LAKEWOOD, COLORADO – May 15, 2020, General Moly, Inc. (the “Company” or “General Moly”) (NYSE AMERICAN and TSX: GMO), the only western-exchange listed, pure-play molybdenum (“moly”) development company, announced its financial results for the first quarter of 2020 (“1Q 2020”).
1Q 2020 and year-to-date highlights:
•Moly prices had generally stair-stepped upward each week in the past month until the prices eased this week to a current price of $8.83 per pound (“/lb”), after having recovered to a recent high of $9.10 on May 7, 2020. In March 2020, moly prices had pulled back to a year-to-date low of $7.80 on March 27, 2020 due to the softness in demand associated with the global economic slowdown from the COVID?19 pandemic.
•During March 2020, Eureka Moly, LLC (“EMLLC”), the joint venture for the Mt. Hope Project repaid the outstanding $307,000 owed to General Moly (more details are described below in the section, EMLLC’s Repayment to General Moly) following the sale of non-critical Mt. Hope Project related property.
•In addition, in March 2020, General Moly raised approximately $82,000 from the sale of non-core property in
•In April 2020, with the continuing COVID-19 negative economic impacts on the Company and its ability to access capital, the Company applied for and received a $365,000 loan from the U.S. Government’s Paycheck Protection Program (“PPP Loan”).
Providing an update on General Moly, Chief Executive Officer and Chief Financial Officer Bruce D. Hansen said, “As the U.S. and global economies have been impacted by business shutdowns in a growing global health crisis, we took decisive actions to selectively reduce some executive salaries and other overhead, and applied for and received a federal stimulus PPP Loan of $365,000 in April 2020, which will help our Company maintain our small and critical workforce. And against the headwinds of challenging financial markets, we continue to work with our financial advisors to pursue incremental financing and strategic options to unlock the value of our 80% interest in the Mt. Hope Project in Nevada.”
Consolidated net loss for the 1Q 2020 was $1.1 million (-$0.01 per share), compared with a consolidated net loss of
$1.5 million (-$0.01 per share) in the first quarter of 2019 (“1Q 2019”). The 1Q 2020 net loss attributable to General Moly was $1.2 million, 15% lower than the net loss of $1.4 million in 1Q 2019. The lower consolidated quarter net loss was largely a result of a $547,000 gain from the sale of non-core assets, partially offset by approximately $200,000 of increased General and Administrative (“G&A”) expense primarily related to non-cash stock compensation in 1Q 2020. There were no stock compensation awards made in 2019.
As a result of the above described non-cash stock compensation, G&A expenses were $1.5 million in 1Q 2020, which was higher than $1.3 million in 1Q 2019. Exploration and evaluation expenses of $173,000 in 1Q 2020 were 12% lower than 1Q 2019 for ongoing care and maintenance expenses for the Liberty Project.
Of the $0.8 million incurred for interest expense during 1Q 2020, $0.3 million were related to cash interest paid on the 12% December 2022 and 13% December 2022 promissory notes, with the remaining $0.5 million related to non-cash adjustments to those notes, primarily for debt discount and debt issuance cost amortization as well as fair value adjustments on the value of the derivatives associated with these notes. Non-cash adjustments reduced interest expense in 2019 by $0.1 million. Cash interest was $0.2 million for the three months ended March 31, 2019.
During 1Q 2020, Other Income of $752,000 was largely the result of the non-cash change in the fair value of warrants held by the Company’s largest shareholder AMER International Group. The change in fair value of the warrants from December 31, 2019 to March 31, 2020 resulted in a non-cash gain of $752,000 recorded in Other Income.
The Company had $3.06 million in unrestricted cash and equivalents on March 31, 2020. Following receipt of the PPP Loan, the Company anticipates having sufficient liquidity to fund its working capital needs into the fourth quarter of 2020.
The Company’s financial advisors, XMS Capital Partners, Headwall Partners, and Odinbrook Global Advisors, continue to be engaged by the Board of Directors to assist the Company with securing incremental financing and evaluating other strategic alternatives, including the potential addition of new Mt. Hope Project partners, additional corporate strategic investors, merger opportunities, and/or the possible sale or privatization of the Company. There is no assurance that the Company will be successful in securing additional funding to be able to continue as a going concern. (See the Company’s May 4, 2020, January 21, 2020 and July 29, 2019 news releases.)
The Mt. Hope Project is owned 80% by General Moly and 20% by POS-Minerals Corporation (“POS-Minerals”) through their membership in EMLLC, which operates the Mt. Hope Project. At the end of 2019, EMLLC had a restricted cash balance of $3.68 million (100% basis) in a reserve account, sufficient to remain self-funded into 2021, based on current estimated care and maintenance expenses.
EMLLC’s Repayment to General Moly
Through an agreement with its Mt. Hope Project joint-venture partner POS-Minerals, General Moly advanced $1.0 million on behalf of Eureka Moly, LLC (“EMLLC”) for the initial settlement payment resolving the final protest to the Mt. Hope Project’s water rights applications, as detailed in the Company’s May 14, 2019 news release. General Moly sourced $500,000 from its available cash and $500,000 from closing a private placement of Series A Preferred Convertible Shares with Mount Hope Mines Inc. (“MHMI”), the project’s claim and land lessor. (All the Preferred Shares initially issued to MHMI and its assignees were converted into 1.85 million common shares of General Moly at a price of $0.27 per share in the fourth quarter of 2019).
In June 2019, approximately $293,000 of the $1.0 million advance was returned to the Company from the proceeds of ongoing sales of non-critical Mt. Hope Project-related equipment, assets and property from such sales. In September 2019, the Company and POS-Minerals entered into a Consent Agreement at EMLLC for a reimbursement schedule concerning the remaining balance of $707,000 owed to the Company. Under the Consent Agreement, $200,000 was reimbursed from the reserve account held at EMLLC to the Company on September 30, 2019 and an additional $200,000 was reimbursed in November 2019.
The remaining $307,000 was repaid to General Moly by EMLLC in March 2020 as a result of the sale of non-critical Mt. Hope Project related property. In March 2020, General Moly also raised approximately $82,000 from the sale of non-core property in Idaho.
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