GENERAL
MOLY, INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
NOTE
1—
DESCRIPTION OF BUSINESS
General
Moly, Inc. (“we,” “us,” “our,” “the Company,” “General Moly,” or “GMI”) 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 5, 2007, we reincorporated in the State of
Delaware (the “Reincorporation”) through a merger involving Idaho General Mines,
Inc. and General Moly, Inc., a 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. 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.
We
were
in the exploration stage until October 4, 2007 when our Board of Directors
approved the development of the Mt. Hope molybdenum property (the
“Mt. Hope Project”) in Eureka County, Nevada. The Company is now in the
development stage and is currently proceeding with the development of the
Mt. Hope Project. We are also conducting exploration and evaluation
activities on our Liberty molybdenum property (the “Liberty Property” formerly
referred to as the “Hall-Tonopah Property”) in Nye County, Nevada.
Effective
as of January 1, 2008, we contributed all of the our interest in the assets
related to the Mt. Hope Project, including our lease of the Mt. Hope
Project, into a newly formed entity, Eureka Moly, LLC, a Delaware limited
liability company (“Eureka Moly”), and in February 2008 (the “Closing Date”)
entered into a
joint
venture for the development and operation of the Mt. Hope Project (the
“Joint Venture”) with POS-Minerals Corporation (“POS-Minerals”) an affiliate of
POSCO, a large Korean steel company. Under the Joint Venture, POS-Minerals
owns
a 20% interest in Eureka Moly and General Moly, through a wholly-owned
subsidiary, owns an 80% interest.
The
interim Condensed Consolidated Financial Statements of the Company 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
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 the Consolidated Financial
Statements included in our Annual Report on Form 10-KSB for the year ended
December 31, 2007.
Certain
amounts for the three months ended March 31, 2007 have been reclassified
to
conform to the 2008 presentation.
NOTE
2—
LIQUIDITY AND CAPITAL REQUIREMENTS
On
October 4, 2007, our Board of Directors approved the development of the
Mt. Hope Project as contemplated in our Bankable Feasibility Study (the
“Bankable Feasibility Study”). The development of the Mt. Hope Project has
an estimated total capital requirement of approximately $1.0 billion
comprised of initial construction cost in excess of $850.0 million (in 2007
dollars); $53.0 million in cash bonding requirements; $22.0 million in
Advance Royalty Payments (as hereinafter defined); and amounts necessary
for
financing costs and working capital. The accuracy of the estimate is considered
to be plus or minus 15%. Such capital requirements are based on management’s
estimates based on the Bankable Feasibility Study and other available
information, and are subject to change, which changes could be
material.
In
February 2008, we entered into the Joint Venture, the terms of which reduced
our
capital requirements for the Mt. Hope Project by up to 20% and will provide
up to $170.0 million in capital for use in funding our remaining 80% share.
Of the $170.0 million in capital committed, $50.0 million was received
in February 2008, $50.0 million is to be received in July 2008, and the
remaining $70.0 million is to be received once the Mt. Hope Project
receives the necessary permits to develop and operate the Mt. Hope Project
(the “POS-Minerals Third Contribution Date”).
Additional
capital will be required through the commencement of Mt. Hope production
estimated to be in late 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 Mt. Hope Project both in sufficient quantity of capital
and at the time such capital is needed. Additionally, if the estimated costs
of
the Mt. Hope Project are exceeded we will need to raise additional capital
to fund such overruns.
We
do not
currently have the capital necessary to complete the Mt. Hope Project and,
accordingly, plan to raise the capital on an ongoing basis when needed. The
receipt of the $50.0 million Joint Venture capital contribution by POS-Minerals
in July 2008, existing cash on hand at March 31, 2008, and $8.4 million received
in April 2008 from the exercise of outstanding warrants should be sufficient
to
fund planned operations for the Mt. Hope Project, as well as our other
planned operations, through the end of 2008. If we are unable to raise
sufficient quantities of capital when needed, it will be necessary to develop
alternative plans that could delay the development and completion of the
Mt. 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.
We
will
also require additional capital to continue the exploration and evaluation
of
the Liberty Property, as well as continue payment of ongoing general,
administrative and operations costs associated with supporting our planned
operations.
NOTE
3—
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
Our
financial statements are prepared using the accrual basis of accounting in
accordance with accounting principles generally accepted in the United States
of
America. At December 31, 2007, all of our subsidiaries were wholly owned.
In February 2008, we entered into the Joint Venture which establishes our
ownership interest in Eureka Moly at 80%. At March 31, 2008, the consolidated
financial statements include all of our wholly owned subsidiaries and our
majority owned Joint Venture Eureka Moly. The POS-Minerals contributions
attributable to their 20% interest are shown as Minority Interest in the
financial statements.
Cash
and Cash Equivalents
For
the
purposes of the statement of cash flows, we consider all highly liquid
investments with original maturities of three months or less to be cash
equivalents. The cash and cash equivalents of Eureka Moly are restricted
for use
in the Joint Venture only.
Investments
We
account for our investments in debt and equity securities in accordance with
the
provisions of Statement of Financial Accounting Standards No. 115,
“Accounting for Certain Investments in Debt and Equity Securities,” and report
investments in available for sale securities at their fair value, with
unrealized gains and losses excluded from income or loss and included in
other
comprehensive income or loss.
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
and Development Stage Activities
We
were
in the exploration stage from January 2002 until October 4, 2007. On
October 4, 2007, our Board of Directors approved the development of the
Mt. Hope Project as contemplated in the Bankable Feasibility Study and we
then entered into the Development Stage. We have not realized any revenue
from
operations. We will be primarily engaged in development of the Mt. Hope
Project and exploration and evaluation of the Liberty Property until we enter
the production stage.
Fair
Value of Financial Instruments
Our
financial instruments as defined by Statement of Financial Accounting Standards
No. 157, “Fair Value Measurements,” 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, 2008 and December 31,
2007.
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. Outstanding warrants to purchase
9,204,481 and 13,943,113 shares of common stock, options to purchase 4,162,500
and 4,523,333 shares of common stock and unvested stock awards totaling 255,000
and 620,000 at March 31, 2008 and 2007, respectively, were not included in
the
computation of diluted earnings per share for the three months ended March
31,
2008 and 2007 because to do so would have been antidilutive. Therefore, basic
loss per share is the same as diluted loss per share.
Mineral
Exploration and Development Costs
All
exploration expenditures are expensed as incurred. Significant property
acquisition payments for active exploration properties are capitalized. If
no
economic 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 the consolidated statement of 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
Properties, Land and Water Rights
Costs
of
acquiring and developing mining properties, land and water rights are
capitalized as appropriate by project area. Exploration and related costs
and
costs to maintain mining properties, land and water rights are expensed as
incurred while the property is in the exploration and evaluation stage.
Development and related costs and costs to maintain mining properties, land
and
water rights are capitalized as incurred while the property is in the
development stage. When a property reaches the production stage, the related
capitalized costs are amortized using the units-of-production basis over
proven
and probable reserves. Mining properties, land and water rights 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,
a gain
or loss is recognized and included in the consolidated statement of
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 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 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.
Accounting
Pronouncements—Recent
In
September 2006, the FASB issued FASB Statement No. 157, “Fair Value
Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework
for measuring fair value in generally accepted accounting principles, and
expands disclosures about fair value measurements. The provisions of SFAS
157
were adopted January 1, 2008. In February 2008, the FASB staff issued Staff
Position No. 157-2 “Effective Date of FASB Statement No. 157” which delayed the
effective date of SFAS 157 for nonfinancial assets and nonfinancial liabilities
which will be effective for our fiscal year beginning January 1,
2009.
SFAS
157
establishes a fair value hierarchy that prioritizes the inputs to valuation
techniques used to measure fair value. The hierarchy gives the highest priority
to unadjusted quoted prices in active markets for identical assets or
liabilities (Level 1 measurements) and the lowest priority to unobservable
inputs (Level 3 measurements). The three levels of the fair value hierarchy
under SFAS 157 are described below:
Level
1 -
Unadjusted quoted prices in active markets that are accessible at the
measurement date for identical unrestricted assets or liabilities.
Level
2 -
Quoted prices in markets that are not active, or inputs that are observable,
either directly or indirectly, for substantially the full term of the asset
or
liability.
Level
3 -
Prices or valuation techniques that require inputs that are both significant
to
fair value measurement and unobservable (supported by little or no market
activity).
The
Company’s cash instruments are classified within Level 1 of the fair value
hierarchy because they are valued using quoted market prices. The cash
instruments that are valued based on quoted market prices in active markets
are
primarily money market securities.
In
February 2007, the FASB issued FASB Statement No. 159, “The Fair Value Option
for Financial Assets and Financial Liabilities” (“SFAS 159”). SFAS 159 permits
entities to choose to measure many financial instruments and certain other
items
at fair value, with the objective of improving financial reporting by mitigating
volatility in reported earnings caused by measuring related assets and
liabilities differently without having to apply complex hedge accounting
provisions. The provisions of SFAS 159 were adopted January 1, 2008. The
Company
did not elect the Fair Value Option for any of its financial assets or
liabilities and therefore the adoption of SFAS 159 had no impact on our
consolidated financial statements.
In
December 2007, the FASB issued FASB Statement No. 160, “Noncontrolling Interests
in Consolidated Financial Statements- an amendment of ARB No. 51” (“SFAS 160”),
which establishes accounting and reporting standards pertaining to ownership
interests in subsidiaries held by parties other than the parent, the amount
of
net income attributable to the parent and to the noncontrolling interest,
changes in a parent’s ownership interest, and the valuation of any retained
noncontrolling equity investment when a subsidiary is deconsolidated. SFAS
160
also establishes disclosure requirements that clearly identify and distinguish
between the interests of the parent and the interests of the noncontrolling
owners. SFAS 160 is effective for our fiscal year beginning January 1, 2009.
We
do not expect the adoption of SFAS 160 to have a material impact on our
consolidated financial statements.
NOTE
4—
MINING PROPERTIES, LAND AND WATER RIGHTS
We
currently have interests in two mining properties that are the primary focus
of
our operations. The Mt. Hope Project is currently in the development stage
and the Liberty Property is in the exploration and evaluation
stage.
The
Mt. Hope Project. We
are
currently in the process of developing the Mt. Hope Project. From November
2004 to January 2008, we owned the rights to 100% of the Mt. Hope
Project. In February 2008, we entered into the Joint Venture with POS-Minerals
and we now own 80% of the Mt. Hope Project and POS-Minerals owns the
remaining 20%. While these ownership interests and/or required contributions
can
change based on the failure of GMI to satisfy specified conditions, including
the receipt of the necessary permits to develop and operate the Mt. Hope
Project by December 31, 2009, failure to achieve production by December 31,
2011
for reasons other than force majeure, or non-payment of amounts due under
the
Joint Venture by either party, we expect the ownership interests in the Joint
Venture to remain as they are now through the life of the project and the
contributions to be received in the amounts that follow.
Pursuant
to the terms of the Joint Venture, POS-Minerals agreed to make cash
contributions to the Joint Venture in the aggregate amount of
$170.0 million in exchange for their 20% interest, of which
$50.0 million was received in February 2008, $50.0 million is to be
received in July 2008 (the “February 2008 and July 2008 Contributions”), and the
remaining $70.0 million is to be received on the POS-Minerals Third
Contribution Date. These initial funds are available to fund the Mt. Hope
Project development costs incurred subsequent to the Closing Date. Additionally,
in May 2008, GMI will pay to POS-Minerals an estimated $2.8 million as a
final
purchase price adjustment based on the terms of the Joint Venture related
to the
difference in the budgeted versus actual expenditures of the Mt. Hope Project
prior to the Closing Date.
We
are
required, pursuant to the Joint Venture, to advance funds in excess of the
February 2008 and July 2008 Contributions required for the development of
the
Mt. Hope Project until the POS-Minerals Third Contribution Date, at which
point POS-Minerals is required to reimburse us for their 20% share of all
development costs incurred from January 1, 2008 through the POS-Minerals
Third
Contribution Date. All amounts incurred subsequent to the POS-Minerals Third
Contribution Date will be allocated and funded pro rata based on each party’s
ownership interest.
The
Liberty Property.
We are
currently in the process of exploration and evaluation of the Liberty
Property.
At
December 31, 2006, the Liberty 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. In January 2007, we
completed the acquisition of all of the issued and outstanding shares of
the corporation that held the 12 percent net smelter royalty interest in
the mineral rights of the Liberty Property and, as a result of this purchase,
we
now own the Liberty Property and all associated mineral rights without future
royalty obligations. We paid approximately $3.7 million in cash at closing,
net of cash acquired of $1.2 million, for this purchase. In addition, at
first commercial production of the Liberty Property, we are obligated to
pay an
additional $6.0 million. Because we cannot determine beyond a reasonable
doubt that the mine will attain commercial production, we have not recognized
the $6.0 million liability in our financial statements. In connection with
the acquisition, we also received restricted cash totaling $0.5 million and
assumed reclamation and remediation costs, accounts payable and accrued
liabilities of $0.3 million.
Summary.
The
following is a summary of mining properties, land and water rights at March
31,
2008 and December 31, 2007 (in thousands):
|
|
At
March 31,
2008
|
|
At
December 31,
2007
|
|
Mt. Hope
Project:
|
|
|
|
|
|
Development
costs
|
|
$
|
14,261
|
|
$
|
7,989
|
|
Mineral,
land and water rights
|
|
|
10,253
|
|
|
9,792
|
|
Advance
Royalties
|
|
|
1,980
|
|
|
1,100
|
|
Total
Mt. Hope Project
|
|
|
26,494
|
|
|
18,881
|
|
Total
Liberty Property
|
|
|
9,808
|
|
|
9,808
|
|
Other
Properties
|
|
|
889
|
|
|
889
|
|
Total
|
|
$
|
37,191
|
|
$
|
29,578
|
|
NOTE
5—
COMMON STOCK UNITS, COMMON STOCK AND COMMON STOCK WARRANTS
Three
Months ended March 31, 2008
During
the three months ended March 31, 2008, we had the following issuances of
common
stock. We issued 125,930 shares of common stock upon the cashless exercise
of warrants. Warrants and options in the amount of 2,688,476 and 65,000,
respectively, were exercised for cash in the amount of $11.4 million and
$0.3 million, respectively.
Year
ended December 31, 2007
During
the year ended December 31, 2007, we completed the private placement of
units for gross proceeds of $25.0 million less placement agent and finder’s
fees of $1.5 million. In the aggregate, we issued 7,352,942 units at a
price of $3.40 per unit in this private placement. Each unit consisted of
one share of common stock and a warrant to purchase one half of one share
of
common stock. Each warrant was exercisable at a price of $5.20 per whole
share for a period of one year from the date of closing. 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.
In
November 2007, we entered into a Securities Purchase Agreement with an affiliate
of ArcelorMittal S.A. (“ArcelorMittal”) whereby we sold to ArcelorMittal
8,256,699 previously un-issued shares of our common stock for $8.50 per
share. In connection with the Securities Purchase Agreement, we also entered
into a molybdenum supply agreement that provides for ArcelorMittal to purchase
6.5 million pounds per year, plus or minus 10%, once the Mt. Hope
Project commences commercial operations. The agreement provides for a floor
price along with a discount for spot prices above the floor price and expires
five years after the commencement of commercial production. In connection
with
arranging the relationship with ArcelorMittal, Coghill Capital Management,
LLC
and CCM Master Qualified Fund, Ltd., entities under common control, and,
combined, our largest stockholder, received warrants to purchase
1.0 million shares of our common stock at an exercise price of
$10.00 per share. The warrants will be exercisable once we have received
the financing necessary for the commencement of commercial production at
the
Mt. Hope Project and will expire one year from such date. These warrants
were valued at $4.7 million and were recorded as issuance costs.
Also
during the year ended December 31, 2007, we had the following issuances of
common stock. We issued 369,715 shares of common stock upon the cashless
exercise of warrants and 361,014 shares of common stock upon the cashless
exercise of stock options. Warrants and options in the amount of 4,261,689
and
1,450,833 were exercised for cash in the amount of $9.3 million and
$1.2 million, respectively. We also issued 304,950 shares of common
stock with a total value of $1.1 million as consideration for land and
water rights for the Mt. Hope Project and the Liberty Property and services
received. During the year ended December 31, 2007, stockholders returned to
the Company 38,998 shares of common stock due to a stock option exercise
pricing error in 2006.
The
following is a summary of common stock warrant activity from January 1, 2007
through the three months ended March 31, 2008:
|
|
Number
of Shares
Under
Warrants
|
|
Exercise
Price
|
|
Balance
at January 1, 2007
|
|
|
12,217,675
|
|
$
|
0.80
to $3.75
|
|
Issued
in connection with private placements and other
|
|
|
3,676,471
|
|
$
|
5.20
|
|
Issued
as finders fee
|
|
|
1,000,000
|
|
$
|
10.00 |
|
Exercised
for cash
|
|
|
(4,261,689
|
)
|
$
|
0.80
to $3.75
|
|
Exercised
in cashless exchange
|
|
|
(542,000
|
)
|
$
|
1.00
to $3.75
|
|
Expired
|
|
|
(10,000
|
)
|
$
|
1.00
|
|
Balance
at December 31, 2007
|
|
|
12,080,457
|
|
$
|
0.80
to $10.00
|
|
Exercised
for cash
|
|
|
(2,688,476
|
)
|
$
|
0.80
to $5.20
|
|
Exercised
in cashless exchange
|
|
|
(187,500
|
)
|
$
|
3.75
|
|
Balance
at March 31, 2008
|
|
|
9,204,481
|
|
$
|
2.10
to $10.00
|
|
Weighted
average exercise price
|
|
$
|
4.67
|
|
|
|
|
Of
the
warrants outstanding at March 31, 2008, 6,511,834 are exercisable at $3.75
per warrant and expire February 2011; 1,617,647 were exercised for cash at
$5.20
per share in April 2008; 1,000,000 are exercisable at $10.00 per share and
are
expected to expire in 2010 and the remaining 75,000 are exercisable at $2.10
per
share and expire in August 2008.
NOTE
6—
PREFERRED STOCK
Pursuant
to our Certificate of Incorporation we are authorized to issue
10,000,000 shares of $.001 per share 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
our
board of directors. The directors have the power to determine the preferences,
limitations and relative rights of each series of preferred stock. At
December 31, 2007 and March 31, 2008, no shares of preferred stock
were issued or outstanding.
NOTE
7—
COMMON STOCK OPTIONS
During
2006, our board of directors and stockholders adopted the Company 2006 Equity
Incentive Plan (the “2006 Plan”). In October 2007, our stockholders approved an
amendment to the 2006 Plan increasing the amount of shares that may be issued
under the 2006 Plan from 3,500,000 to 5,100,000. During 2004, our board of
directors and stockholders 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 us greater ability to attract, retain, and motivate our officers
and key
employees. The Plans are intended to provide us with ability to provide
incentives more directly linked to the success of our business and increases
in
stockholder value.
Under
the
2006 Plan, our 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 5,100,000,
plus the number of shares that are ungranted and those that are subject to
reversion under the 2003 Plan. As of March 31, 2008, 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 three months ended March 31, 2008, we granted 160,000 options under the
2006
Plan with an exercise price ranging from $7.80 to $11.45 with vesting at
various
dates through 2011. These options were granted to officers and employees
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 1.5% to 5.0%; volatility
of 79%
to 93%; dividend rate of 0%; and expected life of from 3.5 to 5.5 years.
The total value of options awarded during the three months was calculated
at
$0.9 million. Expense was recorded of $0.5 million and
$0.4 million was capitalized as part of development costs for the options
which were earned during the three months ended.
During
the year ended December 31, 2007, we granted 2,730,000 options under the
2006 Plan with an exercise price ranging from $2.41 to $10.66 with vesting
at
various dates through 2009. These options were granted to members of our
board
of directors, officers, and employees. 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 4.10% to 4.96%; volatility of 76% to 93%; dividend rate of 0%;
and
expected life of from 2.0 to 2.8 years. The total value of options awarded
during the year was calculated at $7.6 million. Expense was recorded of
$4.3 million and $0.5 million was capitalized as part of development
costs for the options which were earned during the year.
The
following is a summary of our stock option plans as of March 31,
2008:
|
|
|
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
|
|
|
1,282,500
|
|
$
|
1.33
|
|
|
n/a
|
|
Equity
compensation plans approved by security holders:
|
|
|
|
|
|
|
|
|
|
|
2006
Plan
|
|
|
2,790,000
|
|
|
5.51
|
|
|
1,246,038
|
|
2003
Plan
|
|
|
90,000
|
|
|
1.55
|
|
|
360,000
|
|
Total
|
|
|
4,162,500
|
|
$
|
4.13
|
|
|
1,606,038
|
|
|
|
|
|
|
|
|
|
|
|
|
(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
5,100,000, 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 become 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 2007 and for the three
months
ended March 31, 2008:
|
|
|
Number of Shares
Under Options
|
|
|
Weighted Average
Exercise Price
|
|
Outstanding
January 1, 2007
|
|
|
3,650,000
|
|
$
|
1.48
|
|
Granted
|
|
|
2,730,000
|
|
|
5.21
|
|
Exercised
|
|
|
(2,170,833
|
)
|
|
1.54
|
|
Forfeited
|
|
|
(91,667
|
)
|
|
2.56
|
|
Expired
|
|
|
(50,000
|
)
|
|
3.20
|
|
Outstanding
December 31, 2007
|
|
|
4,067,500
|
|
$
|
3.91
|
|
Exercisable
at December 31, 2007
|
|
|
2,350,832
|
|
$
|
2.38
|
|
Weighted
Average Fair Value Granted During 2007
|
|
$
|
2.77
|
|
|
|
|
Outstanding
January 1, 2008
|
|
|
4,067,500
|
|
$
|
3.91
|
|
Granted
|
|
|
160,000
|
|
|
9.90
|
|
Exercised
|
|
|
(65,000
|
)
|
|
4.33
|
|
Outstanding
March 31, 2008
|
|
|
4,162,500
|
|
$
|
4.13
|
|
Exercisable
at March 31, 2008
|
|
|
2,645,832
|
|
$
|
2.48
|
|
Weighted
Average Fair Value Granted During 2008
|
|
$
|
5.45
|
|
|
|
|
Stock
Awards
Under the 2006 Plan
During
the year ended December 31, 2007, we issued 250,000 shares of common
stock to an officer of the Company that were earned based on achieving
certain performance based milestones established.
Additionally,
during the year ended December 31, 2007, we reserved for issuance
535,000 shares of non-vested common stock for officers and employees of the
Company of which 280,000 were issued upon achievement of certain performance
based milestones in the three months ended March 31, 2008 and the remaining
255,000 will vest and be issued based on the achievement of
certain performance based milestones established for each
person.
During
the three months ended March 31, 2008 and the year ended December 31, 2007,
we
issued 67,296 and 160,000 shares, respectively, to directors that vest over
one and two year periods in exchange for services as board members. During
the
three months ended March 31, 2008, two of the directors retired, forfeiting
a
total of 63,334 shares of such stock. Also during the three months ended
March
31, 2008 and the year ended December 31, 2007, we issued 10,000 shares and
5,000 shares, respectively, to retiring board members in exchange for
services rendered.
The
total
value of stock awards granted and expensed during the three months ended
March
31, 2008 was $0.3 million. The total value of stock awards granted during
the
year ended December 31, 2007was $3.2 million of which $1.9 million was
expensed and $1.3 million was capitalized as part of development
costs.
NOTE
8—
INCOME TAXES
At
March
31, 2008 and December 31, 2007, we had deferred tax assets principally
arising from the net operating loss carry forwards for income tax purposes
multiplied by an expected rate of 35%. As our management cannot determine
that
it is more likely than not that we will realize the benefit of the deferred
tax
assets, a valuation allowance equal to the deferred tax asset has been
established at March 31, 2008 and December 31, 2007. The significant
components of the deferred tax asset at March 31, 2008 and December 31,
2007 were as follows (in thousands):
|
|
March 31,
2008
|
|
December 31,
2007
|
|
Operating
loss carry forward
|
|
$
|
40,858
|
|
$
|
39,755
|
|
Unamortized
exploration expense
|
|
|
11,567
|
|
|
8,268
|
|
Deductible
stock based compensation
|
|
|
320
|
|
|
1,914
|
|
Net
operating loss carry forward
|
|
$
|
52,745
|
|
$
|
49,937
|
|
Deferred
tax asset
|
|
$
|
18,461
|
|
$
|
17,478
|
|
Deferred
tax asset valuation allowance
|
|
$
|
(18,461
|
)
|
$
|
(17,478
|
)
|
Net
deferred tax asset
|
|
$
|
—
|
|
$
|
—
|
|
At
March
31, 2008 and December 31, 2007, we had net operating loss carry forwards of
approximately $52.7 million and $49.9 million, respectively, which
expire in the years 2022 through 2027.
NOTE
9—COMMITMENTS AND CONTINGENCIES
Mt. Hope
Project
Eureka
Moly currently has a 30-year renewable lease with Mount Hope Mines, Inc.
(“MHMI”) for the Mt. Hope Project (as amended, the “Mt. Hope Lease”).
The Mt. Hope Lease may be terminated upon the expiration of its 30-year
term, earlier at the election of Eureka Moly, or upon Eureka Moly’s material
breach and failure to cure such breach. If Eureka Moly terminates the lease,
termination is effective 30 days after receipt by MHMI of written notice
to
terminate the Mt. Hope Lease and no further payments would be due to MHMI.
In order to maintain the lease, Eureka Moly must pay certain deferral fees
and
advance royalties as discussed below.
Pursuant
to the terms of the Mt. Hope Lease, the underlying total royalty on
production payable to MHMI, less certain deductions, is the greater of:
(i) $0.25 per pound of molybdenum metal (or the equivalent of some other
product) sold or deemed to be sold from the Mt. Hope Project; (ii) 3.5% if
the average gross level of products sold is equal to or lower than
$12.00 per pound; (iii) 4.5% if the average gross level of products sold is
higher than $12.00 per pound, but equal to or lower than $15 per pound, and
(iv) 5% if the average gross level of products sold is higher than $15 per
pound (the “Production Royalties”). Additionally, Eureka Moly is obligated to
pay Exxon Mineral Company a 1% net smelter royalty on all
production.
The
Mt. Hope Lease requires a royalty advance (the “Construction Royalty
Advance”) of the greater of $2.5 million or 3% of the construction capital
cost estimate upon the earliest of Eureka Moly securing project financing
in
sufficient amounts to develop and put the Mt. Hope Project into operation
at an annual production level of at least 10 million pounds or
October 19, 2008.
Eureka
Moly has the right to defer the Construction Royalty Advance for one or two
years by payment of a deferral fee (the “Deferral Fee”) in the amount of
$0.4 million on or before October 19, 2008 and October 19, 2009
in the event project financing for the project has not been secured by each
of
the dates. By October 19, 2010, Eureka Moly must pay at a minimum
$2.5 million of the Construction Royalty Advance with the remainder due
upon securing project financing or 50% of the remainder on October 19, 2011
and the other 50% due on October 19, 2012.
Once
the
Construction Royalty Advance has been paid in full, Eureka Moly is obligated
to
pay an advance royalty (the “Annual Advance Royalty”) each October 19
thereafter in the amount of $0.5 million per year. The Construction
Royalty Advance and the Annual Advance Royalty are collectively referred
to as
the “Advance Royalties”. All Advance Royalties are credited against the
Production Royalties once the mine has achieved commercial production. The
Deferral Fees are not recoverable against Production Royalties.
Eureka
Moly is obligated to pay the Construction Royalty Advance each time capital
is
raised for the Mt. Hope Project. Based on the current estimate of raising
capital and developing and operating the mine, we believe Eureka Moly’s
contractual obligations under the Mt. Hope Lease will be as shown in the
following table (in thousands). This estimate is based on our current estimates
of the timing of securing project financing and construction capital costs.
The
amounts shown are the total amounts (in thousands) remaining at March 31,
2008
under the contracts to Eureka Moly. Through March 31, 2008, we have advanced
a
total of $2.0 million.
Year
|
|
Deferral
Fees
|
|
Advance
Royalties
|
|
Total
|
|
2008
|
|
$
|
350
|
|
$
|
1,320
|
|
$
|
1,670
|
|
2009
|
|
|
—
|
|
|
18,200
|
|
|
18,200
|
|
2010
|
|
|
—
|
|
|
500
|
|
|
500
|
|
2011
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Thereafter
(1)
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Total
|
|
$
|
350
|
|
$
|
20,020
|
|
$
|
20,370
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) |
After
the first full year of production, Eureka Moly estimates that
the
Production Royalties will be in excess of the Annual Advance
Royalties for
the life of the project and, further, the Construction Royalty
Advance
will be fully recovered (credited against MHMI Production Royalties)
by
the end of 2012.
|
Deposits
on property, plant and equipment
As
a
continuing part of the development of the Mt. Hope Project, Eureka Moly has
begun to place orders for mining and milling equipment that must be built
to the
mine’s specifications and requires a long lead time for engineering and
manufacturing. Contractual commitments for long lead items require progress
payments during the engineering and construction of the equipment and have
cancellation penalties in the event Eureka Moly cancels the
contract.
In
September and October 2007, we entered into three contracts to purchase a
primary crusher, a semi-autogenous mill, two ball mills and various motors
for
the mills. Additionally, in February 2008, we entered into a contract to
purchase two electric shovels. At March 31, 2008 and December 31, 2007,
$7.8 million and $0.5 million, respectively, had been paid under the
contracts and at March 31, 2008 Eureka Moly has committed to the following
additional amounts under the contracts by year (in thousands). The amounts
shown
are the total amounts under the contracts to Eureka Moly.
Year
|
|
Total
|
|
2008
(remainder)
|
|
$
|
24,457
|
|
2009
|
|
|
62,077
|
|
2010
|
|
|
1,009
|
|
Total
|
|
$
|
87,543
|
|
ITEM
2. MANAGEMENT’S
DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
References
made in this Quarterly Report of Form 10-Q to “we,” “our,” “us,” the “Company,”
or “GMI” refer to General Moly, Inc.
The
following discussion and analysis of our financial condition and results
of
operations constitutes management’s review of the factors that affected our
financial and operating performance for the three months ended March 31,
2008 and 2007. This discussion should be read in conjunction with the financial
statements and notes thereto contained elsewhere in this report and in our
Annual Report on Form 10-KSB, for the year ended December 31,
2007.
Overview
We
are a
development stage company and are currently proceeding with the development
of
the Mt. Hope Project. We are also conducting exploration and evaluation
activities on our Liberty Property.
On
October 4, 2007, our Board of Directors approved the development of the
Mt. Hope Project as contemplated in the Bankable Feasibility Study. The
development of the Mt. Hope Project has an estimated total capital
requirement of approximately $1.0 billion comprised of initial construction
cost in excess of $850.0 million (in 2007 dollars); $53.0 million in
cash bonding requirements; $22.0 million in Advance Royalty Payments; and
amounts necessary for financing costs and working capital. The accuracy of
the
estimate is considered to be plus or minus 15%. Such capital requirements
are
based on management’s estimates based on the Bankable Feasibility Study and
other available information, and are subject to change, which changes could
be
material.
Effective
as of January 1, 2008, we contributed all of our interest in the assets
related to the Mt. Hope Project, including the Mt. Hope Lease, to
Eureka Moly and in February 2008 (the “Closing Date”) entered
into the
Mt. Hope Project joint venture with POS-Minerals (the “Joint Venture”).
Under the terms of the Joint Venture, POS-Minerals owns a 20% interest in
Eureka
Moly and General Moly, through a subsidiary, owns an 80% interest.
While
these ownership interests and/or required contributions can change based
on the
failure of GMI to satisfy certain specified conditions, including the receipt
of
the necessary permits to develop and operate the Mt. Hope Project by
December 31, 2009, failure to achieve production by December 31, 2011 for
reasons other than force majeure, or non-payment of amounts due under the
Joint
Venture by either party, we expect the interests to remain as they are now
through the life of the project and the contributions to be received in the
amounts that follow.
Pursuant
to the terms of the Joint Venture, POS-Minerals agreed to make cash
contributions to The Joint Venture in the aggregate amount of
$170.0 million in exchange for their 20% interest, of which
$50.0 million was received in February 2008, $50.0 million is to be
received in July 2008 (the “February 2008 and the July 2008 Contributions”), and
the remaining $70.0 million is to be received once the Mt. Hope
Project receives the necessary permits to develop and operate the project
(the
“POS-Minerals Third Contribution Date”). These initial funds are available to
fund the Mt. Hope Project development costs incurred subsequent to the
Closing Date. Additionally, in May 2008, GMI will pay to POS-Minerals an
estimated $2.8 million as a final purchase price adjustment based on the
terms
of the Joint Venture related to the difference in the budgeted versus actual
expenditures of the Mt. Hope Project prior to the Closing Date.
We
are
required, pursuant to the Joint Venture, to advance funds in excess of the
February 2008 and July 2008 Contributions required for the development of
the
Mt. Hope Project until the POS-Minerals Third Contribution Date at which
point POS-Minerals is required to reimburse us for their 20% share of all
development costs incurred from the Closing Date through the POS-Minerals
Third
Contribution Date. All amounts incurred subsequent to the POS-Minerals Third
Contribution Date will be allocated and funded pro rata based on each party’s
ownership interest.
Additional
capital will be required through the commencement of Mt. Hope production
estimated to be in late 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 Mt. Hope Project both in sufficient quantity of capital
and at the time such capital is needed. Additionally, if the estimated costs
of
the Mt. Hope Project are exceeded we will need to raise additional capital
to fund such overruns.
We
do not
currently have the capital necessary to complete the Mt. Hope Project and,
accordingly, plan to raise the capital on an ongoing basis when needed. The
receipt of the $50.0 million Joint Venture capital contribution by POS-Minerals
in July 2008, existing cash on hand at March 31, 2008, and $8.4 million received
in April 2008 from the exercise of outstanding warrants should be sufficient
to
fund planned operations for the Mt. Hope Project, as well as our other
planned operations, through the end of 2008. If we are unable to raise
sufficient quantities of capital when needed, it will be necessary to develop
alternative plans that could delay the development and completion of the
Mt. Hope Project. There is no assurance that we will be able to obtain the
necessary financing for the Mt. Hope Project on customary or favorable
terms, or at all.
We
will
also require additional capital to continue the exploration and evaluation
of
the Liberty Property, as well as continue payment of ongoing general,
administrative and operations costs associated with supporting our planned
operations.
Liquidity
and Capital Resources
We
have
limited capital resources and thus have had to rely upon the sale of equity
securities and the formation of a joint venture for the cash required for
exploration and development purposes, for mineral property acquisitions and
to
fund our general and administration costs. Since we do not expect to generate
any revenues until the Mt. Hope Project begins production, we will rely on
the sale of our equity and debt securities, bank financing and joint venture
arrangements to raise capital. There can be no assurance that financing will
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, 2008 was $79.3 million compared to $78.4 million
at December 31, 2007. Additionally we have $39.5 million of funds from
POS-Minerals’ initial contribution in February that have not yet been spent in
the continuing development of the Mt. Hope Project and are shown as
restricted cash. The restricted cash is available for the continuing development
of the Mt. Hope Project.
Total
assets as at March 31, 2008 were $168.6 million compared to
$110.3 million as of December 31, 2007. These increases were due
primarily to the receipt of $50.0 million from POS-Minerals in February 2008
pursuant to the Joint Venture, and proceeds from exercises of warrants and
options totaling $11.6 million offset by expenditures for continuing exploration
and evaluation of our Liberty Property, plus expenditures for our general
and
administrative costs.
As
discussed above, in addition to the $50.0 million we received from
POS-Minerals in February 2008, we are scheduled to receive an additional
$50.0 million in July 2008, and $70.0 million at the time Eureka Moly
receives the necessary permits to develop and operate the Mt. Hope Project
(including the record of decision for the Mt. Hope Project), which is
expected in mid-2009. Additionally, POS-Minerals will fund approximately
$65.0 million on the POS-Minerals Third Contribution Date, which represents
POS-Minerals’ share of the anticipated project costs from January 1, 2008
through the POS-Minerals Third Contribution Date.
We
believe the cash on hand at March 31, 2008 (including the cash restricted
for
use in the Joint Venture), the expected receipt of $50.0 million from
POS-Minerals in July 2008, and $8.4 million received in April 2008 from the
exercise of outstanding warrants will be sufficient to fund our joint venture
development, exploration, evaluation and operating activities, as well as
our
other planned operations, through the end of the year ending December 31,
2008.
As
discussed above in the overview section, we will require, and continue to
require additional funds on an ongoing basis until we have completed the
development of the Mt. Hope Project and profitable producing operations are
achieved at the Mt. 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.
Results
of Operations
For
the
three months ended March 31, 2008 we had a net loss of $5.2 million compared
with a net loss of $9.1 million in the same period for 2007.
For
the
three months ended March 31, 2008 and March 31, 2007, exploration and evaluation
expenses were $2.5 million and $3.8 million, respectively. During the three
months ended March 31, 2007 both our Mt. Hope Project and our Liberty Property
were in the exploration and evaluation stage. In October 2007 the Mt. Hope
Project advanced to the development stage. For the three months ended March
31,
2008 exploration and evaluation costs were incurred on the Liberty Property
as
we progressed to the completion of a pre-feasibility study on the Liberty
Property that was completed in April 2008.
For
the
three months ended March 31, 2008 and March 31, 2007, general and administration
expenses were $3.2 million and $5.4 million, respectively. During the three
months ended March 31, 2008 and March 31, 2007 we incurred $.9 million and
$3.1
million, respectively, in non-cash equity compensation for management and
directors. The amounts in 2007 were significantly higher than in 2008 as
a
greater amount of equity compensation was incurred during the first quarter
of
2007 as we added new Officers and Directors as part of a reorganization and
expansion of the executive team compared with the same period in 2008. The
cash
portion of our general and administrative expense was approximately the same
in
both periods.
Interest
income was $.5 million for the three months ended March 31, 2008 compared
with
$.2 million for the same period in 2007 as a result of higher cash balances
in
2008.
Changes
in Accounting Policies
We
did
not change our accounting policies during the three months ended March 31,
2008.
ITEM
3. QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Commodity
Price Risk
We
are a
development stage company in the business of the exploration, development
and
mining of properties primarily containing molybdenum. As a result, upon
commencement of production, estimated to begin at the Mt. Hope Project in
late 2010, our financial performance could be materially affected by
fluctuations in the market price of molybdenum and other metals we mine.
The
market prices of specialty, base and precious metals, such as molybdenum,
copper, gold and silver, can fluctuate widely due to number factors. These
factors include fluctuations with respect to the rate of inflation, the exchange
rates of the US dollar and other currencies, interest rates, global or regional
political and economic conditions and banking crises, global and regional
demand, production costs in major molybdenum producing areas, and investor
sentiment.
In
order
to better manage commodity price risk and to seek to reduce the impact of
fluctuations in prices, we will seek to enter into long term supply contracts.
On December 28, 2007, we entered into a molybdenum supply agreement with
ArcelorMittal that provides for ArcelorMittal to purchase 6.5 million
pounds of per year, plus or minus 10%, once the Mt. Hope Project commences
commercial operations. The supply agreement provides for a floor price along
with a discount for spot prices above the floor price and expires five years
after the commencement of commercial production at the Mt. Hope
Project.
While
we
have not used derivative financial instruments in the past, we may elect
to
enter into derivative financial instruments to manage commodity price risk.
We
have not entered into any market risk sensitive instruments for trading or
speculative purposes and do not expect to enter into derivative or other
financial instruments for trading or speculative purposes.
Interest
Rate Risk
As
of
March 31, 2008, we had a balance of cash and cash equivalents and restricted
cash of $118.8 million. If and to the extent that these funds were invested
in
interest bearing instruments during the entire three month period ended March
31, 2008, a hypothetical 1% point decrease in the rate of interest earned
on
these funds would affect our income for the three month period ended March
31,
2008 by approximately $0.3 million.
ITEM
4. CONTROLS
AND PROCEDURES
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-Q. Based on the foregoing, our management concluded that our
disclosure controls and procedures are effective 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.
There
was
no change in our internal control over financial reporting that occurred
during
the quarter ended March 31, 2008 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial
reporting.
PART
II
OTHER
INFORMATION
ITEM
1. LEGAL
PROCEEDINGS
We
are
involved from time to time in litigation incidental to our business. We believe
that the outcome of current litigation is not expected to have a material
adverse effect on our results of operations or financial condition.
ITEM
1A. RISK
FACTORS.
Our
Annual Report on Form 10-KSB for the year ended December 31, 2007,
including the discussion under the heading “Risk Factors” therein, and this
report describe risks that may materially and adversely affect our business,
results of operations or financial condition. The risks described in our
Annual
Report on Form 10-KSB and this report are not the only risks facing us.
Additional risks and uncertainties not currently known to us or that we
currently deem to be immaterial also may materially adversely affect our
business, financial condition and/or operations.
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
Mt. Hope Project, Liberty Property 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. These forward-looking statements are subject
to a
number of risks, uncertainties and assumptions that could cause actual results
to differ materially from those in the forward looking statements. Such risks,
uncertainties and assumptions are described in the “Risk Factors” section
included in our Annual Report on Form 10-KSB for the year ended
December 31, 2007 and this report, and include, among other
things:
|
•
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our
dependence on the success of the Mt. Hope
Project;
|
|
•
|
the
ability to obtain all required permits and approvals for the Mt. Hope
Project and the Liberty Property;
|
|
•
|
issues
related to the management of the Mt. Hope Project pursuant to the
Mt. Hope Joint Venture;
|
|
•
|
risks
related to the failure of POS-Minerals to make contributions pursuant
to
the Mt. Hope Joint Venture;
|
|
•
|
fluctuations
in the market price of, and demand for, molybdenum and other
metals;
|
|
•
|
the
estimation and realization of mineral reserves, 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 and the possible sources of such
capital;
|
|
•
|
government
regulation of mining operations, environmental conditions and risks,
reclamation and rehabilitation
expenses;
|
|
•
|
title
disputes or claims; and
|
|
•
|
limitations
of insurance coverage.
|
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 above. 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.
ITEM
2. UNREGISTERED
SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM
3. DEFAULTS
UPON SENIOR SECURITIES
None.
ITEM
4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM
5. OTHER
INFORMATION
None.
ITEM
6. EXHIBITS
Exhibit
Number
|
|
Description
of Exhibit
|
2.1†
|
|
Agreement
and Plan of Merger, dated October 5, 2007 (Filed as Exhibit 99.1
to our
Current Report on Form 8-K filed on October 5, 2007.)
|
3.1†
|
|
Certificate
of Incorporation (Filed as Exhibit 3.1 to our Current Report on
Form 8-K
filed on October 5, 2007.)
|
3.2†
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Bylaws
(Filed as Exhibit 3.2 to our Current Report on Form 8-K filed on
October
5, 2007.)
|
4.1†
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|
Form of
Security Purchase Agreement in connection with the private placement
completed February 15, 2006 (Filed as Exhibit 4.1 to our Current
Report on Form 8-K filed on February 17,
2006.)
|
4.2†
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|
Form of
Common Stock Purchase Warrant in connection with the private placement
completed February 15, 2006 (Filed as Exhibit 4.2 to our Current
Report on Form 8-K filed on February 17,
2006.)
|
4.3†
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|
Form of
Common Stock Warrant Issued Pursuant to Placement Agent Agreement
in
connection with the private placement completed February 15, 2006
(Filed as Exhibit 4.3 to our Current Report on Form 8-K filed on
February 17, 2006.)
|
4.4†
|
|
Form of
Common Stock Purchase Warrant in connection with the private placement
completed January 10, 2006 (Filed as Exhibit 4.3 to our Current
Report on Form 8-K filed on January 17,
2006.)
|
4.5†
|
|
Letter
#1 to Investors regarding Registration Rights dated January 6, 2006
in connection with the private placement completed January 10, 2006
(Filed as Exhibit 4.4 to our Current Report on Form 8-K filed on
January 17, 2006.)
|
4.6†
|
|
Letter
#2 to Investors regarding Registration Rights dated January 6, 2006
in connection with the private placement completed January 10, 2006
(Filed as Exhibit 4.5 to our Current Report on Form 8-K filed on
January 17, 2006.)
|
4.7†
|
|
Securities
Purchase Agreement, dated March 28, 2007, for the private placement
completed in April 2007 (Filed as Exhibit 4.5 to our Registration
Statement on Form S-3 filed on May 14, 2007.)
|
4.8†
|
|
Form
of Warrant Agreement for the private placement completed in April
2007
(Filed as Exhibit 4.6 to our Registration Statement on Form S-3
filed on
May 14, 2007.)
|
|
|
Contribution
Agreement between Nevada Moly, LLC, a wholly-owned subsidiary of
the
Company (“Nevada Moly”), Eureka Moly, LLC, and POS-Minerals
Corporation
|
|
|
Amended
and Restated Limited Liability Company Agreement of Eureka Moly,
LLC
|
|
|
Guarantee
and Indemnity Agreement, dated February 26, 2008, by POSCO Canada
Ltd., in
favor of Nevada Moly, LLC and the Company.
|
|
|
Certification
of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
Certification
of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
|
|
|
Certification
of Chief Executive Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
|
Certification
of Chief Financial Officer Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
|
|
|
|
† |
Previously
filed as indicated and incorporated herein by
reference.
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
Dated:
May 7, 2008
GENERAL
MOLY, INC.
David
A.
Chaput
Chief
Financial Officer and Duly
Authorized Officer