General Moly Announces First Quarter 2011 Results
LAKEWOOD, Colo.--(BUSINESS WIRE)--May 2, 2011--General Moly, Inc. (the "Company") (NYSE Amex and TSX: GMO) announced its unaudited financial results for the first quarter ended March 31, 2011. Net loss for the three months ended March 31, 2011 was approximately $4.2 million ($0.05 per share), compared to a loss of $2.8 million ($0.04 per share) for the year ago period.
Our cash balance at the end of the first quarter was approximately $64 million compared to approximately $54 million at the end of 2010. During the first quarter, cash use of approximately $9 million was the result of approximately $5 million in development, engineering, advance royalty and equipment deposit costs and approximately $4 million in General and Administrative costs offset by approximately $19 million in warrant exercise proceeds. During the remainder of 2011, spending levels will largely be tied to progress toward receipt of the Mt. Hope project's construction and operating permits.
Financial information is included at the end of this release.
Future spending levels for the Mt. Hope project are connected to receipt of permits for the Mt. Hope project. When final permits are received, POS-Minerals Corporation (the 20% owner of the Mt. Hope project) is anticipated to fund its final $56 million initial contribution, plus 20% of all money 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 two months after the Mt. Hope project’s permits are received, pursuant to the 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. The Company is continuing work with a Chinese engineering firm to develop a Chinese language version of the Bankable Feasibility Study for the Chinese banks. This work is planned for completion during the second quarter of this year. When the bank loan is in place, 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. In total, these financing commitments are anticipated to fully fund the development of the Mt. Hope project.
The Bureau of Land Management (“BLM”) and its independent Environmental Impact Statement (“EIS”) contractor completed and circulated a second draft of the Mt. Hope project’s Preliminary Draft Environmental Impact Statement (“PDEIS”) on April 11, 2011. Comments from reviewing agencies are due to the BLM on May 6, 2011. Following receipt of submitted comments, the BLM and its independent contractor will evaluate and incorporate comments as necessary before moving forward with the production of the project’s Draft Environmental Impact Statement (“DEIS”) for publication. The DEIS is anticipated to be completed in the second quarter and published in the Federal Register in the second or third quarter. Following publication of the DEIS, full permits are anticipated within six to nine months.
WATER RIGHTS UPDATE
On April 22, 2011, the Nevada State Engineer issued a Notice of Hearing scheduling an additional day of hearing to be held on May 10, 2011. The additional day is a continuation of the Hearing held in December 2010 and is to receive and allow cross-examination related to information requested by the State Engineer. Based on the date of this hearing, the Company now anticipates a grant of applications on its water rights most likely in the third quarter of this year. The Company remains confident that the State Engineer will ultimately rule favorably on our applications and issue final water permits for the Mt. Hope project in sufficient time to maintain the Company’s current project development timeline. The Company continues to hold discussions with protestants to its water applications, including the County of Eureka, in an effort to find a solution to the protestants’ opposition of the Company’s water applications.
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.
MOLYBDENUM MARKET UPDATE
Over the first quarter of 2011, molybdenum prices traded slightly upward and finished the quarter at $17.20 per pound, compared to $16.40 per pound at the end of last year. Since the end of the first quarter, prices have continued their general upward trend and are currently trading near $17.40 per pound.
Higher prices continue to be driven by Chinese steel demand, as well as a more gradual return of western world growth, particularly relating to stainless steel. According to the International Molybdenum Association, China remained a net importer of molybdenum in 2010, although net imports of approximately 4 million pounds were down from 2009 levels indicating that high-cost domestic production within China that shuttered in 2008 and 2009 as a response to low prices has likely returned to production. Low levels of raw exports from China continue to force Korean and Japanese steel producers to source molybdenum from the West.
Additional information on the Company’s first 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 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.
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.