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General Moly at John Tumazos Metals & Mining Conference

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  • 1. Mining Done RightJohn Tumazos Very Independent Research Metals & Mining Conference October 3, 2012 David A. Chaput Chief Financial Officer
  • 2. 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 orbelief is expressed in good faith and believed to have a reasonable basis However forward looking statements are subject to risks basis. However, forward-looking risks,uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied bysuch forward-looking statements. These risks and uncertainties include, but are not limited to, metals price and production volatility, globaleconomic conditions, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed inmining plans, exploration risks and results, political, operational and project development risks, including the Company’s ability to obtainrequired permits to commence production and its ability to meet conditions precedent required to complete the Hanlong financing, adverseggovernmental regulation and j g judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company’s Annual p yReport on Form 10K, which is on file with the Securities and Exchange Commission, as well as the Company’s other SEC filings. TheCompany does not undertake any obligation to release publicly revisions to any “forward-looking statement,” to reflect events orcircumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required underapplicable securities laws.Cautionary Note to U.S. Investors Concerning Estimates of Reserves and ResourcesCalculations with respect to "proven reserves" and "probable reserves" referred to above have been made in accordance with, and usingthe definitions of National Instrument 43-101, as required by Canadian securities regulatory authorities. For United States reportingpurposes, the U.S. SEC applies a different standard in order to classify mineralization as a "reserve". Under SEC standards, mineralizationmay not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legallyextracted or produced at the time the reserve determination is made. No such determinations have been made with respect to anymineralization at the Liberty project, and it cannot be assured that such a determination will be made. This release also uses the terms“measured”, “indicated” and “inferred” resources We caution U.S. investors that while such terms are recognized and required by measured indicated inferred resources. USCanadian Securities Administrators pursuant to the National Instrument 43-101, the SEC does not recognize them. U.S. investors arecautioned not to assume that any part or all of mineral deposits in these categories will ever be converted into reserves. “InferredResources”, in particular, have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legalfeasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. UnderCanadian Securities Administration rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or pre-feasibilitystudies. U.S. investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally minable. 2
  • 3. General Moly: Who We Are Near-term producer N t d • Mt Hope: a large and high-grade moly project Mt. of molybdenum with • Liberty: a follow-on moly & copper project to two world-class grow General Moly into the largest pure-play p j projects primary moly producer in the world • Up to $870 million financing arrangement with Co pa y supported Company suppo ed Hanlong1 g through significant • 20% Mt. Hope Joint Venture with POSCOstrategic partnerships • Off-take 100% committed for first five years • Significant State Permits already received (Water, Air) Significant Catal sts Catalysts • Other State Permits to be granted H2 2012 Anticipated in 2012 (Water Pollution, Reclamation) • Federal Permits (ROD) to be granted H2 2012 • $930 million in financing (Debt, Equity, JV) to be closed 31. Contingent upon Conditions Precedent contained within Hanlong Transaction occurring, includes $665 CDB term loan, $40mm direct equity investment, plus up to $125 sub-debt facility per non-binding LOI.
  • 4. Mt. Hope – A World-Class Moly Project Winnemucca Battle Elko Wells Mountain Carlin Mt. Reno R Hope H Austin Eureka Ely • Access to infrastructure, labor Mining-friendly g y & support services Tonopah location in Nevada USA • Near many operating mines • Annual production of 40M lbs1 Process grades of 0 1% M 1 • P d f 0.1% Mo Large scale project with high Mo grades • 1.3 billion pounds moly contained in Proven & and low costs Probable Reserves • C h costs of $ 29 per pound M 1 – well positioned Cash f $5.29 d Mo ll ii d on cash cost curve • Bankable Feasibility Study completed with recently Advanced stage of revised capital estimate of $1.284 billion development • Engineering more than 60% complete • $197M spent on permitting, long-lead equipment 41. Average over the first five years of operations
  • 5. Liberty - A Second World-Class Moly Project Winnemucca Battle Elko Wells Mountain Carlin Reno Austin Eureka Ely Tonopah A previous producing • Anaconda operated 1982-1985 Liberty mine of moly and copper • Cyprus Minerals operated 1988-1991 • Canadian Reserves containing 739M lbs Mo and 893M lbs Cu Pre-feasibility study • Production of 20M lbs Mo and 17M lbs Cu over first completed November 5 years at costs of $5.70/lb Mo1 2011 • 42 year mine life • After-tax NPV 8% of $538 million2, IRR of 19.7% 51. Costs estimated using $2.50/lb Cu byproduct credits. See November 2011 43-101 Report on SEDAR for more information2. NPV estimated using $15/lb Mo and $2.50/lb Cu, discounted at 8%
  • 6. Project and Financing TimelineApproval of baseline studies pp September 2008 pApproval of hydrology reports June 2010Publish Preliminary Draft EIS August 2010Receive first $40M equity December 2010tranche from Hanlong December 2011Publish Draft EIS March 1, 2012Conclude Public Comment PeriodNV State Air Permit Receipt May 30, 2012NV State Court Denies Water Appeal June 14, 2012Revised Capital estimate and August 1, 2012 1Hanlong LOICompletion of Preliminary FEIS September 5, 2012Receive Final Permits (ROD) H2 2012Receive ~$100M from POSCOAccess $665M Chinese Bank Loan ROD + 3 months targetReceive final $40M equity tranche from HanlongInitiate Construction 6Commence Production 20-24 months construction
  • 7. General Moly Partnerships• POSCO 3rd largest global steel producer POSCO, • 20% Joint Venture Partner at Mt. Hope project • $156M buy-in values Mt. Hope at $780M• H l Hanlong, Chi Chinese conglomerate l t • Privately held, not state-owned • $870M financing package to fully fund project • Will become largest GMO shareholder, customer• APERAM, former stainless division of ArcelorMittal • GMO’s 2nd largest shareholder, 2nd largest customer • Bought shares at $8.50 in late 2007• Other Customers • SeAH Besteel & Sojitz have off-take agreements• Total sales fully committed for first five years of operations • Half of sales contain hard floor prices between $14.00-$15.00/lb with ~80% upside participation above floor 71. Contingent upon Conditions Precedent contained within Hanlong Transaction occurring
  • 8. Off-Take 100% Committed – First 5 Years 1. Hanlong (March 2010) • 16.5M lb off-take over first five years, additional rights LOM1 • 25% of off-take contains floor prices, 75% near spot1 2. APERAM2 (Nov 2007) • 6.5M lb (+/- 10%) off-take agreement for five years with floor price protection3 t ti • 3.0M lb off-take option for years 6-15, requires 10% FD ownership of GMO 3. SeAH Besteel (May 2008) ( y ) • 4.0M lb (+/- 10%) off-take agreement for five years with floor price protection3 15.5M annual pounds committed with price protection 4. 4 Sojitz Corporation (Aug 2008) that includes: • 1.0M lb off-take agreement for five • A hard floor price between $14.00-$15.00 per years with floor price protection3,4 pound on average; • 4.0M lb off-take agreement for five • PPI escalation annually; years near spot3 4 3,4 • A modest discount to customer above floor price1. Contingent upon completion of Hanlong transaction2. APERAM was the stainless steel division of ArcelorMittal and was spun off as a separate public company as of January 25, 2011 83. Off-take agreements begin only when Mt. Hope reaches certain levels of commercial production and do not require General Moly to deliver product other than its own.4. The Sojitz agreement is effective upon General Moly delivering production by January 2013; after January 2013, Sojitz has the option of continuing the contract.
  • 9. Molybdenum Overview• Essential metal for modern industry • Industrial requirements demand better steels q• Strengthens steel, improves weldability, reduces brittleness, helps steel perform in very high or very low temperatures• Applications for energy, pipeline development, nuclear power plants, desalination, refineries, catalyst for high sulphur fuels, motor vehicles• Powerful anti-corrosive alloy for stainless and alloy steels anti corrosive• Molybdenum is vital in the products in which it is used with few economical substitutes • Moly demand is relatively price inelastic 9
  • 10. Moly Demand Growth Projected to be Robust • Moly demand to grow +30M lbs per year or approximately 128M lbs by year, 2015 when Mt. Hope projected to be in full production. • Moly use recovered and grew 18% in 2010 and 13% in 2011 (IMOA) • Demand forecast to grow 5.5% CAGR through 2020 to reach over 800 million pounds annually • Supported by global steel demand growth (~3.5% CAGR) and growing intensity of use World Moly Demand1,000 869 800 600 537 400 200 0 2011p 2012p 2013p 2014p 2015p 2016p 2017p 2018p 2019p 2020p 10
  • 11. Energy Complex Key to Demand• Moly use is 40% energy related with Transportation consuming another 20%• More sophisticated energy production and transportation driving moly use• Examples include: • Shale Gas Production • Off-shore / deep-ocean oil production • LNG development• JP Morgan forecasts $30 trillion to be spent globally on energy energy- supply infrastructure by 2035• JP Morgan says Mo one of 5 key commodities for 21st century1 Source: SMR Research1. Commodities include Moly, Cobalt, Lithium, Indium, & Helium 11
  • 12. China Use to Drive Global Demand• China consumes ~31% of moly consumed today, while consuming 45-50% 31% 45 50% of Aluminum & Copper consumed today • China also produces & consumes 45-50% of global steel• China focused on increasing stainless & specialty steel products • $23 billion in new steel facilities approved• JPMorgan forecasts China commodity consumption to approach 65% of global consumption in next 10 20 years 10-20 China’s Share of Commodity Use Today & in 20 Years 70% 65% 60% 50% 45-50% 40% 31% 30% 20% 10% 0% China Moly 2011 China Al, Cu, & Steel China 2020-2030 12Source: IMOA, JP Morgan Research 2011 Commodity
  • 13. Marginal Cost Limits Price Downside$40 Historic Moly Prices (January 2008 - September 2012)$35$30 Strong global growth supports $30+ /lb moly prices$25 Financial crisis causes prices to collapse$20 Global uncertainty cause prices to drift sideways y$15 Marginal Cost of Chinese Production$10 Ex-China demand recovery supports prices Softer macro further environment weakens demand offset by supply Chinese buying & reductions in China $5 marginal production shuttered support price recovery $0Source: Ryan’s Notes, Company Estimates 13
  • 14. CPM Near-Term Price Forecast• “A balanced market with price upside tied to Supply & Demand A Fundamentals”• Declining inventory levels• Price forecast in the $15-$20 range through 2014 Source: CPM Group 14Source: CPM Group
  • 15. General Moly Capital StructureStock on IssueShares Outstanding 91.2 M GMO Share Price, Volume Sh Pi V lWarrants1 1.0 M (Rolling One Year)Equity Compensation1 3.3 M $5 4Diluted Shares 95.5 MBalance Sheet (6/30/2012) 3.5Cash on Hand 28 MDebt 10 M $4 3Top Owners1. Hanlong 11.88M shares 13.0% FD $/sh)2. Coghill Capital Mgmt g p g 8.55M shares 9.4% FD 2.5 Volume, Millions s GM Share Price ($3. APERAM 8.26M shares 9.1% FD $34. Vanguard Group 3.63M shares 4.0% FD5. BlackRock Trust Co. 3.62M shares 4.0% FD 26. Harbinger Group 1.40M shares 1.5% FD7. Dimensional Fund 1.34M shares 1.5% FD8. David Russell 1.29M shares 1.3% FD $2 MO9.9 Bruce Hansen 1.20M 1 20M shares 1.3% 1 3% FD 1.5 1510. State Street Global 1.91M shares 1.3% FDAnalyst Coverage 1Bank of America Merrill Lynch David Forster $1CIBC Ian ParkinsonDahlman Rose Anthony Young y g 0.5 05John Tumazos VIR John TumazosRBC Fraser PhillipsStifel Nicolaus Paul Massoud $0 0 Average Target Price $4.26 per shareInsider OwnershipDirectors & Mgmt 16.84M shares2 17.6% FD1. Includes warrants and equity compensation that are “out of the money” 152. Actual ownership; does not include non-exercised equity compensation. Includes Hanlong’s shares
  • 16. General Moly Overview  Two world-class molybdenum assets  Mt. Hope – One of the largest and highest-grade moly assets Near-term Producer ✖ currently under development  Liberty – a solid follow-on project to make General Moly the Meaningful Follow-on Project ✖ largest primary moly producer in the world Properties in Mining Friendly  Both assets located in Nevada, USA Jurisdictions ✖ Significant Strategic Partnerships ✖  Partnerships with Hanlong, POSCO, APERAM, SeAH Besteel and Sojitz Corporation support financing and off-take Substantial Off k A S b i l Off-take Agreements ✖  100% committed first five years itt d fi t fi  Full permit receipt anticipated H2 2012 Permitting Program Progressing ✖ Compelling Valuation ✖  Trading at 20-25% of NPV @ $15/lb moly  Transaction with Hanlong provides substantially all funding Financing Arranged ✖ required for Mt. Hope development1; Expect ~$930 million in financing t close after permits received l t thi year fi i to l ft it i d later this 161. Contingent upon Conditions Precedent contained within Hanlong Transaction occurring
  • 17. Appendix 17
  • 18. Experienced Team - Management •CEO at General Moly since 2007. Bruce Hansen •Previously served in multiple executive roles at Newmont Mining including Chief Financial Officer and Senior VP, Operations Services & Development. Prior to that, Chief Executive Officer was Senior VP of Corporate Development for Santa Fe Pacific Gold. Dave Chaput •CFO at General Moly since 2007. •More than 30 years of financial and operational experience in the metals and mining y p p g Chief Financial Officer industry, previously serving as CFO of The Doe Run Resources Corporation. Bob Pennington •25 years experience in plant operations and 6 years in design engineering firm. •Previously served as general manager of one of the largest open-pit/concentrator Chief Operating Officer operations in the world, the Phelps Dodge Morenci mine in Arizona. Lee Shumway •Joined General Moly in 2007; has served as Controller and Treasurer since 2009. •Formerly the Director of Supply Chain - Nevada Operations for Newmont Mining; prior Controller roles with Santa Fe Pacific Gold and Price Waterhouse. Pat Rogers •25 years industry experience, including extensive work within the state of Nevada. •Previously served as Operations Environmental Permitting Manager with NewmontVP Permit. & Env. Compliance Mining. •30 years of mining experience, predominately in Nevada.Mike Iannacchione •Previous positions include Operations Manager at Goldcorp’s Marigold Mine and Goldcorp s General Manager at Round Mountain Mine, a Barrick Gold and Kinross Gold Joint VP & GM Mt. Hope Venture. Fred Zumwalt •25 years mining experience, primarily with Phelps Dodge and Freeport McMoran. •Previously served as Assistant General Manager of Concentrator Operations at Cerro y g p Mt. Hope Mill Manager Verde, a large copper and molybdenum mine in Peru. Randy Johnson •38 years mining experience with Santa Fe Pacific Gold, North American Coal Co., TXU/Luminant Mining and Westmoreland Coal Co. 18 Mt. Hope Mine Manager •Previously served as General Manager of the Kemmerer Mine in Wyoming.
  • 19. Permitting Mt. Hope in Nevada, USAPermitting in Nevada: Permitting Advantages for Mt. Hope Mt project:1. Top-ranked US mining jurisdiction 1. No Threatened or Endangered & top 10 ranked global mining Species S i jurisdiction (Fraser Institute). 2. No sacred Native American sites2. Nevada has long mining history with no permits denied in last 20 3. No wetlands or Waters of the US years (limits EPA involvement) 4. 4 Experienced permitting team led by3. US BLM committed to reducing Pat Rogers (ex-Newmont) agency delays4. Battle Mountain Division of BLM has approved many large mines (ABX, NEM)5. Supportive State and Federal 19 Government Representatives
  • 20. China Development BankCDB L Loan P Process Major loan terms confirmed (Feb 2012) • $665 million term loan with CDB lending 60% & syndicating balance g y g • 12 years including 30-month grace period for construction • Hanlong corporate guarantee • Customary loan covenants, security terms CDB hiring Western counsel (March 2012) • GMO uses Shearman & Sterling Detailed term sheet negotiations (May-October) Final loan documentation & approvals (October-December) Loan Availability (Post ROD) 20
  • 21. Mt. Hope Financing – Funding Sources & Uses Sources $m Uses $m Eureka Moly: Eureka Moly 21As of June 30, 2012
  • 22. Water Rights HistoryMt. Hope water right history p g y Mt. Hope Water Well Map• Project requires ~7,000 gpm fresh water for milling operations• Company purchased from existing water holders in Kobeh Valley, essentially all available water rights, sufficient for project water requirements• Nevada State Engineer granted us water permits in March 2009. That ruling was successfully appealed in a Nevada District Court in April 2010 Mt. Hope Water Impact Map• Company re applied for water rights and re-applied Nevada State Engineer granted the applications in a second ruling in July 2011• That ruling has again been appealed and a court hearing h i was h ld A il 3 2012 held April 3, 2012.• Nevada State District Court affirmed the State Engineer’s ruling in all respects June 14, 2012• Two parties appeal to NV Supreme Court GMO considers appeals w/o merit 22
  • 23. Equipment Procurement Status• Approximately $67m paid on commitments for $164 million in equipment orders• Major milling equipment secured: Own or have orders in place for Mt. Hope crusher, SAG mill & ball mill mill drives, and roaster equipment mill, drives• Made $75 commitment to Caterpillar for haul fleet and support equipment, including 18 CAT 793F haul trucks• Have letter of intent in place for large electric mining shovels• 4 Atlas Copco mine drills ordered• As progress on permitting and financing continues, will place orders for remainder of equipment. 23
  • 24. Moly Use: First vs. Second 24Source: SMR Research Source: SMR Research
  • 25. High Levels of Energy Investment 25Source: JP Morgan Research