Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-QSB/A
Amendment
#2
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QUARTERLY
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended March 31, 2007
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o
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TRANSITION
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from ___________ to ___________
General
Moly, Inc.
(Name
of
small business issuer in its charter)
DELAWARE
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001-32986
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91-0232000
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(State
or other jurisdiction of
incorporation or organization)
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Commission
File Number
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(I.R.S.
Employer
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1726
Cole Blvd., Suite 115
Lakewood,
CO 80401
Telephone:
(303) 928-8599
(Address
and telephone number of principal executive offices)
Idaho
General Mines, Inc.
10
North
Post St., Suite 610
Spokane,
WA 99201
(Former
name, former address and former fiscal year, if changed since last
report)
Check
whether the issuer (1) filed all reports required to be filed by Section 13
or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been
subject to such filing requirements for at least the past 90 days. YES
x
NO
o
Indicate
by check mark whether
the
registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES
oNO
x
The
number
of
shares outstanding of registrant’s common stock as of May 10, 2007 was
54,363,631.
Transitional
Small
Business Disclosure Format (check one): YES
o
NO
x
EXPLANATORY
NOTE
This
Amendment No. 2 on Form 10-QSB/A (this “Amendment”) amends and restates items
identified below with respect to the Form 10-QSB and Amendment No. 1 on Form
10-QSB/A filed by General Moly, Inc. (formerly “Idaho General Mines, Inc.”)
(“we” or the “Company”) for the period ended March 31, 2007 with the Securities
and Exchange Commission (the “SEC”) on May 16, 2007 and June 5, 2007,
respectively (the “Original Filing”). The purpose of this Amendment is to amend
and restate the previously issued financial statements included in the Original
Filing for the reasons described in Note 2 to the financial statements included
in Item 1 (Financial Statements) herein. Other than as set forth below, the
items of the Original Filing continue to speak as of the date of the original
filing date thereof, and the disclosure relating to such items is not being
updated.
This
Amendment amends and restates the information in Item 1 (Financial Statements)
and Item 2 (Management’s Discussion and Analysis of Operation) of the Original
Filing. Except for the foregoing amended and restated information and the
information set forth below under the heading “Subsequent Event,” this Amendment
continues to describe conditions as of the date of the Original Filing, and
the
disclosures contained herein have not been updated to reflect events, results
or
developments that have occurred after the date of the Original Filing, or to
modify or update those disclosures affected by subsequent events. Among other
things, forward-looking statements made in the Original Filing have not been
revised to reflect events, results or developments that have occurred or facts
that have become known to us after the date of the Original Filing, and such
forward-looking statements should be read in their historical context. This
Amendment should be read in conjunction with the Company’s filings made with the
SEC subsequent to the Original Filing, including any amendments to those
filings.
Subsequent
Event
On
October 8, 2007, we reincorporated the Company in the State of Delaware (the
“Reincorporation”) through a merger involving Idaho General Mines, Inc. and
General Moly, Inc., a newly-formed Delaware corporation that was a wholly owned
subsidiary of Idaho General Mines, Inc. The Reincorporation was effected by
merging Idaho General Mines, Inc. with and into General Moly, with General
Moly
being the surviving entity. In connection with the Reincorporation, all of
the
outstanding securities of Idaho General Mines, Inc. were converted into
securities of General Moly on a one-for-one basis. For purposes of the Company’s
reporting status with the Securities and Exchange Commission, General Moly
is
deemed a successor to Idaho General Mines, Inc.
PART
1 - FINANCIAL INFORMATION
ITEM
1. FINANCIAL
STATEMENTS
GENERAL
MOLY, INC.
(AN
EXPLORATION STAGE COMPANY)
Consolidated
BALANCE SHEETS
(Unaudited
- Dollars in thousands, except per share amounts)
(Restated
- Note 2)
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March 31,
2007
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December 31
2006
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ASSETS:
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CURRENT
ASSETS
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Cash
and cash equivalents
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$
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24,023
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$
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17,883
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Other
Receivables
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2
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—
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Deposits
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310
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146
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Prepaid
expense
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28
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46
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Total
Current Assets
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24,363
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18,075
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PROPERTY
AND EQUIPMENT, net
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535
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431
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RECLAMATION
BOND
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490
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—
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LAND
AND MINING CLAIMS
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13,324
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8,598
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TOTAL
ASSETS
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$
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38,712
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$
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27,104
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LIABILITIES
AND STOCKHOLDERS’ EQUITY
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CURRENT
LIABILITIES
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Accounts
payable and accrued liabilities
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$
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2,296
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$
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1,076
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Provision
for post closure monitoring costs
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212
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—
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Current
portion of long term debt
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29
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19
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Total
Current Liabilities
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2,537
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1,095
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Provision
for post closure monitoring cost, net of current portion
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502
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—
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Long
term debt, net of current portion
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73
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58
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Total
Liabilities
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3,112
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1,153
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STOCKHOLDERS’
EQUITY
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Preferred
stock, Series A, $0.001 par value; 10,000,000 shares authorized,
no shares
issued and outstanding
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—
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—
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Common
stock, $0.001 par value; 200,000,000 shares authorized, 44,205,545
and
43,397,540 shares issued and outstanding, respectively
|
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44
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43
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Additional
paid-in capital
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50,397
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46,017
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Common
stock issuable
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14,341
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—
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Accumulated
deficit before exploration stage
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|
(213
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)
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|
(213
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)
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Accumulated
deficit during exploration stage
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(28,969
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)
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(19,896
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)
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Total
Stockholders’ Equity
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35,600
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25,951
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TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
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$
|
38,712
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$
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27,104
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The
accompanying condensed notes are an integral part of these financial
statements.
GENERAL
MOLY, INC.
(AN
EXPLORATION STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF OPERATIONS
(Unaudited
- In thousands except per share amounts)
(Restated
- Note 2)
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Three
Months Ended
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January 1,
2002
Inception
of
Exploration
Stage)
to
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March 31,
2007
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March 31,
2006
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March 31,
2007
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REVENUES
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$
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—
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$
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—
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$
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—
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OPERATING
EXPENSES:
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Property
research, exploration and development
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3,842
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1,270
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14,194
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General
and administrative expense
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5,399
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1,062
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15,944
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TOTAL
OPERATING EXPENSES
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9,241
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2,332
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30,138
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LOSS
FROM OPERATIONS
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(9,241
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)
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(2,332
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)
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(30,138
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)
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OTHER
INCOME
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Interest
and dividend income
|
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168
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|
144
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1,103
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Realized
gain on marketable securities
|
|
|
—
|
|
|
—
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|
5
|
|
Income
from timber sales
|
|
|
—
|
|
|
—
|
|
|
60
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|
TOTAL
OTHER INCOME
|
|
|
168
|
|
|
144
|
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1,168
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LOSS
BEFORE TAXES
|
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|
(9,073
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)
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|
(2,188
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)
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|
(28,970
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)
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INCOME
TAXES
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
|
|
|
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NET
LOSS
|
|
$
|
(9,073
|
)
|
$
|
(2,188
|
)
|
$
|
(28,970
|
)
|
|
|
|
|
|
|
|
|
|
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BASIC
AND DILUTED NET LOSS PER SHARE OF COMMON STOCK
|
|
$
|
(0.21
|
)
|
$
|
(0.07
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
WEIGHTED
AVERAGE NUMBER OF COMMON SHARES OUTSTANDING - BASIC AND DILUTED
|
|
|
43,746
|
|
|
30,910
|
|
|
|
|
The
accompanying condensed notes are an integral part of these interim financial
statements.
GENERAL
MOLY, INC.
(AN
EXPLORATION STAGE COMPANY)
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(Unaudited
- In thousands)
(Restated
- Note 2)
|
|
Three
Months Ended
March 31,
2007
|
|
Three
Months Ended
March 31,
2006
|
|
January
1, 2002
(Inception
of
Exploration
Stage
to
March 31,
2007
|
|
CASH
FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(9,073
|
)
|
$
|
(2,188
|
)
|
$
|
(28,970
|
)
|
Adjustments
to reconcile net loss to net cash used by operating activities:
|
|
|
|
|
|
|
|
|
|
|
Services
and expenses paid with common stock
|
|
|
304
|
|
|
308
|
|
|
1,991
|
|
Depreciation
and amortization
|
|
|
33
|
|
|
5
|
|
|
106
|
|
Gain
on sale of investments
|
|
|
—
|
|
|
—
|
|
|
(9
|
)
|
Unrealized
loss on securities
|
|
|
—
|
|
|
—
|
|
|
4
|
|
Adjustment
to equity
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
Equity
compensation management and directors
|
|
|
3,131
|
|
|
108
|
|
|
6,441
|
|
Decrease
(increase) in employee advances
|
|
|
—
|
|
|
9
|
|
|
—
|
|
Decrease
(increase) in prepaid expenses and deposits
|
|
|
(146
|
)
|
|
32
|
|
|
(368
|
)
|
Decrease
(increase) in accounts payable and accrued expenses
|
|
|
1,166
|
|
|
(385
|
)
|
|
2,272
|
|
Net
cash used by operating activities
|
|
|
(4,585
|
)
|
|
(2,111
|
)
|
|
(18,541
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Payments
for the purchase of equipment
|
|
|
(104
|
)
|
|
(39
|
)
|
|
(482
|
)
|
Purchase
of securities
|
|
|
—
|
|
|
—
|
|
|
(458
|
)
|
Cash
provided from the purchase of mining property, claims
|
|
|
1,279
|
|
|
—
|
|
|
1,279
|
|
Purchase
of mining property, claims, options
|
|
|
(5,339
|
)
|
|
(4,460
|
)
|
|
(12,805
|
)
|
Payments
on capital leases
|
|
|
(6
|
)
|
|
—
|
|
|
(6
|
)
|
Cash
provided by sale of marketable securities
|
|
|
—
|
|
|
—
|
|
|
247
|
|
Net
cash provided (used) by investing activities
|
|
|
(4,170
|
)
|
|
(4,499
|
)
|
|
(12,225
|
)
|
|
|
|
|
|
|
|
|
|
|
|
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Cash
received for common stock issuable
|
|
|
14,341
|
|
|
—
|
|
|
14,341
|
|
Proceeds
from issuance of stock
|
|
|
554
|
|
|
32,214
|
|
|
40,402
|
|
Net
cash provided by financing activities:
|
|
|
14,895
|
|
|
32,214
|
|
|
54,743
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
6,140
|
|
|
25,604
|
|
|
23,977
|
|
Cash
and cash equivalents, beginning of period
|
|
|
17,883
|
|
|
257
|
|
|
44
|
|
Cash
and cash equivalents, end of period
|
|
$
|
24,023
|
|
$
|
25,861
|
|
$
|
24,021
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL
DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
|
|
|
Income
taxes paid
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Interest
paid
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-CASH
INVESTING AND FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
|
|
Common
stock issued for equipment
|
|
$
|
—
|
|
$
|
11
|
|
$
|
11
|
|
Common
stock and warrants issued for property
|
|
$
|
420
|
|
$
|
—
|
|
$
|
1,169
|
|
Reclamation
bond acquired from Equatorial
|
|
$
|
491
|
|
$
|
—
|
|
$
|
491
|
|
Post
closure monitoring cost acquired from Equatorial
|
|
$
|
751
|
|
$
|
—
|
|
$
|
751
|
|
Accounts
payable and accrued expenses acquired from Equatorial
|
|
$
|
54
|
|
$
|
—
|
|
$
|
54
|
|
The
accompanying condensed notes are an integral part of these interim financial
statements.
GENERAL
MOLY, INC.
(AN
EXPLORATION STAGE COMPANY)
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2007
NOTE
1—DESCRIPTION OF BUSINESS
General
Moly, Inc. (the “Company” or “GMO”) is a Delaware corporation originally
incorporated as General Mines Corporation on November 23, 1925. In 1966,
the Company amended its articles of incorporation to change its name to Idaho
General Petroleum and Mines Corporation, and amended its articles again in
1967
changing its name to Idaho General Mines, Inc. On October 8, 2007, the
Company reincorporated in the State of Delaware (the “Reincorporation”) through
a merger involving Idaho General Mines, Inc. and General Moly, Inc., a
newly-formed Delaware corporation that was a wholly owned subsidiary of Idaho
General Mines, Inc. The Reincorporation was effected by merging Idaho General
Mines, Inc. with and into GMO, with GMO being the surviving entity. For
purposes of the Company’s reporting status with the Securities and Exchange
Commission, GMO is deemed a successor to Idaho General Mines,
Inc.
The
Company’s historic activities have principally consisted of the exploration for
nonferrous and precious metals in and around Shoshone County, Idaho. The Company
entered a new exploration stage in early January 2002 when it shifted its
focus to minerals exploration. In May 2004, the Company began a search for
substantive mineral properties with a focus on metals such as copper, zinc,
silver, gold and specialty metals. GMO entered into an option to lease the
Mount
Hope molybdenum property located in Nevada in November 2004 and exercised
that option in October 2005 after several phases of feasibility studies and
project design studies which indicated the attractiveness of the project. GMO
similarly optioned the Hall Tonopah molybdenum-copper property, also in Nevada,
in 2005 and exercised that option to purchase the Hall Tonopah property in
March 2006 with the intent of assessing economic feasibility by exploring
and assessing the property’s potential. Accordingly, GMO has assumed the role of
exploring, and as warranted, developing major mineral deposits which are at
a
relatively advanced stage and are worthy of economic consideration.
The
interim Condensed Consolidated Financial Statements of the Company and its
subsidiaries are unaudited. In the opinion of management, all adjustments and
disclosures necessary for a fair presentation of these interim statements have
been included. All such adjustments are, in the opinion of management, of a
normal and recurring nature. The results reported in these interim Condensed
Consolidated Financial Statements are not necessarily indicative of the results
that may be reported for the entire year. These interim Condensed Consolidated
Financial Statements should be read in conjunction with GMO’s Consolidated
Financial Statements included in its Annual Report on Form 10-KSB/A for the
year
ended December 31, 2006.
On
January 30, 2007, the Company completed the acquisition of all of the
issued and outstanding shares of a corporation that owned a royalty interest
in
our Hall-Tonopah Property (see note 6). Upon its acquisition, the
corporation was consolidated as a wholly owned subsidiary of the
Company.
NOTE
2—RESTATEMENT OF PRIOR YEAR FINANCIAL STATEMENTS
The
Company has corrected its accounting treatment for certain non-cash adjustments
primarily related to the calculation of and recognition of compensation expense
and the valuation of warrants to purchase common shares of the Company under
FASB Statement 123 - Accounting
for Stock-Based Compensation, FASB
Statement 123(R) -Share
Based Payment
and EITF
96-18 - Accounting
for Equity Instruments That Are Issued to Other Than Employees for Acquiring,
or
in Connection with Selling Goods and Services.
The
Company had utilized volatility assumptions which were too low in determining
the value of certain equity instruments issued during the periods and failed
to
attribute value to certain warrants included as consideration in transactions
with third parties. This resulted in the Company valuing equity instruments
granted and/or issued at too low of a value and, accordingly, the amounts
recorded for these non-cash transactions were understated.
Additionally
during the periods, the Company did not account for forfeitures of employee
options which occurred prior to vesting, resulting in an overstatement of
non-cash compensation expense, and allocated stock-related compensation costs
to
the incorrect service periods. Furthermore, in the year ended December 31,
2006, the Company incorrectly allocated a portion of the cash consideration
paid
for water rights to non marketable securities and subsequently impaired such
securities, rather than allocating this portion of the consideration to the
purchase of such water rights.
In
addition, the Company has corrected certain other immaterial errors.
At March 31, 2007 the cumulative effect of all changes was an increase to
the cost of our land and mining claims of $713,000, an increase in property
research, exploration and development expense of $268,000 an increase in general
and administration expense of $186,000, a decrease in realized loss on
marketable securities of $ 321,000, and an increase to our net equity of
$588,000.
The
impact of these errors on each of the Company’s previously issued financial
statements, are set forth in the table below (in thousands except per share
amounts).
|
|
As
Originally Reported
|
|
As
Restated
|
|
Impact
of the Error Increase (Decrease)
|
|
Income
Statement for the three months ended March 31,
2006
|
|
|
|
|
|
|
|
Property
research, exploration and development expenses
|
|
$
|
1,145
|
|
|
1,270
|
|
|
125
|
|
General
and administrative expenses
|
|
|
1,068
|
|
|
1,062
|
|
|
(6
|
)
|
Net
loss
|
|
|
2,070
|
|
|
2,188
|
|
|
118
|
|
Basic
and fully diluted loss per share
|
|
|
.07
|
|
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Statement for the three months ended March 31,
2007
|
|
|
|
|
|
|
|
|
|
|
Property
research, exploration and development expenses
|
|
|
3,912
|
|
|
3,842
|
|
|
(70
|
)
|
General
and administrative expenses
|
|
|
5,403
|
|
|
5,399
|
|
|
(4
|
)
|
Net
loss
|
|
|
9,147
|
|
|
9,073
|
|
|
(74
|
)
|
Basic
and fully diluted loss per share
|
|
|
.21
|
|
|
.21
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet at December 31, 2006
|
|
|
|
|
|
|
|
|
|
|
Land
and Mining Claims
|
|
|
7,885
|
|
|
8,598
|
|
|
713
|
|
Total
Assets
|
|
|
26,391
|
|
|
27,104
|
|
|
713
|
|
Accrued
Liabilities
|
|
|
970
|
|
|
1,095
|
|
|
125
|
|
Additional
Paid in Capital
|
|
|
45,221
|
|
|
46,017
|
|
|
796
|
|
Accumulated
Deficit
|
|
|
(19,902
|
)
|
|
(20,109
|
)
|
|
(207
|
)
|
Total
Stockholders’ Equity
|
|
|
25,362
|
|
|
25,951
|
|
|
589
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance
Sheet at March 31, 2007
|
|
|
|
|
|
|
|
|
|
|
Land
and Mining Claims
|
|
|
12,611
|
|
|
13,324
|
|
|
713
|
|
Total
Assets
|
|
|
37,999
|
|
|
38,712
|
|
|
713
|
|
Additional
Paid in Capital
|
|
|
49,676
|
|
|
50,397
|
|
|
721
|
|
Accumulated
Deficit
|
|
|
(29,049
|
)
|
|
(29,182
|
)
|
|
(133
|
)
|
Total
Stockholders’ Equity
|
|
|
35,012
|
|
|
35,600
|
|
|
588
|
|
NOTE
3—LIQUIDITY AND CAPITAL REQUIREMENTS (AND SUBSEQUENT
EVENT)
On
October 4, 2007 the Company’s Board of Directors approved the development of the
Mount Hope Project as contemplated in the Bankable Feasibility Study. The
development of the Mount Hope Project has an estimated total capital requirement
of approximately $1 billion comprised of initial construction cost in excess
of
$850 million; $50 to $70 million in cash bonding requirements;
$27 million in advance royalty payments; and amounts necessary for
financing costs and working capital. Such capital requirements are management’s
best estimates based on the Bankable Feasibility Study and other available
information, and are subject to change, which changes could be material. The
Company will also require additional capital to continue the exploration and
evaluation of Hall-Tonopah, as well as continue payment of ongoing general,
administrative and operations costs associated with supporting its planned
operations, the amounts of which are presently unknown.
The
capital will be required through the commencement of Mount Hope production
estimated to be in the second half of 2010. Our ability to develop the project
on time and on budget is dependent on, among other things, our ability to raise
the necessary capital to fund the Mount Hope Project both in sufficient quantity
of capital and at the time such capital is needed. Additionally, if the
estimated costs of the Mount Hope Project are exceeded we will need to raise
additional capital to fund such overruns.
The
Company does not currently have the capital necessary to complete the Mount
Hope
Project and, accordingly, plans to raise the capital on an ongoing basis when
needed. Our current business plan and project time schedule will require the
Company to raise approximately $200 million in capital from now through
December 31, 2008 with $10 to $20 million of such amount required by
December 31, 2007. If the Company is unable to raise sufficient quantities
of capital when needed, it will be necessary to develop alternative plans that
would likely delay the development and completion of the Mount Hope Project.
There is no assurance that we will be able to obtain the necessary financing
for
the Mt. Hope Project on customary terms, or at all.
NOTE
4—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This
summary of significant accounting policies is presented to assist in
understanding the financial statements. The financial statements and notes
are
representations of the Company’s management, which is responsible for their
integrity and objectivity. These accounting policies conform to accounting
principles generally accepted in the United States of America and have been
consistently applied in the preparation of the financial
statements.
Accounting
Method
The
Company’s financial
statements are prepared using the accrual basis of accounting in accordance
with
accounting principles generally accepted in the United States of
America.
Accounting
Pronouncements—Recent
In
February 2007, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 159. “The Fair
Value
Option for Financial Assets and Financial Liabilities Including an amendment
of
FASB Statement No. 115.” This statement permits entities to choose to
measure many financial instruments and certain other items at fair value. The
objective is to improve financial reporting by providing entities with the
opportunity to mitigate volatility in reported earnings caused by measuring
related assets and liabilities differently without having to apply complex
hedge
accounting provisions. This statement is expected to expand the use of fair
value measurement, which is consistent with the Board’s long term measurement
objective for accounting for financial instruments. This statement is effective
as of the beginning of an entity’s first fiscal year that begins after
November 15, 2007, although earlier adoption is permitted. Management has
not determined the effect that adopting this statement would have on the
Company’s financial condition or results of operation.
In
September 2006, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 157, “Fair
Value
Measurements.” This statement defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles (GAAP), and
expands disclosure about fair value measurements. This statement applies under
other accounting pronouncements that require or permit fair value measurements.
This statement does not require any new fair value measurements, but for some
entities, the application of this statement may change current practice. The
adoption of this statement had no immediate material effect on the Company’s
financial condition or results of operations.
In
June
2006, the Financial Accounting Standards Board issued FASB Interpretation
No. 48, “Accounting for Uncertainty in Income Taxes an interpretation of
FASB Statement No 109” (hereinafter “FIN 48”), which prescribes a
recognition threshold and measurement attribute for the financial statement
recognition and measurement of tax position taken or expected to be taken in
a
tax return. FIN 48 also provides guidance on de-recognition,
classification, interest and penalties, accounting in interim periods,
disclosure and transition. FIN 48 is effective for fiscal years beginning
after December 15, 2006. The Company’s adoption of FIN 48 did not have
any impact on the Company’s previously reported financial position as it has no
uncertain tax positions.
Cash
and Cash Equivalents
For
the
purposes of the statement of cash flows, the Company considers all highly liquid
investments with original maturities of three months or less to be cash
equivalents.
Estimates
The
process of preparing financial statements in conformity with accounting
principles generally accepted in the United States of America requires the
use
of estimates and assumptions regarding certain types of assets, liabilities,
revenues, and expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial statements. Accordingly,
upon settlement, actual results may differ from estimated amounts.
Exploration
Stage Activities
The
Company has been in the exploration stage since January 2002 and has not
realized any revenue from operations. It will be primarily engaged in minerals
exploration until it enters a development or operations stage.
Fair
Value of Financial Instruments
The
Company’s financial instruments as defined by Statement of Financial Accounting
Standards No. 107, “Disclosures about Fair Value of Financial Instruments,”
include cash, accounts payable and accrued liabilities. All instruments are
accounted for on a historical cost basis, which, due to the short maturity
of
these financial instruments, approximates fair value at March 31, 2007 and
December 31, 2006.
Basic
and Diluted Net Loss Per Share
Net
loss
per share was computed by dividing the net loss by the weighted average number
of shares outstanding during the period. The weighted average number of shares
was calculated by taking the number of shares outstanding and weighting them
by
the amount of time that they were outstanding. Diluted net loss per share for
GMO is the same as basic net loss per share, as the inclusion of common stock
equivalents would be antidilutive.
Mineral
Exploration and Development Costs
All
exploration expenditures are expensed as incurred. Significant property
acquisition payments for active exploration properties are capitalized. If
no
minable ore body is discovered, previously capitalized costs are expensed in
the
period the property is abandoned. Expenditures to develop new mines, to define
further mineralization in existing ore bodies, and to expand the capacity of
operating mines, are capitalized and amortized on a units-of-production basis
over proven and probable reserves.
Should
a
property be abandoned, its capitalized costs are charged to operations. The
Company charges to operations the allocable portion of capitalized costs
attributable to properties sold. Capitalized costs are allocated to properties
sold based on the proportion of claims sold to the claims remaining within
the
project area.
Mining
Claims and Land
Costs
of
acquiring and developing mineral properties are capitalized as appropriate
by
project area. Exploration and related
costs
and costs to maintain mineral rights and leases are expensed as incurred. When
a
property reaches the production stage, the related capitalized costs are
amortized using the units-of-production method on the basis of periodic
estimates of ore reserves. Mineral properties are periodically assessed for
impairment of value, and any subsequent losses are charged to operations at
the
time of impairment. If a property is abandoned or sold, its capitalized costs
are charged to operations.
Provision
for Taxes
Income
taxes
are provided based upon the liability method of accounting pursuant to Statement
of Financial Accounting Standards No. 109, “Accounting for Income Taxes”
(hereinafter “SFAS No. 109”). Under this approach, deferred income taxes
are recorded to reflect the tax consequences in future years of differences
between the tax basis of assets and liabilities and their financial reporting
amounts at each year-end. A valuation allowance is recorded against the deferred
tax asset if management does not believe the Company has met the “more likely
than not” standard imposed by SFAS No. 109 to allow recognition of such an
asset.
Reclamation
and Remediation
Expenditures
for ongoing compliance with environmental regulations that relate to current
operations are expensed or capitalized
as
appropriate. Expenditures resulting from the remediation of existing conditions
caused by past operations that do not contribute to future revenue generations
are expensed. Liabilities are recognized when environmental assessments indicate
that remediation efforts are probable and the costs can be reasonably
estimated.
Estimates
of such liabilities are based upon currently available facts, existing
technology and presently enacted laws and regulations taking into consideration
the likely effects of inflation and other societal and economic factors, and
include estimates
of
associated legal costs. These amounts also reflect prior experience in
remediating contaminated sites, other companies’ clean-up experience and data
released by The Environmental Protection Agency or other organizations. Such
estimates are by their nature imprecise and can be expected to be revised over
time because of changes in government regulations, operations, technology and
inflation. Recoveries are evaluated separately from the liability and, when
recovery is assured, the Company records and reports an asset separately from
the associated liability. At March 31, 2007 and December 31, 2006, the
Company had accrued liabilities for compliance with environmental regulations
of
$714,134 and $0, respectively.
Reclassification
Certain
amounts from prior periods have been reclassified to conform to the current
period presentation. This reclassification has
resulted
in no changes to the Company’s accumulated deficit or net losses presented.
Previously, directors’ fees paid by issuing common stock were not disclosed
separately in the Company’s statement of cash flows. These fees were part of
services and expenses paid with common stock.
NOTE
5—LAND, MINING CLAIMS, PROPERTY, AND EQUIPMENT
During
the three months ended March 31, 2007 the Company purchased vehicles for
$34,206, field equipment for $45,173, and office and computers and related
equipment for $57,366. The vehicles, equipment and computers will be depreciated
over useful
lives of
three to seven years using straight line depreciation. Depreciation expense
for
the three months ended March 31, 2007 is $32,840.
During
the year ended December 31, 2006 the Company purchased vehicles for
$164,575, field equipment for $10,116, and office
and
computers and related equipment and improvements for $260,194. The vehicles,
equipment and computers will be depreciated over useful lives of three to seven
years using straight line depreciation. Depreciation expense for the year ended
December 31, 2006 is $57,578.
On
November 12, 2004, GMO entered into an option to lease all property and
assets of the Mount Hope Molybdenum Property from Mt. Hope Mines, Inc. Exercise
of the option in October 2005 allows GMO to proceed for the next
30 years
with
permitting, developing and mining the deposit and for so long thereafter as
GMO
maintains an active operation. At
December 31, 2004, the Company had paid $186,044 cash and issued 500,000
shares of common stock with warrants to purchase 500,000 shares of common stock
to Mt. Hope Mines, Inc. for the Mount Hope option.
Pursuant
to the terms of the lease, the underlying total royalty on production payable
to
Mt. Hope Mines, Inc., less certain deductions, is 3 percent for a molybdenum
price up to $12 per pound, 4 percent for a molybdenum price up to $15 per pound,
and 5 percent for a molybdenum price above $15 per pound. GMO is subject to
certain periodic payments totaling $1,550,000 to be paid as per schedule between
January 2006 and October 2010. GMO has a best efforts obligation, by
the third anniversary of the lease, to pay Mt. Hope Mines, Inc. a recoverable
periodic payment (advance royalty) of 3 percent of the estimated capital cost
of
the project. This obligation to pay 3 percent of the construction capital
is subject to certain extension provisions through October 2013. Minimum
royalty payment after the mine commences operations is $0.27 a pound of
molybdenum if produced or $500,000 per year if the plant is idle.
Additionally, GMO is obligated to pay Exxon Mineral Company a one percent
net smelter royalty on all production
During
the year ended
December 31, 2005 the Company entered into an option agreement with High
Desert Winds LLC (“High Desert”) for High Desert’s approximately ten square mile
property in Nye County, Nevada, including water rights, mineral and surface
rights, buildings and certain equipment (the “Hall Tonopah Property”). Pursuant
to the terms of this agreement, the Company was granted a nine-month option
to
purchase the Hall Tonopah Property. The Company extended the option agreement
with High Desert with payments of $75,000 in June 2005
and
$100,000 in August 2005. The option to purchase the Hall Tonopah Property was
subsequently extended to March 17, 2006 with an $80,000 payment on
January 17, 2006. On March 17, 2006, the Company entered into a
purchase agreement with High Desert whereby it purchased a substantial portion
of the Hall Tonopah Property. At closing, the Company paid High Desert a cash
payment of approximately $4.5 million for the portion of the Hall Tonopah
Property that it purchased and made a deferred payment of $989,789 in
November of 2006 for the
purchase
of the remaining portion of this property for the total purchase price of
$5,449,616 including $32,698 in buildings and equipment at the Hall Tonopah
site. The primary purpose of the Hall Tonopah purchase was to further the
Company’s strategy of exploring and developing potential molybdenum properties.
The buildings and improvements to the property were valued at $32,698 based
on a
previous recent transaction at the property, and the remaining amount was
allocated to the land. At December 31, 2006 the Hall Tonopah property was
subject to a 12 percent royalty payable with respect to the net revenues
generated from molybdenum or copper minerals removed from the properties
purchased.
On
January 30, 2007, the Company completed the acquisition of all of the
issued and outstanding shares of Equatorial Mining North
America,
Inc., a Delaware corporation (“Equatorial”), from Equatorial Mining Limited
(“Equatorial Mining Limited”). Equatorial holds the 12 percent net smelter
royalty interest in the mineral rights of the Hall Tonopah property and as
a
result of this purchase, the Company now owns the Hall-Tonopah property and
all
associated mineral rights without future royalty obligations. As set forth
in
the Purchase Agreement, the Company paid to Equatorial Mining Limited
approximately $4.9 million in cash at closing. At first commercial
production of the property, the Company has agreed to pay an additional
$6.0 million. Because the Company cannot determine beyond a reasonable
doubt that the mine will attain commercial production the Company has chosen
not
to recognize the $6.0 million liability in its financial statements. By
purchasing Equatorial, the Company also assumed an approximate $460,000 cash
reclamation bond which will continue to be held by the Nevada Department of
Environmental Protection and the Bureau of Land Management and acquired cash
of
approximately $1.3 million.
In
July
2006, the Company purchased 1,503 acres of deeded land which includes 70,000
acres of BLM grazing rights and certain water rights known as the Gale Ranch
for
$1,869,373. This ranch is located near the Mount Hope mine site. The primary
reason
for the
purchase of this asset was to acquire the water rights of 1,200 acre feet
for use by the Mount Hope operations. The Company paid $54,982 for the water
rights and the remaining amount was used to purchase the land and the grazing
rights.
In
November 2006, the Company purchased from Atlas Precious Metals, Inc.
patented millsite claims for $32,090, water rights for $363,687 and fee land
in
Eureka, Nevada for $26,740 with improvements of $5,350. The primary purpose
of
this purchase was to acquire the water rights of 1,448 acre feet for the Mount
Hope operation.
On
March 2, 2007, the Company purchased the Florence patented lode mining
claim for $175,000 cash. This claim is adjacent to the Hall Tonopah property
and
is included in the total Hall Tonopah Property amount.
On
March 23, 2007, the Company completed the purchase of certain patented lode
mining claims referred to as the Liberty Claims on property adjacent to Hall
Tonopah property for cash of $75,000 and 150,000 shares of restricted common
stock valued at $420,000.
The
Company’s mining claims and land purchased prior to 2006 consist in part of (a)
approximately 107 acres of fee simple land in the Pine Creek area of Shoshone
County, Idaho, (b) six patented mining claims known as Chicago-London
group,
located
near the town of Murray in Shoshone County, Idaho, (c) 265 acres of private
land
with three unpatented claims in Josephine County, Oregon, known as the Turner
Gold project.
Capital
assets are recorded at cost. Depreciation is calculated using the straight-line
method over three to twenty years. The following is a summary of property,
equipment, and accumulated depreciation at March 31, 2007 and
December 31, 2006 (in thousands):
|
|
|
|
|
|
Net
Book
|
|
Net
Book
|
|
|
|
|
|
Accumulated
|
|
Value
at
|
|
Value
at
|
|
|
|
Cost
|
|
Depreciation
|
|
Mar.
31, 2007
|
|
Dec.
31, 2006
|
|
Property
and Equipment:
|
|
|
|
|
|
|
|
|
|
Field
Equipment
|
|
$
|
61
|
|
$
|
6
|
|
$
|
55
|
|
$
|
14
|
|
Vehicles
|
|
|
220
|
|
|
44
|
|
|
176
|
|
|
154
|
|
Office
Furniture
|
|
|
46
|
|
|
10
|
|
|
36
|
|
|
24
|
|
Computer
Equipment
|
|
|
248
|
|
|
40
|
|
|
208
|
|
|
185
|
|
Leasehold
Improvements
|
|
|
28
|
|
|
3
|
|
|
25
|
|
|
19
|
|
Imp.
to Fee Land in Eureka
|
|
|
5
|
|
|
|
|
|
5
|
|
|
5
|
|
Bldg
& Equip Hall Tonopah
|
|
|
32
|
|
|
3
|
|
|
29
|
|
|
30
|
|
Total
Property and Equipment
|
|
|
640
|
|
|
106
|
|
|
534
|
|
|
431
|
|
Land
and Mining Claims:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pine
Creek Land
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
Chicago-London
Group
|
|
|
80
|
|
|
—
|
|
|
80
|
|
|
80
|
|
Liberty
Claims
|
|
|
495
|
|
|
—
|
|
|
495
|
|
|
—
|
|
Turner
Gold Land
|
|
|
808
|
|
|
—
|
|
|
808
|
|
|
808
|
|
Hall
Tonopah Property
|
|
|
9,648
|
|
|
—
|
|
|
9,648
|
|
|
5,417
|
|
Real
Estate and Water Rights |
|
|
2,292 |
|
|
—
|
|
|
2,292 |
|
|
2,292 |
|
Total
Land and Mining Claims
|
|
|
13,324
|
|
|
—
|
|
|
13,324
|
|
|
8,598
|
|
Total
Capital Assets
|
|
$
|
13,643
|
|
$
|
106
|
|
$
|
13,537
|
|
$
|
9,029
|
|
NOTE
6—RELATED PARTY TRANSACTIONS
On
January 30,
2007
the Company entered into an employment agreement with a son of the Company’s
Chairman for services as Director of Projects and Operations. Under this
agreement, the Company granted a stock option to purchase 140,000 shares at
$2.78 per share, the closing price of the Company’s stock on January 30,
2007.
Additional
related
party transactions are included as part of Note 8.
NOTE
7—COMMON STOCK UNITS, COMMON STOCK AND COMMON STOCK
WARRANTS
During
the three months ended March 31, 2007, the Company issued 30,000 shares of
stock for an option exercised in 2006. Warrants and options in the amount of
479,053 and 100,000 were exercised for cash in the amount of $524,394 and
$30,000 respectively, less brokerage fees of $30,592 on the warrants. The
Company issued 150,000 shares of restricted common stock in the completion
of
the Liberty Claims purchase in the amount of $420,000 and issued 75,000 shares
of restricted common stock in exchange for services valued at $303,750. The
Company issued 500,000 shares of restricted stock to officers of the Company.
During the first three months of 2007, shareholders returned to the Company
38,998 shares of common stock due to a stock option exercise pricing error
in
2006. At the end of March, the Company was in the process of a private placement
offering and had received $14,000,000 in exchange for 4,117,647 common shares.
This transaction has been classified as common stock issuable on the Company’s
financial statements.
During
the year ended December 31, 2006 the Company had two private placements of
Common Stock Units. In the first private placement, the Company sold 3,021,936
common stock units for $1.10 per unit. The Company received cash of $3,324,130
less cash placement agent and finder’s fees of $157,699 and issued 170,550
Common Stock Units for finder’s fees valued at $1.80 per unit for a total value
of $307,511. Each unit consisted of one of share of common stock with warrants
to purchase one-half share of common stock at a price of $1.75 for each whole
share for a period of two years. In the second private placement, the Company
sold 15,000,000 common stock units for $2.00 per unit. Each unit consisted
of
one of share of common stock with warrants to purchase one-half share of common
stock at a price of $3.75 for each whole share for a period of five years.
The
Company received cash of $30,000,000 less cash placement agent and finder’s fees
of $2,125,000 and issued 800,000 warrants to purchase shares of common stock
at
a price of $3.75 for each whole share for a period of five years for finder’s
fees valued at $2.17 per warrant for a total value of $1,735,214.
Also
in
the year ended December 31, 2006, the Company issued 1,482,147 shares of
common stock for the cashless exercise of warrants and 1,008,837 shares of
common stock for the cashless exercise of stock options. Warrants and options
in
the amount of 5,838,055 and 340,000 were exercised for cash in the amount of
$4,476,927 and $60,670 respectively, less combined brokerage fees of $230,684.
The Company issued 50,000 shares of common stock for services valued at
$112,566. The Company issued 75,000 warrants to purchase shares of common stock
at a price of $2.10 for a period of two years in exchange for services valued
at
$1.07 per warrant for a total value of $79,946.
During
2004, the board of directors and shareholders adopted amended and restated
articles of incorporation, which authorized the Company’s issuance of
200,000,000 shares of common stock with a $0.001 par value. Prior to 2004,
the
Company was authorized to issue 25,000,000 shares of common stock with a par
value of $0.10.
The
Company is authorized
to issue
200,000,000 shares of common stock. All shares have equal voting rights, are
non-assessable and have one vote per share. Voting rights are not cumulative
and
therefore, the holders of more than 50% of the common stock could, if they
choose to do so, elect all of the directors of the Company.
NOTE
8—PREFERRED STOCK
On
October 28, 2004, shareholders of the Company authorized 10,000,000 shares
of no par value preferred stock. The authorized but
unissued shares of preferred stock may be issued in designated series from
time
to time by one or more resolutions
adopted
by the board of directors. The directors have the power to determine the
preferences, limitations and relative rights of each series of preferred
stock.
On
November 16, 2004, the board of directors unanimously consented to amend
the articles of incorporation of the Company. The amendment reclassified
10,000,000 shares of the Company’s no par value preferred stock into 10,000,000
shares of $0.001 par value Series A preferred stock. At December 31, 2005
and 2006, no shares of $0.001 par value Series A preferred stock were issued
or
outstanding.
NOTE
9—STOCK BASED COMPENSATION
Stock
Options
During
the three months ending March 31, 2007 the Company issued 1,120,000 options
within the 2006 Plan with an exercise price ranging from $2.41 to $2.78 with
vesting at various dates through 2009. These options were granted to members
of
the board of directors, officers, employees and consultants of the Company.
The
fair value of each option is estimated
on the
issue date using the Black-Scholes Option Price Calculation. The following
assumptions were made in estimating the fair value: risk free interest of 4.58%
to 4.94%; volatility of .9142 to .9228; dividend rate of 0%; and expected life
of 2.0 years. The total value of options awarded during the first three
months of 2007 was calculated at $1,606,619. Expense was recorded of $1,814,650
for the options which vested in 2007.
During
2006, the board of directors and shareholders adopted the 2006 Equity Incentive
Plan of the Company (the “2006 Plan”). During 2004, the board of directors and
shareholders adopted the Company 2003 Stock Option
Plan
(the “2003 Plan” and together with the 2006 Plan, the “Plans”). The purpose of
the Plans is to give the Company greater ability to attract, retain, and
motivate its officers and key employees. The Plans are intended to provide
the
Company with ability to provide incentives more directly linked to the success
of the Company’s business and increases in shareholder value.
Under
the
2006 Plan, the board of directors is authorized to grant incentive stock options
(“ISOs”) to employees (pursuant to Internal Revenue Code 422), non-statutory
stock options, restricted stock awards, restricted stock units and stock
appreciation
rights.
The aggregate number of shares of common stock that may be issued pursuant
to
awards granted under the 2006 Plan will not exceed 3,500,000 plus the number
of
shares that are ungranted and those that are subject to reversion under the
2003
Plan. As of March 31, 2007, the maximum number of shares available for
issuance under the 2003 Plan was 360,000 shares.
Shares
under the 2003 Plan that become eligible for awards under the 2006 Plan may
not
be granted again under the 2003 Plan.
During
the year ended December 31, 2006, the Company granted 1,665,000
non-qualified stock options outside of the Plans prior to
our AMEX
listing with an exercise price ranging from $2.25 to $3.68 with vesting at
various dates through 2008. These options were granted to members of the board
of directors, officers, and employees of the Company. No options or stock grants
were made under the 2006 Plan during the year ended December 31, 2006. The
Company issued 60,000 of ISOs within the 2003 Plan with an exercise price of
$2.10 with vesting at various dates through 2008. The fair value of each option
is estimated on the issue date using the Black-Scholes Option Price Calculation.
The following assumptions were made in estimating the fair value: risk free
interest of 5%; volatility of 101%; dividend rate of 0% and expected life of
2.4
years. The total value of options awarded during 2006 was calculated at
$3,346,975. Expense was recorded of $2,325,500 for the options which vested
in
2006.
Restricted
Stock
During
the three months ending March 31, 2007 the Company issued 500,000 shares of
restricted stock to officers of the Company that will vest
based on
certain performance based milestones established for each officer.
The
total
value of restricted stock awarded and expensed during the first three months
of
2007 was calculated at $1,390,000.
The
following is a summary of the Company’s stock option plans as of March 31,
2007:
|
|
Number
of
securities
to be
issued
upon
exercise
of
outstanding
options
|
|
Weighted
average
exercise
price of
outstanding
options
|
|
Number
of
securities
remaining
available
for
future issuance
under
equity
compensation
plans
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
2,863,333
|
|
$
|
1.66
|
|
|
n/a
|
|
|
Equity
compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
|
2006
Plan
|
|
|
1,120,000
|
|
$
|
2.77
|
|
|
1,880,000
|
(1)
|
|
2003
Plan
|
|
|
540,000
|
|
|
0.59
|
|
|
360,000
|
|
|
Total
|
|
|
4,523,333
|
|
$
|
1.81
|
|
|
2,240,000
|
|
|
(1)
|
The
aggregate number of shares of common stock that may be issued pursuant
to
awards granted under the 2006 Equity Incentive Plan will not exceed
3,500,000 plus the number of shares that are ungranted and those
that are
subject to reversion under 2003 Stock Plan. Shares under the 2003
Plan
that becomes eligible for awards under the 2006 Plan may not be granted
again under the 2003 Plan.
|
The
following is a summary of stock option activity in 2006 and 2007:
|
|
Number
of Shares
Under
Options
|
|
Weighted
Average
Exercise
Price
|
|
Outstanding
January 1, 2006
|
|
|
4,020,000
|
|
$
|
0.43
|
|
Granted
|
|
|
1,725,000
|
|
|
3.01
|
|
Exercised
|
|
|
1,615,000
|
|
|
0.49
|
|
Forfeited
|
|
|
480,000
|
|
|
—
|
|
Expired
|
|
|
—
|
|
|
—
|
|
Outstanding
at December 31, 2006
|
|
|
3,650,000
|
|
$
|
1.48
|
|
Options
exercisable at December 31, 2006
|
|
|
2,705,000
|
|
|
|
|
Weighted
average fair value of options granted during 2006
|
|
$
|
3.10
|
|
|
|
|
Outstanding
January 1, 2007
|
|
|
3,650,000
|
|
$
|
1.48
|
|
Granted
|
|
|
1,120,000
|
|
|
2.77
|
|
Exercised
|
|
|
130,000
|
|
|
0.26
|
|
Forfeited
|
|
|
116,667
|
|
|
|
|
Expired
|
|
|
—
|
|
|
|
|
Outstanding
March 31, 2007
|
|
|
4,523,333
|
|
$
|
1.81
|
|
Exercisable
at March 31, 2007
|
|
|
3,941,666
|
|
|
|
|
Weighted
Average Fair Value Granted During 2007
|
|
$
|
1.43
|
|
|
|
|
NOTE
10—INCOME TAXES
At
March 31, 2007 and December 31, 2006 the Company had deferred tax
assets principally arising from the net operating loss carry forwards for income
tax purposes multiplied by an expected rate of 34%. As management of the Company
cannot determine that it is more likely than not that the Company will realize
the benefit of the deferred tax assets, a valuation
allowance equal to the deferred tax asset has been established at March 31,
2007 and December 31, 2006. The significant components of the deferred tax
asset at March 31, 2007 and December 31, 2006 were as follows (in
thousands):
|
|
March 31,
2007
|
|
December 31,
2006
|
|
|
|
|
|
|
|
Net
operating loss carry forward
|
|
$
|
11,420
|
|
$
|
8,425
|
|
Deferred
tax asset
|
|
$
|
3,883
|
|
$
|
2,865
|
|
Deferred
tax asset valuation allowance
|
|
$
|
(3,883
|
)
|
$
|
(2,865
|
)
|
Net
deferred tax asset
|
|
$
|
—
|
|
$
|
—
|
|
At
March 31, 2007 and December 31, 2006 the Company had a net operating
loss carry forward of approximately $11,420,000 and
$8,425,000 respectively, which expire in the years 2022 through 2027. The change
in the allowance account from December 31, 2006 to March 31, 2007 was
$1,010,000.
NOTE
11—COMMITMENTS AND CONTINGENCIES
In
January 2007, the Company entered into a note to purchase a 2007 1 ton
pickup for $30,451 at an implied interest rate of 7.2% and with a term of three
years.
In
December 2006, the Company entered into two five year capital leases for
office equipment. The Company in December 2006 also entered into a note to
purchase a 2007 1 ton pickup for $33,571 at an interest rate of 0.9% and with
a
term of three years. The table below shows these obligations over the next
five
years (in thousands).
Year
|
|
Lease
Payment
|
|
Interest
on Leases
|
|
Note
Payment
|
|
Note
Interest
|
|
2007
(Remaining portion)
|
|
$
|
8
|
|
$
|
2
|
|
$
|
17
|
|
$
|
2
|
|
2008
|
|
|
10
|
|
|
2
|
|
|
23
|
|
|
1
|
|
2009
|
|
|
10
|
|
|
1
|
|
|
23
|
|
|
1
|
|
2010
|
|
|
10
|
|
|
1
|
|
|
1
|
|
|
|
|
2011
|
|
|
10
|
|
|
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
48
|
|
$
|
6
|
|
$
|
64
|
|
$
|
4
|
|
The
Mount
Hope Lease may be terminated upon the expiration of its 30-year term, earlier
at
our election, or upon our material breach and failure to cure such breach.
If we
terminate the lease, termination is effective 30 days after receipt by MHMI
of
our written notice to terminate the Mount Hope Lease. In order to maintain
the
lease, the Company must pay certain deferral fees and advance royalties as
discussed below.
Contractual
Obligations for Future Payments under Mount Hope Lease
Date
|
|
Fixed
Payment
|
|
Project
Financing Received by Date Indicated
|
|
|
Project
Financing Not Received and Deferral Elected
|
April
19, 2007
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
19, 2007
|
|
$
|
350
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October
19, 2008
|
|
|
|
Greater
of 3% of Construction
Capital
Cost Estimate or
$2,500(1)(3)(4)
|
|
$ |
350
|
|
|
|
|
|
|
|
|
October
19, 2009
|
|
|
|
Greater
of 3% of Construction
Capital
Cost Estimate or
$2,500(1)(3)(4)
|
|
$ |
350
|
|
|
|
|
|
|
|
|
October
19, 2010
|
|
|
|
$2,500(3)
|
|
|
Greater
of $2,500 or 3% of
Construction
Capital Cost
Estimate(3)(4)
|
|
|
|
|
|
|
|
|
October
19, 2011
|
|
|
|
3%
of Construction Capital
Cost
Estimate(3)(4)
|
|
|
Greater
of (a) $2,500 or (b),
if
3% of Construction Capital
Cost
Estimate is greater than
$2,500
then 50% of the
difference
between 3% and
$2,500(3)(4)
|
|
|
|
|
|
|
|
|
October
19, 2012
|
|
|
|
3%
of Construction Capital
Cost
Estimate(3)(4)
|
|
|
Greater
of (a) $2,500 or (b),
if
3% of Construction Capital
Cost
Estimate is greater than
$2,500,000,
then 50% of the
difference
between 3% and
$2,500(3)(4)
|
|
|
|
|
|
|
|
|
October
19, 2013 and each year thereafter(3)
|
|
$
|
500(3)
|
|
|
|
|
|
(1)
|
If
Project Financing is not received by October 19 of the year shown
in the
left column, then the Company may elect to defer this payment and
proceed
to make the payments under the column labeled “Project Financing Not
Received and Deferral Elected.” If prior to making all of the payments
under the column “Project Financing Not Received and Deferral Elected” the
Company obtains project financing, the Company would be required
to make
this payment and to pay $500,000 each year
thereafter.
|
(2)
|
In
addition to the payments above, the Company is required to pay to
MHMI a
production royalty after the commencement of Commercial Production
of the
greater of (i) $.20/lb of molybdenum metal (or the equivalent thereof
if
another Product is sold) sold from the property (not to exceed the
amount
of Net Returns we receive for those products) or (ii) 3% of the Net
Returns, subject to certain adjustments as set forth in the
lease.
|
(3)
|
To
be offset from the production royalty described in (3) above. The
Company
may recover the aggregate of these payments by retaining 50% of each
production royalty payment due to
MHMI.
|
(4)
|
“Construction
Capital Cost Estimate” means the Company’s projected costs plus 10% to put
the Mount Hope property into commercial
production.
|
On
January 30, 2007, the Company completed its previously announced
acquisition of all of the issued and outstanding shares of Equatorial Mining
North America, Inc., a Delaware corporation (“Equatorial”), from Equatorial
Mining Limited (“Equatorial Mining Limited”). Equatorial holds a 12 percent net
smelter royalty interest in the mineral rights of the Company’s Hall Tonopah
molybdenum-copper property in Nye County, Nevada. The Company now owns the
Hall-Tonopah property and all associated mineral rights without future royalty
obligations. As set forth in the Purchase Agreement, the Company paid to
Equatorial Mining Limited approximately $4.9 million in cash at closing. At
first commercial production of the property, the Company has agreed to pay
an
additional $6.0 million.
Environmental
Considerations:
The
Company owns and has owned mineral property interests on certain public and
private lands in Shoshone County, Idaho. The Company’s mineral property holdings
include lands contained in mining districts that have been designated as
“Superfund” sites
pursuant
to the Comprehensive Environmental Response, Compensation, and Liability Act.
The Company and its properties have been and are subject to a variety of federal
and state regulations governing land use and environmental matters. The Company
believes it has been in substantial compliance with all such regulations, and
is
unaware of any pending action or proceeding action relating to regulatory
matters that would affect the financial position of the Company. At
March 31, 2007, the Company had accrued liabilities for compliance with
environmental regulations of $714,134. The Company’s management acknowledges,
however, that the possibility exists that the Company may be subject to further
environmental liabilities associated with its properties in the future, and
that
the amount and nature of any liabilities the Company may be held responsible
for
is impossible to estimate.
NOTE
12—SUBSEQUENT EVENTS
In
April
2007, the Company purchased 1,675 acres of land known as the Bobcat Ranch
including all water rights and various personal property
for
$3,000,000 plus another $200,500 earnest money which was deposited in escrow
on
March 8, 2007 and is recorded in the deposits account as of March 31,
2007. This ranch is located near the Mount Hope mine site.
On
March 29, 2007, the Company announced the private placement of units for
gross proceeds of $25,000,000, with net proceeds to the Company of approximately
$23.5 million before legal and other related expenses. In the aggregate,
the Company agreed to issue 7.35 million units at a price of $3.40 per
unit. Each unit will consist of one share of common stock and a warrant to
purchase one half of one share of common stock. Each warrant will be exercisable
at a price of $5.20 per whole share for a period of one year from the date
of
closing. As of March 31, 2007 the Company had issued 4,117,647 shares and
warrants to purchase 2,058,824 shares pursuant to this private placement and
had
received $14,000,000 and has been classified as Common stock issuable on our
financial statements. The Units were offered and sold pursuant to exemptions
from registration under Regulation S of the Securities Act of 1933, as amended
(the “Securities Act”), for offers and sales occurring outside the United
States, and Rule 506 of Regulation D and Section 4(2) of the
Securities Act, as a transaction not involving any public offering. The Company
plans to use net proceeds from the financing to continue the permitting and
development of the Company’s Mount Hope molybdenum project, for drilling and
evaluation work on the Hall-Tonopah molybdenum project, and for general
corporate purposes.
On
May 9,
2007, the Company purchased water rights known as the Risi Ranch water rights
for cash of $1,371,429 and 17,000 shares of GMO
restricted stock. The Company has deposited $40,000 in escrow on this
transaction.
We
completed our Phase 1 drilling program at our Hall-Tonopah project located
in
Nye County, Nevada. The drilling program was designed
to
validate and confirm the continuity of mineralization indicated in the previous
results of drilling by Anaconda and Cyprus. The new drilling has confirmed
previous drill results for the upper ore body, and has indicated near surface
high grade mineralization greater than 0.10 % on the east side of the existing
molybdenum pit.
ITEM
2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The
following discussion of our financial condition and plan of operations
constitutes management’s review of the factors that affected our financial and
operating performance for the three months ended March 31, 2007 and 2006.
This discussion should be read in conjunction
with the
financial statements and notes thereto contained elsewhere in this report and
in
our Form 10-KSB/A, for the year ended December 31, 2006.
Overview
We
are in
the business of the exploration, development and, if warranted, the mining
of
properties containing molybdenum, as well as silver, gold, base metals and
other
specialty metals. We currently have a 30-year renewable lease for the lands
related to, possess surface rights
for, and
own patented and unpatented claims to, the Mount Hope Project, a primary
molybdenum property, located in Eureka County, Nevada. In 2006, we acquired
a
second significant molybdenum project, the Hall-Tonopah project, located in
Nye
County, Nevada. We also own other properties and mineral rights on which we
intend to conduct mineral exploration and evaluation for determining economic
viability for further development. We continue to identify, investigate, and
acquire other potential properties for future development.
Mount
Hope.
In
November 2004, we entered into an option agreement with Mount Hope Mines,
Inc., or MHMI, pursuant to which we were granted an exclusive
one-year
option to enter into a lease agreement for Mount Hope’s previously drilled
molybdenum deposit consisting of 13 patented claims and 109 unpatented claims
in
Eureka County, Nevada, for a lease period of 30 years. In April 2005, we
completed a Phase 1 Mine Feasibility Study with respect to Mount Hope and began
the permitting process for placing into production an open pit molybdenum mine,
concentrator and processing facility capable of producing 40,000 tonnes (44,093
tons) of ore per day. In October 2005, we exercised the option and our
lease agreement with MHMI became effective.
In
December 2005, we completed a Technical Report which evaluated the
potential to profitably extract the deeper portion of the Mount Hope deposit
and
augmented the mine plan contained in the 2005 Phase I Mine Feasibility
Study. The augmented mine plan currently
allows for the mining and processing of 920 million tonnes (1.0 billion
tons) of molybdenum bearing rock over a mine production life of 50 or more
years.
We
are
currently in the process of developing a new bankable feasibility study with
respect to the Mount Hope Project, which is scheduled to be completed by July
2007. The bankable feasibility study will include optimized mine and waste
rock
placement plans as well as revised estimates for capital and operating costs
in
light of industry wide increases in input commodity, labor and construction
costs over the last two years. As we are currently focused primarily on the
development of the Mount Hope
Project, we do not expect to generate revenues from operations before production
of molybdenum begins at the Mount Hope Project.
Hall
Tonopah.
In
March 2006, we purchased from High Desert Winds LLC it’s approximately ten
square mile property in Nye County, Nevada, including water rights, mineral
and
surface rights, buildings and certain equipment. The property includes the
former Hall molybdenum and copper deposit which was mined by open pit methods
between 1982 and 1985 by the Anaconda Minerals Company and between 1988 and
1991
by Cyprus Metals Company for molybdenum. Equatorial Tonopah, Inc. mined copper
from 1999 to 2000 on this property. Much of the deposit was drilled but not
developed or mined.
In
January 2007, we purchased 100% of the Stock in Equatorial Mining North
America, Inc. and its two subsidiaries, which owned a 12% net smelter returns
royalty on the Hall-Tonopah property, from Equatorial Mining Pty.
Limited.
In
January 2007, we also began a drilling program at Hall-Tonopah on the
molybdenum mineralization of the existing molybdenum
pit
developed by Cyprus and an east extension mineralized area near the top of
the
east side of the existing pit. $2.2 million was budgeted for exploratory
and mineralization confirmation drilling. This program includes 13 RC drill
holes and six diamond drill holes. We expect completion and results of this
drilling program in the second quarter of 2007. Assay data will be confirmed
through our geological quality control program and then incorporated into a
mineralization model.
We
also
currently own several other properties located in the western United States.
These properties include additional advanced-stage molybdenum deposits as well
as copper and gold deposits.
Critical
Accounting Estimates
Estimates
The
process of preparing
financial statements in conformity with US GAAP requires the use of estimates
and assumptions regarding certain types of assets, liabilities, revenues, and
expenses. Such estimates primarily relate to unsettled transactions and events
as of the date of the financial statements. Accordingly, upon settlement, actual
results may differ from estimated amounts.
Basic
and Diluted Net Loss Per Share
Net
loss
per share was computed
by
dividing the net loss by the weighted average number of shares outstanding
during the period. The weighted average number of shares was calculated by
taking the number of shares outstanding and weighting them by the amount of
time
that they were outstanding.
Mineral
Exploration and Development Costs
All
exploration expenditures are expensed as incurred. Significant property
acquisition payments for active exploration properties are capitalized. If
no
mineable orebody is discovered, previously capitalized costs are expensed in
the
period the property
is
abandoned. Expenditures to develop new mines, to define further mineralization
in existing mineral deposits, and, in the future, to expand the capacity of
operating mines, will be capitalized and amortized on a units of production
basis over the economically demonstrated proven and probable
reserves.
Should
a
property be abandoned, its capitalized costs are charged to operations. We
charge to operations the allocable portion of capitalized costs
attributable to properties sold. Capitalized costs are allocated to properties
sold based on the proportion of claims sold to the claims remaining within
the
project area.
Mining
Claims and Land
Costs
of
acquiring and developing mineral properties are capitalized as appropriate
by
project area. Exploration and related costs and costs to maintain mineral rights
and leases are expensed as incurred. When a property reaches the production
stage, the
related
capitalized costs are amortized using the units-of-production method on the
basis of periodic estimates of ore reserves. Mineral properties are periodically
assessed for impairment of value, and any subsequent losses are charged to
operations at the time of impairment. If a property is abandoned or sold, its
capitalized costs are charged to operations.
Provision
for Taxes
Income
taxes are provided based upon the liability method of accounting pursuant to
the
Statement of Financial Accounting Standards No. 109, “Accounting for Income
Taxes” (“SFAS No. 109”). Under this approach, deferred income taxes are
recorded to reflect
the tax
consequences in future years of differences between the tax basis of assets
and
liabilities and their financial reporting amounts at each year-end. A valuation
allowance is recorded against the deferred tax asset if management does not
believe we have met the “more likely than not” standard imposed by SFAS
No. 109 to allow recognition of such an asset.
Property
and Equipment
Property
and equipment are being depreciated over useful lives of three to seven years
using straight-line depreciation.
Share-Based
Compensation
We
account for stock-based compensation in accordance with SFAS No. 123(R),
Share-Based
Payment.
Under
the fair value recognition provisions of this statement, share-based
compensation cost is measured at the grant date based on the value of the award
and is recognized as expense over the vesting period. Determining the fair
value
of share-based awards at the grant date requires judgment, including estimating
expected dividends. In addition, judgment is also required in estimating the
amount of share-based awards that are expected to be forfeited. If actual
results differ significantly from these estimates, stock-based compensation
expense and our results of operations could be materially impacted.
Results
of Operations for the Three Months Ended March 31,
2007
Compared
to Three Months Ended March 31, 2006
We
are
classified as an exploration stage company with no producing mines and,
accordingly, we do not produce income. Our net loss for the three months ended
March 31, 2007 was $(9,073,000) as compared to a net loss of $(2,188,000)
for the three months ended March 31, 2006. The increase of $6,885,000 is
attributable primarily to increased exploration and documentation studies
required to complete our Environmental Impact Statement and our bankable
feasibility study at Mount Hope significantly contributed to additional
operating expenses. We also incurred higher corporate and administrative costs
in a number of areas consistent with our substantially increased activity
levels. These costs include employee compensation expenses, expansion of
corporate personnel and associated costs, marketing and investor relations
expenses, general legal expenses, and accounting and compliance issues
reflecting the greater complexity of our operations.
Exploration
and development expenditures of $3,842,000 were incurred at the Mount Hope
Project and the Hall Tonopah Project during the three
months
ended March 31, 2007 as exploration and development activity proceeded at a
very aggressive pace. This is consistent with our stated objective to complete
our Mount Hope Project plans and to focus on the permitting required to bring
the project to commercial production. All of the expenditures during the three
months ended March 31, 2007 were related to this objective, and associated
feasibility study costs represent the majority of expenditures at the Mount
Hope
Project.
Liquidity
and Capital Resources
We
have
limited capital resources and thus have to rely upon the sale of equity and
debt
securities for the cash required for exploration
and
development purposes, for acquisitions and to fund our administration. Since
we
do not expect to generate any revenues in the near future, we must continue
to
rely upon the sale of our equity and debt securities to raise capital. There
can
be no assurance that financing, whether debt or equity, will always be available
to us in the amount required at any particular time or for any period or, if
available, that it can be obtained on terms satisfactory to us.
Our
cash
balance at March 31,
2007
was $24,023,000 compared to $25,861,000 at March 31, 2006. Total assets at
March 31, 2007 were $38,712,000 compared to $30,907,000 at March 31,
2006. The change in these balances reflects the purchase of property and water
rights for our Mount Hope project and the purchase of Equatorial Mining North
America to secure the royalty at our Hall Tonopah project offset by proceeds
received in March, 2007, from a private placement of equity. Liabilities at
March 31, 2007 were $3,112,000 compared to $305,000 at March 31, 2006.
This increase in payables reflects our increased accounts payable due to
increased drilling expenses and expenses related to the completion of our
bankable feasibility study.
On
January 10, 2006, we concluded a private placement of 3,441,936 units at a
price of $1.10 per unit. Each unit consisted of one share of our common stock
and one-half of one warrant to purchase one share of our common stock. Each
whole warrant
is
exercisable for 24 months from the date of issuance and carries an exercise
price of $1.75 per whole share. The gross proceeds of this offering were
$3,786,000 and, after payment of sales commissions and finder’s fees, we
received net proceeds of $3,621,000.
On
February 15, 2006, we concluded a private placement of 15,000,000 units at
a price of $2.00 per unit. Each unit consisted of one share of our common stock
and a warrant to purchase one-half of a share of our common stock. Each whole
warrant is exercisable for five years from the date of issuance and carries
an
exercise price of $3.75 per whole share. The gross proceeds
of this
offering were $30,000,000 and, after payment of cash sales commissions and
finder’s fees, we received net proceeds of $27,875,000. In the aggregate, we
issued 15 million shares of common stock and warrants to purchase an
additional 8.3 million shares, including warrants issued as compensation to
the placement agent.
In
January 2007, we entered into a note to purchase a 2007 1 ton pickup for
$34,206 at an implied interest rate of 7.2% and with a term of three
years.
In
December 2006, we entered into two five year capital leases for office
equipment. In December 2006 we also entered into a note to purchase a 2007
1 ton pickup for $34,000 at an interest rate of 0.9% and with a term of three
years. The table below shows these obligations over the next five years (in
thousands).
Year
|
|
Lease
Payment
|
|
Interest
on Leases
|
|
Note
Payment
|
|
Note
Interest
|
|
2007
(Remaining portion)
|
|
|
8
|
|
|
2
|
|
|
17
|
|
|
2
|
|
2008
|
|
|
10
|
|
|
2
|
|
|
23
|
|
|
1
|
|
2009
|
|
|
10
|
|
|
1
|
|
|
23
|
|
|
1
|
|
2010
|
|
|
10
|
|
|
1
|
|
|
1
|
|
|
—
|
|
2011
|
|
|
10
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
48
|
|
$
|
6
|
|
$
|
64
|
|
$
|
4
|
|
Set
forth
below is a schedule of our contractual obligations for payments under the Mount
Hope lease agreement (in
thousands):
Date
|
|
Fixed
Payment
|
|
Project
Financing
Received
by Date
Indicated
|
|
Project
Financing Not
Received
and Deferral
Elected
|
April
19, 2007
|
|
$
|
125
|
|
|
|
|
|
|
|
|
|
|
|
|
October
19, 2007
|
|
$
|
350
|
|
|
|
|
|
|
|
|
|
|
|
|
October
19, 2008
|
|
|
|
Greater
of 3% of Construction Capital Cost Estimate or $2,500 (1)(3)(4)
|
|
$350
|
|
|
|
|
|
|
|
October
19, 2009
|
|
|
|
Greater
of 3% of Construction Capital Cost Estimate or $2,500 (1)(3)(4)
|
|
$350
|
|
|
|
|
|
|
|
October
19, 2010
|
|
|
|
$2,500
(3)
|
|
Greater
of $2,500 or 3% of Construction Capital Cost Estimate (3)(4)
|
|
|
|
|
|
|
|
October
19, 2011
|
|
|
|
3%
of Construction Capital Cost Estimate (3)(4)
|
|
Greater
of (a) $2,500 or (b) if 3% of Construction Capital Cost Estimate
is
greater than $2,500, then 50% of the difference between 3% and
2,500,000
(3)(4)
|
|
|
|
|
|
|
|
October
19, 2012
|
|
|
|
3%
of Construction Capital Cost Estimate (3)(4)
|
|
Greater
of (a) $2,500 or (b) if 3% of Construction Capital Cost Estimate
is
greater than $2,500, then 50% of the difference between 3% and
2,500
(3)(4)
|
|
|
|
|
|
|
|
October
19, 2013 and each year thereafter (3)
|
|
$
|
500
(3
|
)
|
|
|
|
(1)
|
If
Project Financing is not received by October 19, 2008, we may elect
to
defer this payment and proceed to make the payments under the column
labeled “Project Financing Not Received and Deferral Elected.” If prior to
making all of the payments under the column “Project Financing Not
Received and Deferral Elected” we obtain project financing, we would be
required to make this payment and to pay $500,000 each year
thereafter.
|
(2)
|
In
addition to the payments above, we are required to pay to MHMI a
production royalty after the commencement of Commercial Production
of the
greater of (i) $.20/lb of molybdenum metal (or the equivalent thereof
if
another Product is sold) sold from the property (not to exceed the
amount
of Net Returns we receive for those products) or (ii) 3% of the Net
Returns, subject to certain adjustments as set forth in the
lease.
|
(3)
|
To
be offset from the production royalty described in (3) above. We
may
recover the aggregate of these payments by retaining 50% of each
production royalty payment due to
MHMI.
|
(4)
|
“Construction
Capital Cost Estimate” means our projected costs plus 10% to put the Mount
Hope property into commercial
production.
|
In
addition, in connection with our purchase of the Hall Tonopah Property, we
agreed to make a deferred payment of up to an additional
$1,000,000 in purchase price which is payable, if at all, on or before
March 17, 2008 depending on the outcome of activities at the
property.
Changes
in Accounting Policies
We
did
not change our accounting policies during the three months ended March 31,
2007.
Special
Note Regarding Forward-Looking Statements
Certain
statements in this report may constitute forward-looking statements, which
involve known and unknown risks, uncertainties and other factors,
which
may cause actual results, performance or achievements of our company, the Mount
Hope project, Hall Tonopah project and our other projects, or industry results,
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. We use the words “may,”
“will,” “believe,” “expect,” “anticipate,” “intend,” “future,” “plan,”
“estimate,” “potential” and other similar expressions to identify
forward-looking statements. Forward-looking statements may include, but are
not
limited to, statements with respect to the following:
· |
the
timing and possible outcome of pending regulatory and permitting
matters;
|
· |
the
parameters and design of our planned initial mining facilities at
the
Mount Hope Project;
|
· |
future
financial or operating performances of our company and our
projects;
|
· |
the
estimation and realization of mineralization, if
any;
|
· |
the
timing of exploration, development and production activities and
estimated
future production, if any;
|
· |
estimates
related to costs of production, capital, operating and exploration
expenditures;
|
· |
requirements
for additional capital;
|
· |
government
regulation of mining operations, environmental conditions and risks,
reclamation and rehabilitation
expenses;
|
· |
title
disputes or claims;
|
· |
limitations
of insurance coverage; and
|
· |
the
future price of molybdenum, gold, silver or other
metals.
|
You
should not place undue reliance on these forward-looking statements, which
speak
only as of the date of this report. These forward-looking statements are based
on our current expectations and are subject to a number of risks
and
uncertainties,
including those set forth below. Although we believe that the expectations
reflected in these forward-looking statements are reasonable, our actual results
could differ materially from those expressed in these forward-looking
statements, and any events anticipated in the forward-looking statements may
not
actually occur. Except as required by law, we undertake no duty to update any
forward-looking statements after the date of this report to conform those
statements to actual results or to reflect the occurrence of unanticipated
events. We qualify all forward-looking statements contained in this report
by
the foregoing cautionary statements.
An
evaluation was performed under the supervision and with the participation
of our
management, including our principal executive officer and principal financial
officer, of the effectiveness of our disclosure controls and procedures (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act
of
1934) as of the end of the period covered by this Quarterly Report on Form
10-QSB/A. Based on the foregoing and in light of the material weakness due
to
the lack of effective controls over the valuation and accuracy of stock
compensation expense and valuation of warrants to purchase common stock (as
previously disclosed in our Annual Report on Form 10-KSB/A for the year ended
December 31, 2006), our principal executive officer and principal financial
officer have concluded that our disclosure controls and procedures are not
effective, as of the end of the period covered by this report, to ensure
that
information required to be disclosed by us in reports that we file or submit
under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Securities and Exchange Commission rules
and
forms and such information is accumulated and communicated to our management,
including our principal executive officer and principal financial officer,
to
allow timely decisions regarding required disclosure.
As
more
fully described in our Annual Report on Form 10-KSB/A for the year ended
December 31, 2006, the Company has implemented a number of internal control
procedures to remediate the material weakness discussed above. As a result
of
these internal control improvements, we believe the material weakness that
existed at March 31, 2007 has been remediated as of the date of this
filing.
The
Company intends to continually review and evaluate the design and effectiveness
of our disclosure controls and procedures as well as our internal control
over
financial reporting to improve our controls and procedures over time as the
Company’s business transitions into mining operations and to correct any
deficiencies that we may discover in the future. The Company anticipates
that
additional changes to our internal control and procedures will be made as
we
takes steps to become compliant with Section 404 of the Sarbanes-Oxley Act
of 2002, which we anticipate will apply for our annual report for the year
ended
December 31, 2007.
PART
II - OTHER INFORMATION
ITEM
6. EXHIBITS
Exhibit
Number
|
|
Description
of Exhibit
|
|
|
|
31.1
|
|
Certification
of CEO pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange
Act
|
31.2
|
|
Certification
of CFO pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act
|
32.1
|
|
Certification
of CEO pursuant to 18 U.S.C. Section 1350
|
32.2
|
|
Certification
of CFO pursuant to 18 U.S.C. Section 1350
|
SIGNATURES
In
accordance with the requirements of the Exchange Act, the Registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto
duly
authorized.
Dated: November 15, 2007. |
|
|
|
|
|
|
GENERAL
MOLY, INC. |
|
|
|
|
By: |
/s/
Bruce D.
Hansen
|
|
Name: |
Bruce D. Hansen |
|
Title:
|
Chief
Executive Officer |
|
|
(Principal Executive
Officer) |