Pure-Play Molybdenum Opportunity
Robert Pennington Chief Operating Officer
Rodman & Renshaw Annual Global Investment ConferenceNew York
Presentation: 10:50 a.m. ET Sept. 12, 2017Venue: Rutherford Room
GMO: NYSE MKT & TSX
GMONYSE MKT
& TSX
Cautionary StatementsThis presentation contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, andSection 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the safe harbor created by suchsections. Such forward-looking statements include, without limitation, (i) estimates of future molybdenum prices, supply, demand and/orproduction; (ii) estimates of future cash costs, direct operating costs, costs applicable to sales (CAS), or royalty payments; (iii) estimates offuture capital expenditures; (iv) estimates regarding timing of permitting, future development, construction or production activities; (v)statements regarding cost structure, project economics, or competitive position, and (vi) statements comparing Mt. Hope to other mines,projects, or metals. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or beliefis expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertaintiesand other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to, metals price and production volatility, global economicconditions, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans,exploration risks and results, political, operational and project development risks, including the Company’s ability to reobtain water permitsand Record of Decision, and retain other required state and federal permits to commence construction and its ability to obtain suitablefinancing for development of the Mt. Hope project, adverse governmental regulation and judicial outcomes. For a more detailed discussion ofsuch risks and other factors, see the Company’s Annual Report on Form 10K, which is on file with the Securities and Exchange Commission, aswell as the Company’s other SEC filings. The Company does not undertake any obligation to release publicly revisions to any “forward-lookingstatement,” to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, exceptas may be required under applicable securities laws.
Cautionary Note to U.S. Investors Concerning Estimates of Reserves and Resources
Calculations with respect to "proven reserves" and "probable reserves" referred to herein have been made in accordance with, and using thedefinitions of National Instrument 43-101, as required by Canadian securities regulatory authorities. For United States reporting purposes, theU.S. SEC applies a different standard in order to classify mineralization as a "reserve". Under SEC standards, mineralization may not beclassified as a "reserve" unless the determination has been made that the mineralization could be economically and legally extracted orproduced at the time the reserve determination is made. No such determinations have been made with respect to any mineralization at theLiberty project, and it cannot be assured that such a determination will be made. This presentation also uses the terms “measured”,“indicated” and “inferred” resources. We caution U.S. investors that while such terms are recognized and required by Canadian SecuritiesAdministrators pursuant to the National Instrument 43-101, the SEC does not recognize them. U.S. investors are cautioned not to assume thatany part or all of mineral deposits in these categories will ever be converted into reserves. “Inferred Resources”, in particular, have a greatamount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all orany part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian Securities Administration rules,estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibility studies. U.S. investors are cautioned not toassume that part or all of an inferred resource exists, or is economically or legally minable.
Please refer to End Notes in the Appendix for certain slides. 2
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Investment Highlights – only pure-play, western exchange traded moly stock
Mt. Hope Project,
one of world’s
largest & highest
grade
undeveloped moly
deposits, and
previously mined
Liberty Project
World-Class Molybdenum
Medium-Term Producer
Strategic
PartnershipsTangible
Assets
Financial
Stability
Mt. Hope Project
bankable feasibility
complete; 65%
engineered
Completed new air
quality analysis to
advance
Supplemental
Environmental
Impact Statement
Develop upon
sustained market
improvement &
financing
Strategic
relationship with
largest share-
holder, Chinese
multinational
AMER
Mt. Hope partner-
ship with Korean
POSCO unit
Off-take sales
agreements with
international
companies –
ArcelorMittal,
SeAH Besteel and
Sojitz Corporation
80% interest in
$87.5M of plant &
mine equipment at
Mt. Hope Project
$21.1M in other
tangible Company
assets
2Q 2017 cash
$5.3M i
Secured $6M
Tranche 2 financing
with AMER
Restricted Mt. Hope
Project cash
$11.0M sufficient to
sustain project into
2022 i
i. Please see the Company’s 2Q 2017 news release issued on August 14, 2017.
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Capital Structure
Major institutional shareholders:
1. AMER i 12.0%
2. Hanlong 10.7%
3. APERAM ii 7.4%
4. University Texas Inv. Mgt. 2.6%
5. Vanguard Group 2.0%
6. Blackrock Fund Advisors 1.5%
Insider ownership total iii 16.7% Bruce Hansen, CEO 2.6%
Other senior management 1.3%
Research coverage Heiko Ihle, H.C. Wainwright
John Tumazos, John Tumazos Very Independent Research
Exchanges: TickerNYSE MKT; TSX: GMO
Recent stock price $0.45
Stock 52-week high/low $0.72/$0.21
Shares outstanding (M) 111.2
Recent moly price iv $8.20
Moly 52-week high/low iv$9.10/$6.60
Financial Highlights v(M) 6/30/2017
Cash and cash equivalents $5.3
Working capital $4.2
Restricted cash at Mt. Hope $11.0
Long-term debt & sr. convert. $7.0
Total shareholders’ equity $105.7i. Upon closing $6M Tranche 2 financing expected by Sept. 30, 2017, AMER will become a 22% shareholder of GMO with ~27.9M shares.ii. APERAM, the former stainless steel division of ArcelorMittal, was spun off as a separate public company as of January 2011.iii. Insider ownership includes AMER shareholdings on basic shares outstanding.iv. Source: CPM Group, Metals Bulletinv. Please refer to the Company’s 2Q 2017 news release issued on Aug. 14, 2017.
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Molybdenum Market i Poised to Rise
Strengthening world steel production
+5.5% YOY for December 2016
+3.2% YOY for June 2017
14 consecutive months of YOY increases through June 2017, signaling rising steel demand
CPM projects 2.5% to 2.8% annual growth between 2017-2020
Catalysts for demand resurgence
Recovery in oil & gas sector and major pipeline projects
Other energy capital investments
Global and China infrastructure renewed expansion (specialty steel)
Supply contracts from price weakness
In 2016, mine supply dropped by nearly 5% to 506M lbs
Total Chinese moly production down 6% YOY in 2016, 2nd consecutive year
KGHM cancels Phase 2 expansion of Sierra Gorda for steady moly production at 10M lbs
Freeport McMoRan reduced its moly production, mostly from primary mines, in 2016
i Source: World Steel Association, CPM Group, Metal Bulletin, China's National Development and Reform Commission, Freeport McMoRanand news reports.
Current price gradually improving. Strong LT fundamentals.
Recent moly price/ lb
Up 24% from 52-weeklow of $6.60= $8.20 =
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Molybdenum Leverage with Steel Global Steel Production &
Molybdenum Demand
Source: CPM Group, World Steel Association
Annual (1992-2020P)
Source: Metal Bulletin molybdenum canned molybdic oxide U.S.$ per lb moly in warehouse (1987-2017) & USGS data (1980-1986); SBB U.S. Domestic Hot Rolled Coil (FOB midwestmill) (2007-2017) & USGS data (1980-2006).
Molybdenum &U.S. Hot Rolled Coil Steel Prices
Annual (1992 – IH 2017)
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Molybdenum Price Projections
Historical Prices 2006-To Date i CPM Price Projections ii
i. Source: CPM Group.ii. CPM Group’s March 2017 Report for projected nominal and real prices. Inset bar chart: CPM Group data.
$11.95$12.65$13.30
$15.20
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018p 2019p 2020p 2021p 2022p 2023p 2024p 2025p
$9.50$10.00
$12.15$12.75
$8.33 $9.85
$11.98
$16.45
2014-16 2012-16 2010-16 2007-16
3-Year Avg. 5-Year Avg. 7-Year Avg. 10-Year Avg.
(Base: 2017)
$9.68$10.40
$13.50 $13.18$13.27
$14.35 $15.41
$17.97
Nominal Real
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Future Global Moly Demand Growth Projected to be Robust
2016 moly consumption = 512.4M lbs
Demand projected to increase~21M lbs/year between 2018 and 2025
Historical pre-financial crisis moly demand growth rate averaged 6.3% CAGR (1991-2007)
World Moly Demand (2016-2025p) i
i. CPM Group, March 2017.
Millions of Pounds
512
570
686
300
350
400
450
500
550
600
650
700
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
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Demand:Diverse End Uses of Moly
9Source: SMR Research
5%
3%
4%
6%
7%
8%
10%
13%
15%
15%
15%
Other Applications
Electronics & Medical
Aerospace & Defense
Building & Construction
Power Generation
Other Transportation
Process Industry
Mechanical Engineering
Automotive
Chemical / Petrochemical
Oil & Gas Oil & Gas - Refinery catalysts, LNG development, shale gas installations, off-shore /deep ocean oil production
Chemical / Petrochemical - Corrosion inhibitors, chemical catalysts, fertilizers, waste water treatment
Automotive - Engines, pistons, crankshafts, axle shafts, steering components
Mechanical Engineering - Heavy machinery, mining equipment, cutting tools
Process Industry - Food processing equipment and storage, metal / steel processing, desalination
Other Transportation - Locomotive shafts, train wheels, brake pads, shipbuilding (bulkheads and hulls)
Power Generation - Coal, oil, gas and nuclear power plants, wind turbines, hydro and solar energy
Building & Construction - Major infrastructure: bridges & tunnels, anchors, rebars, heating / ventilation systems
Aerospace & Defense - Turbine parts, jet engines, landing gear, piping systems, armored vehicles
Electronics & Medical - Semiconductors, pharmaceutical and biotechnology processing equipment, x-ray tubes
Other Applications - Pigments, coatings, lubricants
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Demand - Structural Trend Emerging:Significant Expansion of LNG Transportation & Storage
Source: U.S. Energy Information Administration AEO 2017
Natural gas demand is being fueled by growth in electricity consumption.
Expanded global transport networks bring the fuel from suppliers to end users. Most natural gas comes from the Qatar and Australia.
Building of pipelines, onshore and offshore rigs, as well as in Liquefied Natural Gas (LNG) infrastructure and storage vessels are positive for moly demand.
Investment in LNG export infrastructure grows as
the U.S. commences exports of LNG
U.S. Natural Gas Trade
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Structural Change:Continued Moly Demand in China
11The Jiaozhou Bay Bridge is the world's longest cross-sea bridge, stretching nearly 26 miles, which would span the English Channel.
CPM projects China’s molybdenum demand at 4.7% CAGR for 2016-2025.
China leads the world in mega infrastructure construction.
In addition to the megacity construction ongoing in the Pearl River Delta, there is the Xiongan new area, outside of Beijing. Wood McKenzie estimates that the new Xiongan could add ~20 Mt of steel demand during the first 10 years of construction.
By 2030, China plans to combine a nine-city region into one giant megacity, twice the size of South Korea, in the Pearl River Delta.
Chinese Infrastructure Investment YOY Growth Rates (Through 2016)
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Structural Change:Rising Chinese Demand for Higher Quality Steel
China consumes a third of global moly and produces 50% of world’s crude steel and stainless steel
CPM projects China’s molybdenum demand at 4.7% CAGR for 2016-2025
China’s average intensity of use rose 5% from 2007 to 8.64 kg of moly per 100 tonnes of steel in 2016, but well below the global average
If China’s intensity of use reached the global average, it would need an additional 100.64 M lbsmoly/year (basis its 2016 level).
12i. Source: CPM Group, Molybdenum News Service. Chart – CPM Group, World Steel and IMOA.
Moly Use/ 100 tonnes of Steel - 2016
Chinese Moly Demand by End Use
-
5
10
15
20
25
30
35
40
45
USA Europe Japan China CIS
World Intensity of Use =
14.3 kg Mo/ 100 Mt of Steel
Kg
Mo p
er 1
00
Mt
of
Cru
de
Ste
el
Source: CPM Group, World Steel, IMOA, Antaike
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Supply: Molybdenum Costs Curve –As much as ~42% of global producers running cash negative i
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World Molybdenum Cash Operating Costs, 2016 ii
US cents/lb pro-rata; no credits
i. At 2016 average molybdenum price of $6.48/lb. Current spot price is $7.55/lb as of July 27, 2017. Source: CPM/Metal Bulletin. ii.Chart represents approximately 93% of total molybdenum production. Source: CPM Group, SNL and company documents.iii.First five years of Optional Plan.
Annual Average Molybdenum Prices in 2016 was $6.48/lbi
Mt. Hope’s Optional Plan cash operating costs $6.28/lb iii
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Ownership 80% General Moly; 20% POSCO
Status Pre-constructionwork suspended
Estimated life * 30 years
P&P reserves,100% (lbs) * 1.4B
Head grade (1st 5 yrs) * 0.09%
Mill recovery rate (1st 5 years) * 89.8%
LOM Strip ratio * 1.7: 1 (waste:ore)
Remaining capex, 100% $1.03B
First 5 years*:
40M lbs/year$6.28 cash op. costs/lb
General Moly’s 80% interest LOM*:
NPV = $734M IRR = 18%After-tax, undiscounted cash flow= $3.8B
Flagship Mt. Hope –A World-Class Moly Project
Among the largest and lowest-cost primary development projects
Invested $286M in permitting & long-lead equipment
Obtain reinstatement of the BLM’s Record of Decision and Nevada water permits i
Mining friendly location in Nevada
Outlook: Improved financing ability with AMER upon market improvement
Reno
BattleMountain
Winnemucca
Carlin
Elko Wells
Austin Eureka Ely
i See Slides 31and 32 in the Appendix.* Data and reserves reflect upside of an optimized $12/lb
molybdenum pit. See End Note 1 in the Appendix. 14
Tonopah
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Strategic Partner & Largest Shareholder: AMER
15i. Source for AMER background: Fortune, Forbes & AMER’s website.* See End Note 2 in the Appendix.
AMER International Group Snapshot i
Largest GMO shareholder
12% stake from Tranche 113M shares + warrants
Three-trancheinvestment in General Moly *
Invested $4M in 2015.Potential funding from Tranches 2 & 3 for additional $16M.
Fortune Global 500 ranking
Privately owned; 183rd on annual revenues of $49.7B
Majorbusinesses
Non-ferrous metals (copper mining, downstream wire/cable fabrication & trading); value-added manufacturing of semi-conductors & polymers
Employees Over 17,000
Headquarters Shenzhen, China
Chairman Mr. Wang Wenyin, ranked 6th richest billionaire in China in 2016 by Forbes
Chairman Wang, August 2017: “We are confident about a rewarding future from a quality management team, the development of the Mt. Hope Project as the best, low-cost primary molybdenum asset in the world and continued increases in the molybdenum price.”
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Key Terms of Investment Agreement* with AMER
November 2015: $4M Tranche 1 private placement by AMER priced at $0.30 for 13.3M GMO shares; Director Tong Zhang joins the Board.
August 2017: Accelerated $6M Tranche 2 private placement by AMER priced at $0.41 for 14.6M GMO shares, expected to close Sept. 30, 2017. *
Accelerated $10M Tranche 3 private placement by AMER priced at $0.50 for 20M shares under certain amended conditions if occurring by March 31, 2018; if not, then by 90 days from reinstatement of the Mt. Hope Project’s water permits. A second director from AMER is nominated. *
Upon molybdenum market improvement, AMER will work with General Moly to procure and support a Bank Loan of approximately $700M from major Chinese banks for development of the Mt. Hope Project. If AMER procures such a loan, then upon drawdown, AMER may begin to exercise its warrants for 80M shares at $0.50/share strike price.
After drawdown of the Bank Loan, if AMER owns more than 30% of the common stock of General Moly, AMER will nominate a third director to the Board.
16* See Aug. 8, 2017 and Aug. 14, 2017 news releases. See End Note 2 in the Appendix.
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Joint Business DevelopmentEvaluating Opportunities for Mutual Benefit
Evaluating internally-developed list of base metal prospects in the Americas, identifying distressed and undervalued assets
Examining potential outright acquisitions, privatizations or significant minority investments with financing support
GMO may participate in value creation by
Retaining a minority interest,
Generating management fees, or
Acquiring non-core assets
Presentations to AMER’s Overseas Investment Committee
Photos from AMER’s website.
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First 5 years*:
14M Mo lbs
& 7.5M Cu lbs /year
$7.79 cash op. costs/lb Mo
LOM NPV* = $325M IRR* = 17%LOM after-tax, undisc. cash flow*= $1.7B
Next Up –Liberty Moly-Copper Project
Second world-class moly asset
Previously mined for molybdenum and copper Significant infrastructure remains
(electrical, roads, truck shops)
Mining friendly location in Nevada
Outlook: Advancement to Feasibility Study contingent on market improvement
Ownership 100%
Status Completed PFS
Estimated life* 32 years
P&P reserves* (lbs) 482M Mo, 606M Cu
Head grade (1st 5 yrs) * 0.09% Mo; 0.07% Cu
Mill recovery rate(1st 5 years) * 83.5%
Strip ratio* 1.8:1 (waste to ore)
Capex* $366M
Reno
BattleMountain
Winnemucca
Carlin
Elko Wells
Austin
Eureka Ely
Tonopah
* See End Note 3 in the Appendix.
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General Moly has Significant Leverageto the Molybdenum Price
Every $1/lb change in moly price between $10-$20/lb* NPV
Mt. Hope Project +/- $180M
Liberty Project +/- $95M
General Moly Total NPV +/- $275M
Projects’ Breakeven Prices
Mt. Hope NPV breakeven price /lb $10.82
Mt. Hope cash flow breakeven price /lb $9.35
Liberty NPV breakeven price /lb $11.64
Liberty cash flow breakeven price /lb $9.58
* See End Note 4 in the Appendix.
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Significant Tangible Asset Value
20
(M, except per share) Current
Cash and cash equivalents (Corporate) i, ii $ 5.3
Restricted cash to be used for loan procurement fund orbusiness opportunities i 1.0
Share of Mt. Hope Project cash(Restricted cash) i 9.6
Share of Mt. Hope’s property, plant & equipment iii 70.0
Cost basis in land, water rights & Liberty Project i 21.1
Long-term debt and convertible debt i (7.0)
Net Tangible Assets $100.0
Net Tangible Assets/GMO share $0.90
i. Please refer to the Company’s Form 10-Q for the quarter ended June 30, 2017 as filed on Aug. 14, 2017.ii. Excludes the pending closing of AMER’s $16M Tranche 2 private placement.iii. Represents Company’s 80% ownership of $87.5M in PP&E in the Consolidated Balance Sheets.
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2017 Priorities
Leverage internal skills working with AMER to identify value-accretive
opportunities with a focus on base metal prospects in the Americas
Effect reinstatement of the ROD, and reissuance of permits for water
rights at the Mt. Hope Project i
Maintain existing state permits for the Mt. Hope and Liberty Projects
Prudently manage financial liquidity and flexibility to sustain the Company
over the medium term
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i See Slides 29 and 30 in the Appendix.
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Appendix
22
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Molybdenum Market Signals:Emerging Secular Upward Moly Market Trend
Market signals include Stable oil prices
Renewed global industrial expansion; highly correlated to moly
Continued economic growth in China, India, Russia, Indonesia and Brazil
Continued growth in steel and higher quality steel production
Molybdenum prices settling into higher ranges
Growth in moly metal, alloy and chemical uses start to exceed projections
-
20
40
60
80
100
120
140
160
Full alloy Stainless HSLA Tool Carbon Cast iron Mo
Metal/Alloys
Superalloys Catalysts Other
Chemicals
2016 2025p
Note: Other Chemicals includes lubricants, pigments, and other chemical demand; Source: CPM Group
Molybdenum Demand Projections, by End-Use
Million Pounds
3.2% 3.5%
3.8% 3.8%
1.3% 1.9% 3.5%
3.8%
4.0% 5.2%
Percentage = CAGR 2016-2025p
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Experienced Management Team
24
CEO and a Director since 2007.
Previously served in multiple executive roles at Newmont, including Chief Financial Officer and Senior VP, Operations Services & Development, and was Senior VP, Corporate Development for Santa Fe Pacific Gold. Executed numerous financings and M&A transactions.
COO since 2012; joined in 2007 as VP Engineering & Construction.
Over 35 years in mine operations, project engineering and construction. Previously served as general manager of Phelps Dodge’s Morenci Mine, one of the largest open-pit/concentrator operations in the world.
Chief Legal Officer since 2015; joined in 2010 as VP HR and Corporate Counsel. Formerly served as General Counsel and Executive Vice President of Law and Human
Resources at Flatiron Financial Services and as in-house counsel for Qwest and US West. Financing and corporate deal experience, including cross-border transactions.
Manager of Engineering and Development since 2008.
Over 38 years of industry experience. Previously worked for Rio Tinto, Phelps Dodge and Freeport-McMoRan in operations, technical services, research and development, project management and M&A.
Mike IannacchioneVP & GM Mt. Hope
Chuck MaxwellManager Engineering &
Development
Scott RoswellChief Legal Officer & VP HR
Bob Pennington Chief Operating Officer
Bruce HansenChief Executive Officer &
Chief Financial Officer
Vice President of Permitting and Environmental Compliance since joining in 2006.
More than 25 years industry experience, including extensive work in Nevada Previously served as Operations Environmental Permitting Manager with Newmont
Pat RogersVP Permit. & Envir. Comp.
Recently appointed Principal Accounting Officer; Controller since 2016. Joined 2008.
Previously served in audit at KPMG. CPA since 2009 and has a Chartered Global Mgt. Accountant certificate from the American Inst. of Certified Public Accountants.
Amanda CorrionPrincipal Accnt. Officer &
Controller
Admin. Services Manager since 2012.
CPA and former long-time Controller and Supply Chain Director of Nevada operations for Newmont. Prior finance and accounting roles at Lockheed Aircraft and Red Lion Inn and Casino.
Alan LondonAdmin. Services Manager
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NPV Shows Significant Leverage to Rising Moly Prices
Mt. Hope, Liberty and Combined NPV* ($M)
25
$289
$734
$1,194
$85
$325
$559
$12.50 $15.00 $17.50
Mt. Hope Liberty
Molybdenum price/lb
$374
$1,059
$1,753
* See End Notes 1, 3 and 4 in the Appendix.
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General Moly’s Partnerships for Mt. Hope
POS-Minerals, unit of Korean POSCO, owns 20% interest in the Mt. Hope Project
Entitled to 8M lbs of annual production Contributed $210M to development
World’s largest steel producer & Luxembourg based General Moly’s largest customer
Off-take agreements with Korean and Japanese companies
Combined with ArcelorMittal sales contract, approximately 50% of General Moly production (15.5M lbs) committed for first 5 years
Sales contracts’ floor prices of
$13.25 - $14.00/lbCovers 37% of General Moly production
(11.5M lbs/yr) over first 5 years
Sales contracts’ upside participation
80% of price
Above floor price
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$-
$5
$10
$15
$20
$25
$30
$35
$40
$45
$5 $10 $15 $20 $25 $30 $35 $40
General Moly has Significant Leverage to the Molybdenum Price with Downside Protection
Moly Spot Price
Realized Price
Downside price protection
Discount to spot above floor price
Price Protection from Off-Take Arrangements
Moly Price/lb(LHS)
GMO Share Price (RHS)
2007 2009 2011 2013 2015 2017
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Mt. Hope Equipment Procurement Status (100% basis)
Paid $87.5M on commitments for $174M in equipment orders
Own or secured with order in place for major milling equipment:
Crusher
SAG mill and ball mill
Mill drives
Roaster equipment
Made $75M order with Caterpillar for haul fleet and support equipment, including 18 240-ton haul trucks i
Secured letter of intent for 4 large P&H electric mining shovels i
Ordered 4 Atlas Copco mine drills i
Outlook: Upon an improvement in the markets and obtaining financing, the Company expects to place orders for remainder of equipment.
i. All orders are cancellable with no further liability. There were non-refundable deposits made of $3.4 million to P&H, $1.2 million to Caterpillar and $0.4 million to Atlas Copco.
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Mt. Hope Supplemental EIS The Record of Decision (“ROD”) for the Mt. Hope Project was initially granted in
November, 2012, and subsequently challenged in the U.S. District Court for the District of Nevada by two western U.S. based NGOs ("non-governmental organization"). The U.S. District Court upheld the ROD in August, 2014. The NGOs appealed the U.S. District Court's Order to the U.S. Court of Appeals for the Ninth Circuit in September, 2014.
On December 28, 2016, the Ninth Circuit issued its Opinion rejecting many of the arguments raised by the NGOs challenging the Environmental Impact Statement ("EIS") issued by the BLM. The Ninth Circuit reversed on technical grounds a narrow issue related to a baseline air quality analysis and related cumulative impact examination, and as a result vacated the ROD.
The Company is advancing completion of a Supplemental EIS, including incorporation of completed additional air quality analysis of direct and cumulative impacts to air quality to address the Ninth Circuit’s concerns with the zero baseline assumption previously used.
The Company looks forward to completing the public review requirements in compliance with the National Environmental Policy Act ("NEPA"), and to receive a new ROD for the eventual construction and operation of the Mt. Hope Project by early 2018.
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Mt. Hope Water Rights and Permitting Background
In the fall of 2015, the Nevada Supreme Court reversed the prior decisions of the Nevada District Court upholding the Nevada State Engineer’s grant of the project’s water permits and Monitoring, Management and Mitigation (3M) Plan, and remanded the Company’s applications back to the District Court.
In March 2016, the District Court released its Order denying the applications previously approved by the Nevada State Engineer, vacating the permits approved on the applications and vacating the 3M Plan.
The State Engineer and the Company disagree with the District Court’s Order, and believe the proper direction from the Supreme Court was for the District Court to remand the applications to the Nevada State Engineer to address mitigation opportunities to protect against conflicts to senior water right holders.
The State Engineer also asserts that the District Court exceeded its judicial authority . Both the Company and the State Engineer have appealed the Order to the Supreme Court. Oral argument was completed May 1, 2017. The court’s decision is pending.
Notwithstanding the appeal to Supreme Court, the Company has filed additional applications that are pending with the State Engineer.
Eureka County has filed a Writ with the Supreme Court to stop further action by the State Engineer on the additional applications.
Supreme Court is considering the Writ in a separate matter.
State Engineer has stopped all action on the applications while the Supreme Court considers the Writ.
The Company will provide additional evidence of its ability to successfully mitigate any potential impacts to senior water right holders. 30
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End Notes to Slides 14, 15, 16 & 25
1. Mt. Hope Project - Slide 14 and NPV Slide 25:Data are based on the updated optional mine plan announced in a February 25, 2014 news release and use parameters from the Bankable Feasibility Study Technical Report, which is compliant with Canada National Instrument 43-101, filed in January 2014 and available on the Company’s website.
Operating data represent the averages over the first five years of production under the optional mine plan. Net Present Value and the Internal Rate of Return use the optional mine plan with a $15.00/lb molybdenum price over 24 years of mining and 30 years of mill processing at an 8% discount rate, after tax. Cash flow is based on the same optional mine plan, except it is undiscounted.
The optional mine plan’s proven and probable reserves represent 984.6M tons at an average grade of 0.070% containing 1.4B lbs of molybdenum. Proven reserves are within 320.5M tons at an average molybdenum grade of 0.084% while probable reserves are within 664.1M tons at 0.063%. Mt. Hope Project reserves, based on $12/lb molybdenum, are effective as of January 30, 2014.
2. AMER Slides 15 and 16:Under the Amended Investment Agreement with AMER, effected in August 2017, the Company and AMER accelerated the Tranche 2
private placement of $6.0 million of General Moly common shares priced at the volume weighted average price ("VWAP") for the 30-day period ending August 7, 2017 of $0.41 for 14.6 million common shares with closing expected by September 30, 2017. A sum of $5.5 million of the Tranche 2 proceeds will be allocated to general corporate purposes and $0.5 million will be directed to the existing expense reimbursement account to cover costs related to Mt. Hope Project financing and other jointly sourced business development opportunities.
The Company and AMER also agreed to accelerate the Tranche 3 $10.0 million private placement at a $0.50 price for 20.0 million common shares and to amend certain conditions related to completion of Tranche 3, under the Amended Investment Agreement. TheTranche 3 private placement for $10.0 million of General Moly common shares, priced at $0.50, is conditioned on closing on the later of (i) March 31, 2018 (or 90 days following the close of a joint business opportunity involving use of 10.0 million shares of GMI common stock) or (ii) 90 days after reinstatement of water permits from the Nevada State Engineer for the Mt. Hope water permits. A sumof $9.5 million of the funds will be directed to general corporate purposes and $0.5 million will be allocated to the expense reimbursement account described above.
Under the agreement originally entered into in November 2015, the Company received $4M ($2M restricted to fund joint businessopportunities and Bank Loan expenses, and $2M general corporate use) from the Trance 1 equity investment. In addition to 13 million GMO shares, AMER also received warrants to purchase 80M shares at an exercise price of $0.50 per share ($40M if fully exercised). These warrants have since been extended to the earlier of the 60 month anniversary of Loan Drawdown or third anniversary of the reissuance of the Record of Decision for the Mt. Hope Project. The number of warrants and exercise price were unchanged.
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End Notes to Slides 18 & 25
3. Liberty Project - Slide 18 and NPV Slide 25:Data are based on the updated Pre-Feasibility Study Technical Report, compliant under Canada National Instrument 43-101, filed in July 2014 and available on the Company’s website.
Operating data represent the averages over the first five years of production. Cash operating costs per pound of molybdenum are estimated using $3.25/lb copper byproduct credits. Net Present Value and Internal Rate of Return use $15/lb molybdenum, $3.25/lb copper over 31 years of mining, 32 years of milling and an 8% discount rate, after tax. Cash flow is based on the aforementioned, except it is undiscounted.
Proven and probable reserves of 309.2M tons at average grades of 0.078% molybdenum and 0.098% copper contain 482M lbs of molybdenum and 606M lbs of copper. Liberty reserves, based on $15/lb molybdenum and $3.00/lb copper, are effective as of July 30, 2014. Proven reserves are within 92.5M tons at average grades of 0.101% molybdenum and 0.056% copper while probable reserves are within 216.7M tons at average grades of 0.068% molybdenum and 0.116% copper.
4. Leverage Slide 25: (Also see Notes 1 and 2.)Mt. Hope Project NPV breakeven and cash flow breakeven reflect General Moly’s 80% ownership in the project under the optional mine
plan, using a $15.00/lb molybdenum price over 24 years of mining and 30 years of mill processing at an 8% discount rate, after tax. Liberty Project NPV breakeven and cash flow breakeven use $15/lb molybdenum, $3.25/lb copper over 31 years of mining, 32 years of
milling and a discount rate of 8%, after tax. There is the potential to increase Liberty’s NPV and IRR by toll roasting Liberty molybdenum concentrates at the Mt. Hope Project once constructed, thereby decreasing total cash costs to $7.41/lb for the first 5 full years of production.
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General Moly Contacts
Headquarters
Lakewood, Colorado
(303) 928-8599
www.generalmoly.com
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Bruce D. Hansen
Chief Executive Officer
Robert Pennington
Chief Operating Officer
General Moly launched a blog by Bruce Hansenin July 2017. Sign up to receive commentariesabout the molybdenum market:http://www.generalmoly.com/molybits.php
