General Moly Reports Further Cash Conservation

LAKEWOOD, CO - General Moly reported plans to further conserve cash while retaining the ability to start construction at the Company's 80% owned Mt. Hope project pending improvements in the molybdenum and capital markets.
Bruce D. Hansen, Chief Executive Officer, said, "Given continued uncertainty in the project finance market, current low moly prices, and a longer than expected timeframe to receive the ultimate permits to begin construction at the Mt. Hope project, the Company and our partner, POS-Minerals, have announced prudent steps to reduce planned expenditures for 2009 and 2010 in order to maximize financial flexibility and preserve maximum shareholder value. With a current cash balance of approximately $80 million we have the capacity to continue aggressive permitting efforts, maintain efforts to secure full project financing, and secure the most critical long lead capital items for the ultimate construction of the Mt. Hope project.
"We continue to believe that the Mt. Hope project is the best moly asset currently under development and continue to be bullish toward the longer-term fundamentals of the moly market. However, given the lack of improvement in the moly and financing markets, we will position General Moly to maximize re-start capability based on maintaining our world-class assets, people and partners while minimizing ongoing expenses. Once full financing is structured, it is expected that Mt. Hope can be constructed and in production within 20 months. Our permitting efforts will continue full-time and the Company will maintain its orders for grinding, milling, and other specialty long-lead equipment, although other engineering, administrative and third-party work will be slowed.
"We will continue work with Credit Suisse and Barclays to seek ultimate project financing. Additionally, we will continue evaluating all sources of potential interim capital, including equity partners at the asset level and vendor financing with a focus on minimizing dilution, long term cost and risk to shareholders. Given our strong off-take agreements and other preparatory work completed, we believe the Company is well positioned to execute a project finance facility once the moly price and credit conditions improve."
The Company anticipates an unaudited cash balance of approximately $80 million at the end of the first quarter. With its cash conservation efforts, total cash utilization other than key equipment purchases is anticipated to decline to approximately $1 million per month. Current cash on hand could last the Company through 2010.
Engineering efforts, currently approximately 57% complete, will be effectively paused. Once a path toward ultimate funding becomes available, engineering work and equipment procurement will be re-started.
Equipment orders for the Company's custom-built grinding and other process equipment are anticipated to be maintained pending on-going negotiations with vendors related to construction and delivery timelines. The grinding and process equipment require the longest lead times and maintaining these orders is critical to the Company's ability to re-start rapidly. Total remaining payments for these capital items is approximately $50 million, with the vast majority to be spent in 2010.
Other equipment orders for non-custom items will be suspended or canceled. The lead times and costs associated with many of these items have significantly declined in recent months. Once total financing is secured, the Company anticipates placing orders for this equipment again. The Company will continue to evaluate all options to decrease Mt. Hope's initial capital requirement and facilitate a more timely re-start of the project development.
The company’s address is 1726 Cole Blvd., Suite 115, Lakewood, CO 80401, (303) 928-8599, fax: (303) 928-8598, email: [email protected].