Hope Project's EMLLC owners' costs, $0.2 million of Liberty Project costs, $0.8 million in retention incentive payouts from agreements dated 2014 and 2015, and $1.8 million in general and administrative expenses.
Bruce Hansen, Chief Executive Officer, remarked, "We continue to evaluate value-accretive, acquisition opportunities jointly with AMER, for our mutual benefit. Further, we continue to take decisive actions that better position our Company to advance the development of the Mt. Hope Project when market conditions improve. Through our management restructuring and cost reduction programs, we have achieved additional reductions in our Corporate spend and Liberty Project care and maintenance costs, and we remain focused on working toward the reinstatement of our water rights for the Mt. Hope Project."
Other Financial Highlights – Refund from Lower Collateral in Reclamation Surety
As announced previously, on February 23, 2016, EMLLC received a net refund of $4.3 million from a reduction in the collateral held in its reclamation surety program. The Company had received approval from the Bureau of Land Management to lower the reclamation financial guarantee requirement from $75.1 million to $2.8 million, based on the current limited state of disturbance at the Mt. Hope Project in late 2015. The surety bond program is now funded with a cash collateral payment of $0.3 million, a reduction from the $4.6 million established in November 2012, resulting in the $4.3 million net return of collateral.
Table 1: Financial Summary
| ($ and Shares in 000) | 1Q 2016 | 1Q 2015 | 1Q YOY |
| Exploration & evaluation expenses | $ 546 | $ 117 | 367% |
| General and administrative expenses, including non-cash stock compensation | 1,362 | 2,986 | -54% |
| Total Operating Expenses | 1,908 | 3,103 | -39% |
| Interest expense | (249) | (561) | -56% |
| Net Loss | $ (2,157) | $ (3,784) | -43% |
| Net Loss Per Share | $ (0.02) | $ (0.04) | -50% |
| Avg. Weighted Shares Outstanding | 110,356 | 93,052 | 19% |
| Note: Exploration and evaluation expenses are substantially higher in 2016 due to leach pad maintenance and repair performed at the Liberty Project during that time period. No such work was performed in 2015. |
Table 2: Balance Sheet Summary
| ($ in 000) | March 31, 2016 | December 31, 2015 |
| Cash and Cash Equivalents | $ 15,836 | $ 13,047 |
| Current Assets | 16,003 | 13,197 |
| Current Liabilities | 2,723 | 2,404 |
| Working Capital | 13,280 | 10,793 |
| Restricted cash held at EMLLC | 14,687 | 16,636 |
| Other restricted cash | 2,501 | 6,782 |
| Total Assets | 345,015 | 346,311 |
| Long term debt | 1,479 | 1,517 |
| Sr. convertible notes | 5,382 | 5,316 |
| Return of contributions payable to POS-Minerals | 33,884 | 33,884 |
| Other liabilities | 12,936 | 12,523 |
| Long term liabilities | 53,681 | 53,240 |
| Contingently Redeemable Non-controlling Interest | 173,261 | 173,265 |
| Total Shareholders' Equity | $ 115,350 | $ 117,402 |
Mt. Hope Project Water Rights and Permits Update
In November 2015, the Nevada Supreme Court issued its Remittitur to the Nevada State District Court ("District Court") for the County of Eureka for further proceedings consistent with its September 2015 Order that reversed and remanded the District Courts' decisions upholding the Nevada State Engineer's approval of the Monitoring, Management and Mitigation ("3M") Plan and water permits. In March 2016, the Nevada State District Court issued an Order in March 2016 vacating the Monitoring, Management, and Mitigation ("3M") Plan, denying the applications and vacating the water permits issued by the State Engineer. The State Engineer has filed an appeal to the Nevada Supreme Court concerning the District Court's interpretation of the Supreme Court's Opinion and the District Court's exercise of executive authority in violation of Nevada's Constitution and Statutes. The Company has filed a similar appeal to the Nevada Supreme Court, and has also filed a Motion to Alter or Amend Judgment with the District Court, requesting the District Court amend its Order and remand the water permits and 3M Plan to the State Engineer to allow further proceedings to address the issues raised by the Nevada Supreme Court.
Notwithstanding the pendency of the appeals to the Nevada Supreme Court and the Motion to Amend or Alter Judgment, the Company will move forward as expeditiously as possible in 2016 to reobtain its water permits with the new applications that it filed with the State Engineer in October 2015, following the Supreme Court's September Order. In hearings to be held before the State Engineer, the Company will provide additional evidence of its ability to successfully mitigate any potential impacts to water rights in Kobeh Valley that could result from the Mt. Hope Project's new applications for water use.
Mr. Hansen said, "We look forward to supporting our new applications and demonstrating that our mitigation approach will mitigate any potential impacts to senior water right holders when we begin pumping water for the Mt. Hope Project. We respect the process and will comply with the direction from the courts and the State Engineer to protect senior water rights holders."
2016 Outlook and Priorities
As was discussed in the Company's 2015 year-end financial results news release, General Moly's priorities for 2016 are to:
- Prudently manage financial liquidity and flexibility to sustain the Company over the medium term, including continued stringent cost management throughout the organization to fund current business activities into early 2018, excluding potential additional AMER investments;
- Leverage General Moly's technical and financial skills and expertise to work jointly with AMER to identify value-accretive acquisition opportunities with a focus on base metal prospects in North America;
- Effect reinstatement of permits for water rights at the Mt. Hope Project, which would lead to the Tranche 2 investment of $6.0 million by AMER, contingent on a molybdenum price rise to $8 per pound for 30 consecutive calendar days;
- Maintain existing federal and state permit status for 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 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 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 to maintain required federal and state permits to continue construction, commence production and its ability to raise required project financing, as well as adverse governmental regulation and judicial outcomes such as the appeal of the Record of Decision 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.
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SOURCE General Moly Inc.
