General Moly (NYSE Amex: GMO) (TSX: GMO) announced its unaudited financial results for the third quarter ended September 30, 2010.
Net loss for the three month period ended September 30, 2010 was approximately $6.3 million ($0.09 per share), compared to a loss of $2.4 million ($0.03 per share) for the year ago period. Net loss for the nine month period ended September 30, 2010 was approximately $12.4 million ($0.17 per share), compared to a loss of $8.1 million ($0.11 per share) for the year ago period. Net loss for the third quarter was impacted by the previously-announced $5 million ($4 million attributable to General Moly) write down associated with the release of the Eureka Canyon Subdivision Lease.
Consolidated cash balance at the end of the third quarter was approximately $17 million compared to approximately $23 million at the end of the second quarter and approximately $49 million at the end of 2009. During the third quarter, cash use of approximately $6 million was the result of $4 million in development and milling equipment deposit costs and approximately $2 million in General and Administrative costs. The Company anticipates receiving $40 million from the closing of Tranche 1 of the Hanlong equity financing on December 20, 2010, as announced in a separate release on October 26, 2010.
The Company anticipates spending approximately $2 million on previously contracted long-lead milling equipment and associated freight and tax payments in the fourth quarter, in addition to ongoing administrative costs of approximately $3 million. Financial information is included at the end of this release.
FINANCING UPDATE
As announced on October 8, Hanlong received formal approval for the equity investment from the Chinese National Development and Reform Commission. On October 12, Hanlong received the Certificate of Overseas Investment as approval from the Chinese Ministry of Commerce and has filed that Certificate with the State Administration of Foreign Exchange, thus substantially satisfying Hanlong's Tranche 1 investment conditions. As previously announced, Hanlong will close its purchase of the first $40 million equity tranche in General Moly, representing a 12.5% fully diluted stake and approximately 12 million shares, on December 20, 2010.
PERMITTING UPDATE
The Preliminary Draft Environmental Impact Statement (PDEIS) was completed and provided to Cooperating Agencies on August 18, 2010. These Agencies, in addition to the Company and the Environmental Protection Agency, provided comments on the PDEIS to the Bureau of Land Management (BLM) on September 23, 2010. The BLM and its independent EIS contractor are currently in the process of reviewing and incorporating the comments into a Draft EIS (DEIS). Once the DEIS is complete, the BLM will advance the DEIS through the Notice of Availability process, which is the procedural step to publishing the document in the Federal Register. The Company continues to expect the DEIS to be published later this year, but the time requirement for the BLM to assess comments and to revise the PDEIS, which the Company does not control, could push DEIS publication into early-2011. Following publication of the DEIS, the general public will review and comment on the DEIS and these comments will be considered by the BLM in preparing a Final EIS prior to the issuance of the Record of Decision, which the Company continues to anticipate receiving in mid-2011.
In June 2010, the Company filed change applications with the State Engineer's office requesting permits to withdraw water at well locations matching those incorporated in the Company's final hydrology models now approved by the BLM. These change applications went through a publication and protest period, which ended August 23, 2010. The State Engineer has set a hearing date for December 6, 2010, where protests to the Company's water applications will be heard. Following the hearing, the State Engineer will issue a ruling with respect to the Company's water applications. The Company remains confident that the State Engineer will rule favorably, and it will be granted required water permits for the Mt. Hope Project in sufficient time to maintain the Company's current project development timeline.
Following the creation of the Agricultural Sustainability Trust and the Eureka Producer's Cooperative's withdrawal of all protests and appeals with respect to the Company's water applications, the Company has focused on working with the Commissioners of Eureka County to find a solution to the County's opposition of the Company's water applications. The Company's scientific studies continue to indicate that Mt. Hope's water pumping in Kobeh Valley will have virtually no impact to water in Diamond Valley.
ENGINEERING AND EQUIPMENT PROCUREMENT UPDATE
The Company will restart engineering efforts, which had been paused in March 2009 to conserve cash, following the publication of the Draft EIS. Equipment procurement efforts, which had also been paused, will resume later in the year or early next year. Although the Company has secured orders for 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 third quarter of 2010, according to Platts Metals Week, spot molybdenum prices peaked at $16.03 per pound at the beginning of September after trading up from a low of $13.88 per pound in mid-July. The market ended the third quarter with a price of $15.35. Price weakness in July was attributed to seasonal summer slowdown due to the European holiday season while higher prices later in the quarter were attributed to a resumption of normal market activities after the summer slowdown. At present, the market seems relatively balanced with prices hovering around the $15 per pound level.
China remains a net importer of molybdenum through August, importing approximately 5.5 million net pounds year-to-date. 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 third quarter 2010 results will be available in General Moly's 2010 Form 10-Q, which will be filed with the Securities and Exchange Commission and posted on the Company's website.
Source: General Moly, Inc.