General Moly Inc has announced its unaudited financial results for the first quarter ended March 31st 2011. Net loss for the three months ended March 31st 2011 was approximately USD 4.2 million as compared to a loss of USD 2.8 million for the year ago period.
Our cash balance at the end of the first quarter was approximately USD 64 million compared to approximately USD 54 million at the end of 2010. During the first quarter, cash use of approximately USD 9 million was the result of approximately USD 5 million in development, engineering, advance royalty and equipment deposit costs and approximately USD 4 million in General and Administrative costs offset by approximately USD 19 million in warrant exercise proceeds. During the remainder of 2011, spending levels will largely be tied to progress toward receipt of the Mt Hope project's construction and operating permits.
Future spending levels for the Mt Hope project are connected to receipt of permits for the Mt Hope project. When final permits are received, POS Minerals Corporation (the 20% owner of the Mt Hope project) is anticipated to fund its final USD 56 million initial contribution, plus 20% of all money the company has spent on the Mt Hope project at that point. The company estimates this combined payment will be approximately USD 100 million. From that point forward, the project will be funded 80% by the company and 20% by POS Minerals Corporation.
Also, within two months after the Mt Hope project's permits are received, pursuant to the Securities Purchase Agreement between the Company and Hanlong Mining Investment Inc, Hanlong is obligated to procure a drawable loan from a Chinese bank of not less than USD 665 million. The company is continuing work with a Chinese engineering firm to develop a Chinese language version of the Bankable Feasibility Study for the Chinese banks. This work is planned for completion during the second quarter of this year. When the bank loan is in place, the company intends to close on Hanlong’s Tranche 2 equity sale for USD 40 million, bringing Hanlong's share position in the company to 25% on a fully diluted basis. In total, these financing commitments are anticipated to fully fund the development of the Mt Hope project.
The Bureau of Land Management and its independent Environmental Impact Statement contractor completed and circulated a second draft of the Mt Hope project’s Preliminary Draft Environmental Impact Statement on April 11th 2011. Comments from reviewing agencies are due to the BLM on May 6th 2011. Following receipt of submitted comments, the BLM and its independent contractor will evaluate and incorporate comments as necessary before moving forward with the production of the project's Draft Environmental Impact Statement for publication. The DEIS is anticipated to be completed in the second quarter and published in the Federal Register in the second or third quarter. Following publication of the DEIS, full permits are anticipated within six to nine months.
On April 22nd 2011, the Nevada State Engineer issued a Notice of Hearing scheduling an additional day of hearing to be held on May 10th 2011. The additional day is a continuation of the Hearing held in December 2010 and is to receive and allow cross examination related to information requested by the State Engineer. Based on the date of this hearing, the company now anticipates a grant of applications on its water rights most likely in the third quarter of this year. The company remains confident that the State Engineer will ultimately rule favorably on our applications and issue final water permits for the Mt. Hope project in sufficient time to maintain the company’s current project development timeline. The company continues to hold discussions with protestants to its water applications, including the county of Eureka, in an effort to find a solution to the protestants’ opposition of the company's water applications.
The company will restart engineering and procurement efforts following the publication of the DEIS. Although the company has purchased and ordered most of the long lead milling equipment, firm orders for much of the mobile mine fleet and other process equipment must still be placed.
Over the first quarter of 2011, molybdenum prices traded slightly upward and finished the quarter at USD 17.20 per pound, compared to USD 16.40 per pound at the end of last year. Since the end of the first quarter, prices have continued their general upward trend and are currently trading near USD 17.40 per pound.
Higher prices continue to be driven by Chinese steel demand, as well as a more gradual return of western world growth, particularly relating to stainless steel. According to the International Molybdenum Association, China remained a net importer of molybdenum in 2010, although net imports of approximately 4 million pounds were down from 2009 levels indicating that high cost domestic production within China that shuttered in 2008 and 2009 as a response to low prices has likely returned to production. Low levels of raw exports from China continue to force Korean and Japanese steel producers to source molybdenum from the West.
