10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                  

Commission File Number: 001-32986

General Moly, Inc.

(Exact name of registrant as specified in its charter)

DELAWARE	91-0232000
(State or other jurisdiction	(I.R.S. Employer
of incorporation or organization)	Identification No.)

1726 Cole Blvd., Suite 115
Lakewood, CO 80401
Telephone:  (303) 928-8599
(Address and telephone number of principal executive offices)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	GMO	NYSE American and Toronto Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES ☒  NO ☐

Indicate by check mark whether the registrant has submitted electronically, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). YES ☒  NO ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ☐  NO ☒

The number of shares outstanding of issuer’s common stock as of November 15, 2019, was 138,359,220.

PART I - FINANCIAL INFORMATION

ITEM 1.FINANCIAL STATEMENTS

GENERAL MOLY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value amounts)

	September 30,		December 31,
	2019		2018
	(unaudited)
ASSETS:
CURRENT ASSETS
Cash and cash equivalents	$	1,100	$	2,016
Deposits, prepaid expenses and other current assets		205		62
Total Current Assets		1,305		2,078
Mining properties, land and water rights		228,928		229,175
Deposits on project property, plant and equipment		87,972		88,124
Restricted cash held at EMLLC		4,118		6,167
Restricted cash and investments held for reclamation bonds		416		834
Non-mining property and equipment, net		36		40
Other assets		3,122		3,076
TOTAL ASSETS	$	325,897	$	329,494
LIABILITIES, CRNCI, AND EQUITY:
CURRENT LIABILITIES
Accounts payable and accrued liabilities	$	1,313	$	574
Promissory Notes		1,340		1,340
Senior Convertible Promissory Notes		5,896		5,807
Accrued advance royalties		500		500
Total Current Liabilities		9,049		8,221
Provision for post closure reclamation and remediation costs		1,885		1,769
Accrued advance royalties		5,700		5,700
Accrued payments to Agricultural Sustainability Trust		5,500		5,500
Return of Contributions Payable to POS-Minerals		33,641		33,641
Other accrued liabilities		2,354		2,125
Total Liabilities		58,129		56,956
COMMITMENTS AND CONTINGENCIES - NOTE 12
CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST ("CRNCI")		172,245		172,261
CONVERTIBLE PREFERRED SHARES		1,800		—
		174,045		172,261
EQUITY
Common stock, $0.001 par value; 650,000,000 and 650,000,000 shares authorized, respectively, 138,220,332 and 137,114,804 shares issued and outstanding, respectively		138		137
Additional paid-in capital		291,584		291,266
Accumulated deficit during exploration and development stage		(197,999)		(191,126)
Total Equity		93,723		100,277
TOTAL LIABILITIES, CRNCI, AND EQUITY	$	325,897	$	329,494

The accompanying notes are an integral part of these consolidated financial statements.

2

GENERAL MOLY, INC. (“GMI”)
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited — In thousands, except per share amounts)

	Three Months Ended				Nine Months Ended
	September 30,		September 30,		September 30,		September 30,
	2019		2018		2019		2018
REVENUES	$	—	$	—	$	—	$	—
OPERATING EXPENSES:
Exploration and evaluation		196		379		401		685
General and administrative expense		1,024		2,473		2,964		7,707
Loss on Sale of non-core properties		1,565		—		2,885		—
TOTAL OPERATING EXPENSES		2,785		2,852		6,250		8,392
(LOSS) FROM OPERATIONS		(2,785)		(2,852)		(6,250)		(8,392)
OTHER INCOME/(EXPENSE):
Interest expense		(196)		(186)		(639)		(574)
TOTAL OTHER (EXPENSE)/INCOME, NET		(196)		(186)		(639)		(574)
(LOSS) BEFORE INCOME TAXES		(2,981)		(3,038)		(6,889)		(8,966)
Income Taxes		—		—		—		—
CONSOLIDATED NET (LOSS)	$	(2,981)	$	(3,038)	$	(6,889)	$	(8,966)
Less: Net loss attributable to CRNCI		5		5		16		367
NET LOSS ATTRIBUTABLE TO GMI	$	(2,976)	$	(3,033)	$	(6,873)	$	(8,599)
Basic and diluted net loss attributable to GMI per share of common stock	$	(0.02)	$	(0.02)	$	(0.05)	$	(0.07)
Weighted average number of shares outstanding — basic and diluted		138,220		127,964		138,197		127,566
COMPREHENSIVE (LOSS)	$	(2,976)	$	(3,033)	$	(6,873)	$	(8,599)

The accompanying notes are an integral part of these consolidated financial statements.

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GENERAL MOLY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited — In thousands, except number of shares and per share amounts)

	Common	Preferred			Additional		Accumulated
	Shares	Shares	Amount		Paid-In Capital		Deficit		Total
Balances, December 31, 2017	125,802,023	—	$	126	$	288,041	$	(180,382)	$	107,785
Issuance of Units of Common Stock:
Issued pursuant to stock awards	195,000	—		—		—		—		—
Stock-based compensation	—	—		—		494		—		494
Restricted stock net share settlement	798,481	—		1		(173)		—		(172)
Issued under at-the-market trading mechanism	1,168,300	—		1		495		—		496
Net loss for the period ended June 30, 2018	—	—		—		—		(5,540)		(5,540)
Balances, June 30, 2018	127,963,804	—	$	128	$	288,857	$	(185,922)	$	103,063
Issuance of Units of Common Stock:
Stock-based compensation	—	—		—		206		—		206
Net loss for the period ended September 30, 2018	—	—		—		—		(3,059)		(3,059)
Balances, September 30, 2018	127,963,804	—	$	128	$	289,063	$	(188,981)	$	100,210
	Common	Preferred			Additional		Accumulated
	Shares	Shares	Amount		Paid-In Capital		Deficit		Total
Balances, December 31, 2018	137,114,804	—	$	137	$	291,266	$	(191,126)	$	100,277
Issuance of Units of Common Stock:
Issued pursuant to stock awards	135,000	—		—		—		—		—
Stock-based compensation	—	—		—		46		—		46
Restricted stock net share settlement	276,328	—		—		(1)		—		(1)
Warrant Exercise	694,200	—		1		247		—		248
Series A Private Placement	—	1,400		—				—
Net loss for the period ended June 30, 2019	—	—		—		—		(3,897)		(3,897)
Balances, June 30, 2019	138,220,332	1,400	$	138	$	291,558	$	(195,023)	$	96,673
Issuance of Units of Common Stock:
Stock-based compensation	—	—		—		26		—		26
Series B Private Placement	—	400		—				—
Net loss for the period ended September 30, 2019	—	—		—		—		(2,976)		(2,976)
Balances, September 30, 2019	138,220,332	1,800	$	138	$	291,584	$	(197,999)	$	93,723

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GENERAL MOLY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited — In thousands)

	Nine Months Ended
	September 30,		September 30,
	2019		2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net loss	$	(6,889)	$	(8,966)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization		94		1,839
Non-cash interest expense		89		46
Income realized on lease of water rights		(13)		(13)
Stock-based compensation for employees and directors		70		598
Decrease (increase) in deposits, prepaid expenses and other		(143)		89
Decrease in accounts payable and accrued liabilities		935		498
(Decrease) increase in post closure reclamation and remediation costs		35		(38)
Net cash used by operating activities		(5,822)		(5,947)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase and development of mining properties, land and water rights		244		(1,980)
Deposits on property, plant and equipment		152		(116)
Decrease in restricted cash		(16)		—
Net cash used by investing activities		380		(2,096)

CASH FLOWS FROM FINANCING ACTIVITIES:
Stock proceeds, net of issuance costs		2,043		323
Net cash provided/(used) by financing activities:		2,043		323
Net (decrease) in cash, cash equivalents and restricted cash		(3,399)		(7,720)
Cash, cash equivalents and restricted cash, beginning of period		8,617		18,374
Cash, cash equivalents and restricted cash, end of period	$	5,218	$	10,654
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized	$	550	$	550
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equity compensation capitalized as development	$	6	$	103
Change in accrued payments to Agricultural Sustainability Trust		—		1,550
Noncash change in deposits on property, plant and equipment		—		103

The accompanying notes are an integral part of these consolidated financial statements.

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GENERAL MOLY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 — DESCRIPTION OF BUSINESS

General Moly, Inc. (“we,” “us,” “our,” “Company,” ”GMI,” or “General Moly”) is a Delaware corporation originally incorporated as General Mines Corporation on November 23, 1925.  We have gone through several name changes and on October 5, 2007, we reincorporated in the State of Delaware (“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 United States Securities and Exchange Commission (“SEC”), General Moly is deemed a successor to Idaho General Mines, Inc.

The Company conducted exploration and evaluation activities from January 1, 2002 until October 4, 2007, when our Board of Directors (“Board”) approved the development of the Mt. Hope molybdenum property (“Mt. Hope Project”) in Eureka County, Nevada.  The Mt. Hope Project is leased and operated by Eureka Moly, LLC, an indirectly held 80% subsidiary of the Company (“EMLLC” or the “LLC”).  The Company is continuing its efforts to both obtain financing for and develop the Mt. Hope Project.  However, the combination of ongoing depressed molybdenum prices, historical challenges to our permits and current liquidity concerns have further delayed development at the Mt. Hope Project. 

Additionally, in late 2018 we completed a 9-hole drill program on the Mt. Hope property, focused on the area where previously identified copper-silver-zinc-mineralized skarns have been identified, immediately adjacent to the Mt. Hope molybdenum deposit.

We also continue to evaluate our Liberty molybdenum and copper property (“Liberty Project”) in Nye County, Nevada.

Liquidity and Management’s Plans

Our current working capital is negative and the Convertible Notes issued in 2014 will become due in December 2019.  See “NOTE 5 – CURRENT DEBT” for further information on the Convertible Notes.  Based on our current operating forecast, which takes into consideration the delays described above, and the fact that we currently do not generate any revenue, the Company does not expect to be able to fund its current operations and meet its financial obligations for a period of at least 12 months from the issuance of these financials.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  If we are unable to meet our obligations, we would be forced to cease operations, in which event investors may lose their entire investment in our company.  In July 2019, our largest shareholder, AMER International Group Co., Ltd.  (“AMER”) failed to timely fund and close its obligation to purchase $10 million of common stock from the Company under Tranche 3 of the AMER Investment Agreement and is now in default.  See “Agreement with AMER International Group” below regarding AMER’s default to its obligation with respect to Tranche 3.  As a result of this default, the Company has inadequate cash to continue operations and will have to find funding going forward including pursuing asset sales, short term financing options and, if unsuccessful in obtaining sufficient financing, the possibility of seeking bankruptcy protection.

The Company is currently pursuing a number of options to extend its liquidity to the end of 2019 and into 2020.  Based on our current operating forecast, our current cash on hand, the convertible preferred share purchase agreements implemented in March and August 2019, discussed below, reimbursement from the LLC for the proceeds advanced to fund the water rights settlement, and renegotiation of the outstanding convertible and promissory notes, the Company expects to be able to fund its operations and meet its financial obligations through the end of 2019.  There can be no assurance that the Company will be successful in obtaining the financing required to complete the Mt. Hope Project, or in raising additional financing in the future on terms acceptable to the Company, or at all.

On March 13, 2019, the Company announced that its Board of Directors has retained XMS Capital Partners, Headwall Partners, and Odinbrook Global Advisors (collectively, the “Advisors”), as financial advisors to assist the Board and management with evaluating and recommending strategic alternatives.

The range of strategic alternatives being evaluated include sourcing of potential incremental capital financing, sale of interest(s) in the assets of the Company or the Company itself and restructuring of the Convertible and Non-Convertible Promissory Notes issued in a December 2014 private placement, which mature in December 2019.

6

Additional potential funding sources for the Company include public or private equity offerings, including sale of other assets wholly-owned by the Company or with EMLLC partner POS-Minerals at the Mt. Hope Project.  The Company is obligated to use a portion of the proceeds from the sales of assets owned by the Company to pre-pay the Convertible and Non-Convertible Promissory Notes. There is no assurance that the Company will be successful in securing additional funding.  This could result in further cost reductions, contract cancellations, and potential delays which ultimately may jeopardize the development of the Mt. Hope Project.

Currently the Company has no plans or intentions to enter into restructuring or liquidation. The Company has engaged the Advisors to assist in securing interim financing and negotiating with debt holders and other potential stakeholders. While the Advisors would have the capability to assist with a restructuring if needed, we do not intend to engage them (or other parties) for these services at this time.

Additional funding for the Mt. Hope Project would allow us to restart equipment procurement and agreements that were suspended or terminated would be renegotiated under current market terms and conditions, as necessary.  In the event of an extended delay related to availability of the Company’s portion of full financing for the Mt. Hope Project, the Company will continue using its best efforts to work with its EMLLC joint venture partner POS-Minerals to revise procurement and construction commitments to preserve liquidity, including Mt. Hope Project equipment deposits and pricing structures.  There can be no assurance that additional funding will be obtained.The Company is currently pursuing a number of options to extend its liquidity to the end of 2019 and into 2020.  Based on our current operating forecast, our current cash on hand, the convertible preferred share purchase agreements implemented in March and August 2019, discussed below, reimbursement from the LLC for the proceeds advanced to fund the water rights settlement, and renegotiation of the outstanding convertible and promissory notes, the Company expects to be able to fund its operations and meet its financial obligations through the end of 2019.  There can be no assurance that the Company will be successful in obtaining the financing required to complete the Mt. Hope Project, or in raising additional financing in the future on terms acceptable to the Company, or at all.

On March 13, 2019, the Company announced that its Board of Directors has retained XMS Capital Partners, Headwall Partners, and Odinbrook Global Advisors (collectively, the “Advisors”), as financial advisors to assist the Board and management with evaluating and recommending strategic alternatives.

The range of strategic alternatives being evaluated include sourcing of potential incremental capital financing, sale of interest(s) in the assets of the Company or the Company itself and restructuring of the Convertible and Non-Convertible Promissory Notes issued in a December 2014 private placement, which mature in December 2019.

Additional potential funding sources for the Company include public or private equity offerings, including sale of other assets wholly-owned by the Company or with EMLLC partner POS-Minerals at the Mt. Hope Project.  The Company is obligated to use a portion of the proceeds from the sales of assets owned by the Company to pre-pay the Convertible and Non-Convertible Promissory Notes. There is no assurance that the Company will be successful in securing additional funding.  This could result in further cost reductions, contract cancellations, and potential delays which ultimately may jeopardize the development of the Mt. Hope Project.

Currently the Company has no plans or intentions to enter into restructuring or liquidation. The Company has engaged the Advisorsto assist in securing interim financing and negotiating with debt holders and other potential stakeholders. While the Advisors would have the capability to assist with a restructuring if needed, we do not intend to engage them (or other parties) for these services at this time.

Additional funding for the Mt. Hope Project would allow us to restart equipment procurement and agreements that were suspended or terminated would be renegotiated under current market terms and conditions, as necessary.  In the event of an extended delay related to availability of the Company’s portion of full financing for the Mt. Hope Project, the Company will continue using its best efforts to work with its EMLLC joint venture partner POS-Minerals to revise procurement and construction commitments to preserve liquidity, including Mt. Hope Project equipment deposits and pricing structures.  There can be no assurance that additional funding will be obtained.

As the cash needs for the development of the Mt. Hope Project are significant, we and/or the LLC will be required to arrange for financing to be combined with funds anticipated to be received from POS-Minerals in order to retain its 20% LLC membership interest.  If we are unsuccessful in obtaining financing, we will not be able to proceed with the development of the Mt. Hope Project.

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On April 12, 2017, the Company filed a prospectus supplement in both Canada and the United States which enabled the Company, at its discretion from time to time, to sell up to $20 million worth of common shares by way of an “at-the-market” offering (the “ATM”).  Since the effectiveness of the prospectus supplement by the SEC on April 26, 2017 to September 30, 2019, a total of 1,168,300 common shares have been sold under the ATM, for net proceeds to the Company of $0.5 million.  In October 2018, the Company completed a public offering of 9,125,000 units consisting of one share of common stock and one warrant to purchase one share of common stock resulting in net proceeds to the Company of $1,900,000.  In conjunction with the public offering in October 2018, the Company agreed to suspend the ATM facility for a period of 2 years.

Additionally, on March 28, 2019, the Company executed a Securities Purchase Agreement (the “Series A Purchase Agreement”) with Bruce D. Hansen, the Company’s Chief Executive Officer, and Robert I. Pennington, the Company’s Chief Operating Officer (collectively the “Investors”), effective as of March 21, 2019.  Pursuant to the Series A Purchase Agreement, the Investors agreed to purchase up to $900,000 of convertible shares of Series A Preferred Stock, par value $0.001 per share (the “Series A Convertible Preferred Shares”), of the Company.  The Company requested three separate closings of sales of Series A Convertible Preferred Shares to the Investors between the date of the Series A Purchase Agreement and June 30, 2019.  Each closing was in the amount of $300,000 of Series A Convertible Preferred Shares. 

The Series A Convertible Preferred Shares were priced at $100.00/preferred share, convertible at any time at the holder’s discretion into common shares whereby one preferred share converts at a price of $0.27/common share to 370.37 common shares. The conversion price was set as the closing price of the common stock on March 12, 2019, which was the day before announcement of the private placement. The Series A Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares or a combination thereof.  Upon maturity or full repayment of the $7.2 million Convertible Note debt, described below, currently outstanding, there will be mandatory redemption of the Series A Convertible Preferred Shares into equivalent cash for the principal invested, plus any accrued and unpaid dividends.

On May 2, 2019, the Company also executed a Securities Purchase Agreement (the “MHMI Series A Purchase Agreement”) with Mount Hope Mines, Inc. (“MHMI”), later assigned in part to members of MHMI individually.  Pursuant to the MHMI Series A Purchase Agreement, MHMI agreed to  purchase $500,000 of Series A Convertible Preferred Shares, as  described above.

Like the Investors described above, the Series A Convertible Preferred Shares were issued at a price of $100.00 per share, and each Series A Convertible Preferred Share will be convertible at any time at the holder’s discretion into 370.37 shares of common stock of the Company.  The Series A Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares or a combination thereof.  Upon maturity or full repayment of the $7.2 million Convertible and Non-Convertible Promissory Note debt currently outstanding, there will be mandatory redemption of the preferred shares into equivalent cash for the principal invested, plus any accrued and unpaid dividends.

On August 5, 2019, the Company executed a Securities Purchase Agreement (the “Series B Purchase Agreement”) with the Investors.  Pursuant to the Series B Purchase Agreement, the Investors agreed to purchase up to $400,000 of convertible shares of Series B Preferred Stock, par value $0.001 per share (the “Series B Convertible Preferred Shares”), of the Company.  This transaction closed on August 7, 2019. 

On September 26, 2019, the Company entered into a 90-day deferral and forbearance agreement with the primary holder of the Convertible Notes, along with certain of the Company’s members of management and directors who participated in the 2014 debt offering.  As a result, the Company deferred approximately $162,000 of interest payments that were due at the end of the third quarter 2019.

On September 27, 2019, the Company and POS-Minerals entered into a Consent Agreement for a reimbursement schedule concerning the approximately $700,000 owed to the Company by the LLC in return for the Company’s advance of funding to settle protests related to the water right applications for the Mt. Hope Project.  Under the Consent Agreement, $200,000 was reimbursed from the Reserve Account, discussed below, to the Company on September 30 and an additional $200,000 was reimbursed in early November.  The remaining amount of approximately $300k will be reimbursed in December, provided that the LLC has sold a minimum of $400,000 in non-critical Mt. Hope Project related equipment.

The Company has reached an agreement in principle (“AiP”) with the holder of $5 million of the Company’s Senior Convertible Promissory Notes and certain other holders of Senior Convertible Notes and Senior Promissory Notes (collectively, the “Senior Notes”) to exchange the Senior Notes for new units consisting of new senior non-convertible promissory notes in the same original principal amount bearing an interest rate between 12-14% and otherwise providing for similar terms (the “Exchange

8

Notes”) and a three-year warrant to purchase Company common stock at $0.35 share (each a “Unit”).  The Exchange Notes will extend the maturity date until December 2022.

In addition to the exchange of Senior Notes, the largest holder of the Senior Notes, as well as the Company’s CEO, Bruce Hansen, have agreed, subject to execution of definitive documentation, to purchase new 13% Senior Promissory Notes due 2022 in the principal amount of $610,000 (representing 10% of the original principal amount of the Senior Notes to be exchanged) providing additional capital to the Company.  At this date, the total principal amount of Senior Notes contemplated to be extended by the AiP is $6.37 million out of the $7.25 million Senior Notes outstanding.  The maturity date for the outstanding Senior Notes is December 26, 2019.

The Company believes these transactions will assist with very near-term liquidity necessary for the Company to operate through the end of 2019 .  However, this does not alleviate the substantial doubt about our ability to continue to operate as a going concern.

We continue to work with our long-lead vendors to manage the timing of contractual payments for milling equipment.  The following table sets forth the LLC’s remaining cash commitments under these equipment contracts (collectively, “Purchase Contracts”) at September 30, 2019 (in millions):

	As of
	September 30,
Year	2019 *
2019	$	—
2020		0.6
Total	$	0.6

*All amounts are commitments of the LLC, and as a result of the agreement between Nevada Moly and POS-Minerals are to be funded by the reserve account, now $4.1 million as discussed above in Note 1, until such time that the Company obtains financing for its portion of construction costs at the Mt. Hope Project or until the reserve account balance is exhausted, and thereafter are to be funded 80% by Nevada Moly and 20% by POS-Minerals.  POS-Minerals remains obligated to make capital contributions for its 20% portion of equipment payments required by approved budgets of the LLC, and such amounts contributed by the reserve account on behalf of POS-Minerals will reduce, dollar for dollar, the amount of capital contributions that the LLC is required to return to POS-Minerals, described under Note 1 above.

If the LLC does not make the payments contractually required under these purchase contracts, it could be subject to claims for breach of contract or to cancellation of the respective purchase contract.  In addition, the LLC may proceed to selectively suspend, cancel or attempt to renegotiate additional purchase contracts, if necessary, to further conserve cash.  If the LLC cancels or breaches any contracts, the LLC will take all appropriate action to minimize any losses, but could be subject to liability under the contracts or applicable law.  The cancellation of certain key contracts could cause a delay in the commencement of operations, and could add to the cost to develop the Company’s interest in the Mt. Hope Project.

Through September 30, 2019, the LLC has made deposits and/or final payments of $88.0 million on equipment orders.  Of these deposits, $71.7 million relate to fully fabricated items, primarily milling equipment, for which the LLC has additional contractual commitments of $0.6 million noted in the table above.  The remaining $16.3 million reflects both partially fabricated milling equipment, and non-refundable deposits on mining equipment.  As discussed in Note 11, the mining equipment agreements remain cancellable with no further liability to the LLC.  The underlying value and recoverability of these deposits and our mining properties in our consolidated balance sheets are dependent on the LLC’s ability to fund development activities that would lead to profitable production and positive cash flow from operations, or proceeds from the sale of these assets. There can be no assurance that the LLC will be successful in generating future profitable operations, selling these assets or that the Company will secure additional funding in the future on terms acceptable to us or at all.  Our consolidated financial statements do not include any adjustments relating to recoverability and classification of recorded assets or liabilities.

9

All Mt. Hope Project related funding is payable out of the reserve account until exhausted, the balance of which was $4.1 million and $6.2 million at September 30, 2019 and December 31, 2018, respectively.  Corporate general and administrative expenses and costs associated with the maintenance of the Liberty Project are not covered by the Reserve Account.  Additional potential funding sources include public or private equity offerings or sale of other assets owned by the Company and/or the LLC, although a portion of any major asset sales may be owed to POS-Minerals and the senior 2014 note holders.  There is no assurance that the Company will be successful in securing additional funding.  This could result in further cost reductions, contract cancellations, and potential delays which ultimately may jeopardize the development of the Mt. Hope Project.

The Mt. Hope Project

From October 2005 to January 2008, we owned the rights to 100% of the Mt. Hope Project.  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, into EMLLC, and in February 2008 entered into a joint venture agreement (“LLC Agreement”) for the development and operation of the Mt. Hope Project with POS-Minerals Corporation (“POS-Minerals”).  Under the LLC Agreement, POS-Minerals owns a 20% interest in the LLC and General Moly, through Nevada Moly, LLC (“Nevada Moly”), a wholly-owned subsidiary, owns an 80% interest.  The ownership interests and/or required capital contributions under the LLC Agreement can change as discussed below.

Pursuant to the terms of the LLC Agreement, POS-Minerals made its first and second capital contributions to the LLC totaling $100.0 million during the year ended December 31, 2008 (“Initial Contributions”).  Additional amounts of $100.7 million were received from POS-Minerals in December 2012, following receipt of major operating permits for the Mt. Hope Project, including the Record of Decision (“ROD”) from the U.S. Bureau of Land Management (“BLM”).

In addition, under the terms of the LLC Agreement, since commercial production at the Mt. Hope Project was not achieved by December 31, 2011, the LLC will be required to return to POS-Minerals $36.0 million, since reduced to $33.6 million as discussed below, of its capital contributions (“Return of Contributions”), with no corresponding reduction in POS-Minerals’ ownership percentage.  Effective January 1, 2015, as part of a comprehensive agreement concerning the release of the reserve account described below, Nevada Moly and POS-Minerals agreed that the Return of Contributions will be payable to POS-Minerals on December 31, 2020; provided that, at any time on or before November 30, 2020, Nevada Moly and POS-Minerals may agree in writing to extend the due date to December 31, 2021; and if the due date has been so extended, at any time on or before November 30, 2021, Nevada Moly and POS-Minerals may agree in writing to extend the due date to December 31, 2022.  If the repayment date is extended, the unpaid amount will bear interest at a rate per annum of LIBOR plus 5%, which interest shall compound quarterly, commencing on December 31, 2020 through the date of payment in full.  Payments of accrued but unpaid interest, if any, shall be made on the repayment date.  Nevada Moly may elect, on behalf of the Company, to cause the Company to prepay, in whole or in part, the Return of Contributions at any time, without premium or penalty, along with accrued and unpaid interest, if any.

The original Return of Contributions amount due to POS-Minerals is reduced, dollar for dollar, by the amount of capital contributions for equipment payments required from POS-Minerals under approved budgets of the LLC, as discussed further below.  During the period January 1, 2015 to September 30, 2019, this amount has been reduced by $2.4 million, consisting of 20% of an $8.4 million principal payment made on milling equipment in March 2015, a $2.2 million principal payment made on electrical transformers in April 2015, and a $1.2 million principal payment made on milling equipment in April 2016, such that the remaining amount due to POS-Minerals is $33.6 million.  If Nevada Moly does not fund its additional capital contribution in order for the LLC to make the required Return of Contributions to POS-Minerals set forth above, POS-Minerals has an election to either make a secured loan to the LLC to fund the Return of Contributions, or receive an additional interest in the LLC estimated to be 5%.  In the latter case, Nevada Moly’s interest in the LLC is subject to dilution by a percentage equal to the ratio of 1.5 times the amount of the unpaid Return of Contributions over the aggregate amount of deemed capital contributions (as determined under the LLC Agreement) of both parties to the LLC (“Dilution Formula”).  At September 30, 2019, the aggregate amount of deemed capital contributions of both parties was $1,090.3 million.

Furthermore, the LLC Agreement authorizes POS-Minerals to put/sell its interest in the LLC to Nevada Moly after a change of control of Nevada Moly or the Company, as defined in the LLC Agreement, followed by a failure by us or our successor company to use standard mining industry practice in connection with the development and operation of the Mt. Hope Project as contemplated by the parties for a period of twelve (12) consecutive months.  If POS-Minerals exercises its option to put or sell its interest, Nevada Moly or its transferee or surviving entity would be required to purchase the interest for 120% of POS-Minerals’ total contributions to the LLC, which, if not paid timely, would be subject to 10% interest per annum.

Effective January 1, 2015,  Nevada Moly and POS-Minerals signed an amendment to the LLC Agreement under which a separate $36.0 million owed to Nevada Moly, held by the LLC in a reserve account established in December 2012, is being

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released for the mutual benefit of both members related to the jointly approved Mt. Hope Project expenses through 2021.  In January 2015, the reserve account funded a reimbursement of contributions made by the members during the fourth quarter of 2014, inclusive of $0.7 million to POS-Minerals and $2.7 million to Nevada Moly.  The remaining reserve account funds are now being used to pay ongoing jointly approved expenses of the LLC until the Company obtains full financing for its portion of the Mt. Hope Project construction cost, or until the reserve account is exhausted.  Any remaining funds after financing is obtained will be returned to the Company.  The balance of the reserve account was $4.1 million and $6.2 million at September 30, 2019 and December 31, 2018, respectively.

Agreement with AMER International Group (“AMER”) 

Private Placement

This description of the AMER Investment Agreement is provided as background to the dispute with AMER.  Subsequent to the end of the second quarter, AMER defaulted on its obligation to fund Tranche 3 under the AMER Investment Agreement described in this section.  As announced in April 2015, the Company and AMER entered into a private placement for 40.0 million shares of the Company’s common stock and warrants to purchase 80.0 million shares of the Company’s common stock, priced using the trailing 90-day volume weighted average price (“VWAP”) of $0.50 on April 17, 2015, the date the Investment and Securities Purchase Agreement (“AMER Investment Agreement”) was signed. General Moly received stockholder approval of the transaction at its 2015 Annual Meeting, and of material amendments to the transaction at a special meeting held in December 2017.

On November 2, 2015, the Company and AMER entered into an amendment to the AMER Investment Agreement, utilizing a three-tranche investment.  The first tranche of the amended AMER Investment Agreement closed on November 24, 2015 for a $4.0 million private placement representing 13.3 million shares, priced at $0.30 per share, and warrants (“the AMER Warrants”) to purchase 80.0 million shares of common stock at $0.50 per share, which will become exercisable upon availability of an approximately $700.0 million senior secured loan (“Bank Loan”). The funds received from the $4.0 million private placement were divided evenly between general corporate purposes and an expense reimbursement account available to both AMER and the Company to cover anticipated Mt. Hope financing costs and other jointly sourced business development opportunities. In addition, AMER and General Moly entered into a Stockholder Agreement allowing AMER to nominate a director to the General Moly Board of Directors and additional directors following the close of Tranche 3, discussed below, and drawdown of the Bank Loan.  The Stockholder Agreement also governs amer’s acquisition and transfer of General Moly shares.  Prior to closing the first tranche the parties agreed to eliminate certain conditions to closing.  Following the closing, AMER nominated Tong Zhang to serve as a director of the Company, and he was appointed by the Board of Directors on December 3, 2015.  Mr. Zhang was nominated by the Board of Directors to stand for election at the 2018 General Meeting of Stockholders and was elected by the stockholders to serve as a Class II director for a three (3) year term expiring in 2021, subject to re-election.  On July 29, 2019, Mr. Zhang resigned from the Board of Directors.

On October 16, 2017, the Company and AMER announced the closure of the second tranche of the parties’ three-tranche financing agreement.  At the close of the second tranche, General Moly issued 14.6 million shares to AMER, priced at the volume weighted average price (“VWAP”) for the 30-day period ending August 7, 2017 (the date of the parties’ Amendment No. 2 to the AMER Investment Agreement) of $0.41 per share for a private placement of $6.0 million by AMER.  $5.5 million of the equity sale proceeds were available for general corporate purposes, while $0.5 million was held in the expense reimbursement account established at the close of the first tranche to cover costs related to the Mt. Hope Project financing and other jointly sourced business development opportunities.

The third tranche of the amended investment agreement was to include a $10.0 million private placement representing 20.0 million shares, priced at $0.50 per share (“Tranche 3”).  Closing of Tranche 3 was conditioned upon the earlier of the reissuance of water permits for the Mt. Hope Project or completion of a joint business opportunity involving use of 10.0 million shares of General Moly stock. After closure of the third tranche of the agreement, AMER would have been allowed to nominate a second director to General Moly’s Board of Directors. 

The issuance of shares in connection with the third tranche of the AMER Investment Agreement was approved by General Moly stockholders in December 2017 at a Special Meeting of Stockholders.

The Company and AMER have jointly evaluated other potential opportunities, ranging from outright acquisitions and privatizations, or significant minority interest investments with a focus on base metal and ferro-alloy prospects, where the Company would benefit from management fees, minority equity interests, or the acquisition of both core and non-core assets.  The Company and AMER have considered but not completed any such transactions to date and we are not currently evaluating potential opportunities with AMER.  From commencement of the AMER Investment Agreement in 2015 to September 30, 2019, the

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Company and AMER spent approximately $2.5 million from the expense reimbursement account described above in connection with such evaluations.

AMER Default on Tranche 3 Private Placement Obligation

The last closing conditions for Tranche 3 under the AMER Investment Agreement included issuance of water permits for the Mt. Hope Project.  The water permits were issued by the Nevada State Engineer on July 24, 2019.  On July 26, 2019, the Company provided formal notice to AMER that the conditions to closing of Tranche 3 had been satisfied, and that AMER would have two business days (until the close of business on Tuesday, July 30, 2019) to close the transaction.  On July 31, 2019, the Company sent a Notice of Default, as AMER failed to fund and close Tranche 3 by the July 30, 2019 deadline.

On August 1, 2019, the Company received a letter from AMER dated July 30, 2019, purporting to terminate the AMER Investment Agreement, referencing its earlier letter received by the Company on July 18, 2019, in which AMER has alleged uncured material adverse effects and alleged breaches of the AMER Investment Agreement by the Company (which include concerns related to US/China relations, concerns regarding the delay in obtaining environmental permits and solvency concerns).  The Company believes such assertions to be inaccurate and wholly without merit under the terms of the AMER Investment Agreement.  As AMER has failed to timely fund and close Tranche 3 and is now in default, the Company believes that AMER’s attempted termination of the AMER Investment Agreement is ineffective.  With AMER’s default with respect to its obligation to fund Tranche 3, the Company will have inadequate cash to continue operations and will have to evaluate its options going forward, including pursuing asset sales, short-term financing options and, if unsuccessful in obtaining sufficient financing, the possibility of seeking bankruptcy protection.  General Moly is seeking immediate sources of liquidity and is evaluating potential strategic alternatives, including sourcing of potential incremental capital financing, sale of interest(s) in the assets of the Company or the Company, and restructuring of the convertible and non-convertible debt from the 2014 private placement, which matures in December 2019. 

On August 28, 2019, the Company engaged King & Spalding, an international arbitration and litigation firm, to represent the Company in its dispute against AMER for AMER’s default under the amended Investment Securities Purchase Agreement (“Agreement”).  The Company formally notified AMER that a dispute exists between the parties as a result of their failure to close Tranche 3.  The notification requires that one representative of each of the executive management of the parties be designated and authorized to attempt to settle the Dispute and the representatives are to meet in good faith to resolve the Dispute.  If the designated representatives do not resolve the Dispute within 10 business days after delivery of the Notice, the Dispute will be subject to resolution by binding arbitration, pursuant to the AMER Investment Agreement.  Any arbitration is to be held in Hong Kong under the rules of the International Chamber of Commerce.

On October 14, 2019, the Company announced that it had entered into an agreement with AMER to extend the dispute negotiation period (“Extension Agreement”).  Under the terms of the Extension Agreement, the Company received $300,000 from AMER in exchange for an extension of the negotiation period to November 15, 2019, on which date the Company’s CEO Bruce Hansen and AMER Chairman Wang Wenyin met to discuss settlement options.  With the payment, AMER shall have the right, at its option, to credit the Extension Fee among the following: (1) credit against a final negotiated settlement; (2) credit against any AMER payment obligation to the Company, pursuant to an arbitration award; or (3) apply the Extension Fee as consideration for the purchase of the Company’s common stock, priced at the 30-day volume weighted average price, as of the date immediately prior to the date that AMER demands delivery of such shares.  As announced on November 19, 2019, the Company and AMER are continuing negotiations and hope to reach a mutually beneficial resolution within the next two weeks.

Bank Loan

Subject to AMER’s purported termination of, and as set forth in the AMER Investment Agreement, AMER had agreed to work cooperatively with the Company upon the return of sustained improved molybdenum prices and the receipt of our water permits to procure and support a senior secured term loan (“Bank Loan”) of approximately $700 million from a major Chinese bank or banks for the development of the Mt. Hope Project, and to provide a guarantee for the Bank Loan.  As indicated above, AMER defaulted on Tranche 3 of the AMER Investment Agreement in July 2019.  Based on this default, the Company believes that it will be required to secure alternative financing for the development of the Mt. Hope Project and is currently exploring options.

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NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim consolidated financial statements (“interim statements”) of the Company are unaudited.  In the opinion of management, all adjustments and disclosures necessary for a fair statement 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 statements are not necessarily indicative of the results that may be presented for the entire year.  These interim statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission (“SEC”) on March 21, 2019.

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 (“GAAP”) 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 GAAP.  With the exception of the LLC, all of our subsidiaries are wholly owned.  In February 2008, we entered into the LLC Agreement, which established our ownership interest in the LLC at 80%.  The consolidated financial statements include all of our wholly owned subsidiaries and the LLC.  The POS-Minerals contributions attributable to their 20% interest are shown as Contingently Redeemable Noncontrolling Interest on the Consolidated Balance Sheet.  The net loss attributable to contingently redeemable noncontrolling interest is reflected separately on the Consolidated Statement of Operations and reduces the Contingently Redeemable Noncontrolling Interest on the Consolidated Balance Sheet.  Net losses of the LLC are attributable to the members of the LLC based on their respective ownership percentages in the LLC.  During the three and nine months ended September 30, 2019, the LLC had a $27,000 and $81,000 loss, respectively, primarily associated with accretion of its reclamation obligations, of which $5,000 and $16,000, was attributed to the Contingently Redeemable Noncontrolling Interest.

Contingently Redeemable Noncontrolling Interest (“CRNCI”)

Under GAAP, certain noncontrolling interests in consolidated entities meet the definition of mandatorily redeemable financial instruments if the ability to redeem the interest is outside of the control of the consolidating entity.  As described in Note 1 — “Description of Business”, the LLC Agreement permits POS-Minerals the option to put its interest in the LLC to Nevada Moly upon a change of control, as defined in the LLC Agreement, followed by a failure by us to use standard mining industry practice in connection with the development and operation of the Mt. Hope Project as contemplated by the parties for a period of 12 consecutive months.  As such, the CRNCI has continued to be shown as a separate caption between liabilities and equity based on accounting standards which require equity instruments with redemption features that are not solely within the control of the issuer to be classified outside of permanent equity (referred to as mezzanine equity).  The carrying value of the CRNCI has historically included the Return of Contributions, now $33.6 million, that will be returned to POS-Minerals in 2020, unless further extended by the members of the LLC as discussed above.  The expected Return of Contributions to POS-Minerals was carried at redemption value as we believed redemption of this amount was probable.  Effective January 1, 2015, Nevada Moly and POS-Minerals agreed that the Return of Contributions will be due to POS-Minerals on December 31, 2020, unless further extended by the members of the LLC as discussed above.  As a result, we have reclassified the Return of Contributions payable to POS-Minerals from CRNCI to a non-current liability at redemption value, and subsequently reduced it by $2.4 million, consisting of 20% of an $8.4 million principal payment made on milling equipment in March 2015, a $2.2 million principal payment made on electrical transformers in April 2015, and a $1.2 million principal payment made on milling equipment in April 2016, such that the remaining amount due to POS-Minerals is $33.6 million.

The remaining carrying value of the CRNCI has not been adjusted to its redemption value as the contingencies that may allow POS-Minerals to require redemption of its noncontrolling interest are not probable of occurring.  Under GAAP, until such time as that contingency has been eliminated and redemption is no longer contingent upon anything other than the passage of time, no adjustment to the CRNCI balance should be made.  Future changes in the redemption value will be recognized immediately as they occur and the Company will adjust the carrying amount of the CRNCI to equal the redemption value at the end of each reporting period.

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Estimates

The process of preparing consolidated financial statements 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.

Asset Impairments

We evaluate the carrying value of long-lived assets to be held and used, using a fair-value based approach when events and circumstances indicate that the related carrying amount of our assets may not be recoverable.  Significant declines in the overall economic environment, molybdenum and copper prices may be considered as impairment indicators for the purposes of these impairment assessments.  Additionally, failure to secure our mining permits, including our water rights, or revocation of our permits, may be considered as impairment indicators for the purposes of these impairment assessments.  In accordance with U.S. GAAP, the carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flows from such asset is less than its carrying value.  In that event, an impairment charge will be recorded in our Consolidated Statement of Operations and Comprehensive Loss based on the difference between book value and the estimated fair value of the asset computed using discounted future cash flows, or the application of an expected fair value technique in the absence of an observable market price.  Future cash flows include estimates of recoverable quantities to be produced from estimated proven and probable mineral reserves, commodity prices (considering current and historical prices, price trends and related factors), production quantities and capital expenditures, all based on life-of-mine plans and projections.  In estimating future cash flows, assets are grouped at the lowest level for which identifiable cash flows exist that are largely independent of cash flows from other asset groups.  Generally, in estimating future cash flows, all assets are grouped at a particular mine for which there are identifiable cash flows.  Management has evaluated the circumstances of the July 30, 2019 AMER default and has concluded the default is a third quarter triggering event in which we updated cash flow forecasts.  We evaluated and determined the carrying value of the asset groups were recoverable as the probability-weighted undiscounted cash flows exceeded the carrying values for each of our asset groups.  While at September 30, 2019, we have not identified any impairment of our long-lived assets, there can be no assurance that there will not be asset impairments if commodity prices experience a sustained decline and/or if there are significant downward adjustments to estimates of recoverable quantities to be produced from proven and probable mineral reserves or production quantities, and/or upward adjustments to estimated operating costs and capital expenditures, all based on life-of-mine plans and projections.  Additionally, should we be unable to secure alternative financing following the default of AMER to fund Tranche 3 under the AMER Investment Agreement, we may be required to modify our cash flow projections which could result in a significant reduction in the valuation of our assets thereby causing an impairment to our assets at that time.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash equivalent instruments are classified within Level 1 of the fair value hierarchy established by FASB guidance for Fair Value Measurements because they are valued based on quoted market prices in active markets.

We consider all restricted cash, inclusive of the reserve account discussed above and reclamation surety bonds, to be long-term. 

	September 30, 2019	December 31, 2018
	(in thousands)
Cash and cash equivalents	1,100	2,016
Restricted cash held at EMLLC	4,118	6,167
Restricted cash and investments held for reclamation bonds	—	434
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	5,218	8,617

As of September 30, 2019, the LLC had $0.3 million in cash deposits associated with reclamation bonds, which are accounted for as restricted cash.  Another $0.1 million in cash collateral is associated with surety bonds at the Liberty Project.  These amounts are considered investments and are not included in cash and cash equivalents for purposes of the Statement of Cash Flows.  As of December 31, 2018, the LLC had an additional $0.4 million in a long-term funding mechanism, which was accounted for as restricted cash.  The $0.4 million held in a long-term funding mechanism was redeemed and is included in cash and cash equivalents as of September 30, 2019.

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Basic and Diluted Net Loss Per Share

Net loss per share was computed by dividing the net loss attributable to the Company 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 awards as of September 30, 2019 and December 31, 2018, respectively, were as follows:

	September 30, 2019	December 31, 2018
Warrants	97,991,800	98,686,000
Shares Issued upon conversion of Senior Notes	5,910,000	5,910,000
Unvested Stock Awards	2,001,268	2,401,268
Stock Appreciation Rights	938,667	938,667

These awards were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2019 and December 31, 2018, respectively, because to do so would have been anti-dilutive.  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.  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.

The Company has capitalized royalty payments made to Mt. Hope Mines, Inc. (“MHMI”) (discussed in Note 11 below) during the development stage.  The amounts will be applied to production royalties owed upon the commencement of production.

Depreciation and Amortization

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Property and equipment are depreciated using the following estimated useful lives:

Field equipment	Four to ten years
Office furniture, fixtures, and equipment	Five to seven years
Vehicles	Three to five years
Leasehold improvements	Three years or the term of the lease, whichever is shorter
Residential trailers	Ten to twenty years
Buildings and improvements	Ten to twenty seven and one-half years

Senior Convertible Promissory Notes and other Long-Term Debt

In December 2014, the Company sold and issued $8.5 million in units consisting of convertible promissory notes (the “Convertible Notes”) and warrants to purchase shares of our common stock (the “Notes Warrants”) to accredited investors,

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including several directors and officers of the Company, pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 thereunder. The Notes are unsecured obligations and are senior to any of the Company’s future secured obligations to the extent of the value of the collateral securing such obligations.

The Convertible Notes bear interest at a rate of 10.0% per annum, payable in cash quarterly in arrears on each March 31, June 30, September 30, and December 31. The Convertible Notes are convertible at any time in an amount equal to 80% of the greater of (i) the average volume weighted average price (“VWAP”) for the 30 Business Day period ending on the Business Day prior to the date of the conversion, or (ii) the average VWAP for the 30 Business Day period ending on the original issuance date of the Convertible Notes.  Each Note will convert into a maximum of 100 shares per note, resulting in the issuance of up to 8,535,000 shares. General Moly’s named executive officers and board of directors who participated in the offering are restricted from converting at a price less than $0.32, the most recent closing price at the time that the Convertible Notes were issued. The Convertible Notes are mandatorily redeemable at par plus the present value of remaining coupons upon (i) the availability of cash from a financing for the Mt. Hope Project or (ii) any other debt financing by the Company. In addition, 50% of any proceeds from the sale of assets cumulatively exceeding $250,000 will be used to prepay the Convertible Notes at par plus the present value of remaining coupons. The Company has the right to redeem the Convertible Notes at any time at par plus the present value of remaining coupons. The Private Placement was negotiated by independent members of General Moly’s board of directors, none of whom participated in the transaction.  As of September 30, 2019, an aggregate of $2.6 million of Convertible Notes had been converted into 2,625,000 shares of common stock and $1.3 million of non-convertible Senior Promissory Notes, resulting in a $0.2 million annual reduction in interest payments made by the Company in the servicing of the Convertible Notes, as further discussed in Note 6 below.

The Company evaluates its contracts for potential derivatives.  See Note 5 for a description of the Company’s accounting for embedded derivatives and the Convertible Notes.

Debt issuance costs are costs incurred in connection with the Company’s debt financings that have been capitalized and are being amortized over the stated maturity period or estimated life of the related debt, using the effective interest method.

Provision for Taxes

Income taxes are provided based upon the asset and liability method of accounting.  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.  In accordance with authoritative guidance under Accounting Standards Codification (“ASC”) 740, Income Taxes, 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 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.  Future obligations to retire an asset, including reclamation, site closure, dismantling, remediation and ongoing treatment and monitoring, are recorded as a liability at fair value at the time of construction or development.  The fair value determination is based on estimated future cash flows, the current credit-adjusted risk-free discount rate and an estimated inflation factor.  The value of asset retirement obligations is evaluated on a quarterly basis or as new information becomes available on the expected amounts and timing of cash flows required to discharge the liability.  The fair value of the liability is added to the carrying amount of the associated asset andthis additional carrying amount will be depreciated or amortized over the estimated life of the asset upon the commencement of commercial production.  An accretion cost, representing the increase over time in the present value of the liability, will also be recorded each period as accretion expense.  As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced.  Certain collateral amounts associated with our reclamation obligations are held in investment accounts, for which the fair value is estimated based on Level 1 inputs.

Stock-based Compensation

Stock-based compensation represents the fair value related to stock-based awards granted to members of the Board, officers and employees.  The Company uses the Black-Scholes model to determine the fair value of stock-based awards under authoritative guidance for Stock-Based Compensation.  For stock-based compensation that is earned upon the satisfaction of a service condition, the cost is recognized on a straight-line basis (net of estimated forfeitures) over the requisite vesting period (up to three years).  Awards expire five years from the date of vesting.

Further information regarding stock-based compensation can be found in Note 8 — “Equity Incentives.”

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Warrants

The Company has issued warrants in connection with several financing transactions and uses the Black-Scholes model or a lattice to determine the fair value of these transactions based on the features included in each.

Leases

The Company adopted Accounting Standards Codification (“ASC”) 842, Leases, on January 1, 2019. Changes to the Company’s accounting policy as a result of adoption are discussed below.

The Company determines if a contractual arrangement represents or contains a lease at inception. Operating leases are included in Deposits, prepaids and other Current Assets and Otheraccrued liabilities in the Consolidated Balance Sheets. No finance leases have been identified to date.

Operating and finance lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The ROU asset includes any lease payments made and lease incentives received prior to the commencement date. Operating lease ROU assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. 

Recently Adopted Accounting Pronouncements

Leases (Topic 842)

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).  The update provides a comprehensive update to the lease accounting topic in the Codification intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The amendments in ASU 2016-02 include a revised definition of a lease as well as certain scope exceptions.  The changes primarily impact lessee accounting, while lessor accounting is largely unchanged from previous GAAP.  The amendments in ASU 2016-02 are effective for public entities for annual reporting periods beginning after December 15, 2018, and for interim periods within that reporting period.   

The Company adopted this standard as of January 1, 2019 using the modified retrospective approach with a cumulative effect adjustment on January 1, 2019.  The adoption had no effect on the opening balance of retained earnings at January 1, 2019.  The comparative information has not been adjusted and continues to be reported under the accounting standard in effect for those periods.

The new standard offers a number of optional practical expedients of which the Company elected the following:

Transition elections:  The Company elected a package of practical expedients, applied consistently to all leases that commenced prior to January 1, 2019, that allowed the Company (i) to not reassess whether a contract is or contains a lease, (ii) to not reassess the lease classification of the lease, and (iii) to not reassess initial direct costs for the lease.  The Company elected the land easements practical expedient whereby existing land easements were not reassessed under the new standard.

Ongoing accounting policy elections: The Company elected the short-term lease recognition exemption whereby ROU assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year. The Company elected the practical expedient to not separate lease and non-lease components for all of its underlying asset classes.

Based on leases outstanding at January 1, 2019 and March 31, 2019, the adoption of the new standard resulted in the recognition of operating lease ROU assets and lease liabilities of $0.2 million and $0.2 million, respectively.  Certain of our leases include payments that vary based on the Company’s level of usage and operations.  These variable payments are not included within ROU assets and lease liabilities and are recognized as expense when incurred.  For the three months ended March 31, 2019, operating lease costs were $20K and variable lease costs were $1K.  Cash paid for amounts in the measurement of lease liabilities

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which are reflected in operating cash flows relating to operating leases for the three months ended March 31, 2019 were $20K. The weighted average life remaining for the operating leases is 1.8 years and the weighted average discount rate is 10%.  Adoption of this standard did not have a material impact to the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows.   

NOTE 3 — MINING PROPERTIES, LAND AND WATER RIGHTS

We currently have interests in two mining properties that are the primary focus of our development, the Mt. Hope Project and the Liberty Project.  We also have certain other, non-core, mining properties that are being evaluated for future development or sale.

The Mt. Hope Project.  We are currently in the process of developing the Mt. Hope Project, and have recently obtained all permits required for construction. In January 2014, the Company published an updated Technical Report on the Mt. Hope Project using Canadian Instrument NI 43-101 guidelines, which provided data on the viability and expected economics of the project.  In early 2017, we re-examined the Mt. Hope proven and probable mineral reserves and updated the reserve and resource estimates using an $8.40/lb molybdenum (“Mo”) three-year backward average price.  No further adjustments have been required.

The Company has also identified a potential high-grade, copper-silver exploration target along with a significant zinc mineralized area at the Mt. Hope Project site, southeast of the Mt. Hope Project’s molybdenum deposit in central Nevada (the “Cu-Ag Target”).

A high-intensity, ground-based Induced Polarization (“IP”) survey completed in February 2018 by Quantec Geoscience indicates a fairly continuous group of high chargeability anomalies that appear aligned with the recently identified Cu-Ag Target. These anomalies lie between 100 feet and 1,000-plus feet from the surface and trend northeast for over 1,000 feet. The IP survey indicates that the anomalies could continue further to the north-northeast and to the south where they appear to dip to the east.

To date the preliminary Cu-Ag Target exploration work was undertaken solely by General Moly. The Company has presented the promising findings to its 20% joint venture partner at the Mt. Hope Project, POS-Minerals, and the parties are discussing value-sharing investment options. Any mining operation to exploit economic mineralization will require the approval of POS-Minerals.

Geological review of historic logs and core was completed by Mine Mappers, LLC of Tucson, Arizona to update the geologic interpretation of the skarn area.  Mine Mappers reviewed the geologic interpretations in conjunction with the IP results and recommended a 10-hole, 9,400 foot drilling confirmation and exploration program. 

In September 2018, the Company commenced a 9 hole drill program on the patented claims at the Mt. Hope Project.  The drilling program is focused on copper-silver-zinc mineralized skarns and designed to confirm and extend the target defined by historical drilling as well as test for extensions of zinc mineralization horizons which were historically mined.  The drill program is was completed in late 2018 and the Company is evaluating results to determine if said results warrant completion of a Preliminary Economic Assessment. 

Liberty Project.  We continue to evaluate opportunities at the Liberty Project as they arise.  The Liberty Project remains largely in care and maintenance at this time.  In July 2014, the Company published an updated NI 43-101 compliant pre-feasibility study, which more closely examined the use of existing infrastructure and the copper potential of the property.  In February 2017, Liberty Moly entered into a lease agreement with WK Mining Ltd. (“WK”) for the lease of water rights for the purpose of mining and milling.  The term of the lease is six years which WK can extend for an additional four years.  As compensation for the leased water rights, WK has issued $124,000 in common shares to Liberty Moly, consisting of $100,000 at signing of the agreement and shares equal to $12,000 in both its first and second annual installments, and is required to pay an annual fee on the anniversary date of the lease in either cash or WK common shares.

The Nevada Division of Environmental Protection (“NDEP”) has identified environmental concerns with some Liberty Project facilities acquired with the property.  NDEP’s concerns are related to aspects of previously approved closure plans required by Nevada regulation.  We have proposed options to NDEP to address these concerns.  In July 2018, we addressed one of those concerns by successfully completing a program, as approved by NDEP, to neutralize the acidic Liberty pit lake by adding hydrated lime to raise the pH.  We will continue to work with NDEP to evaluate ongoing options to address any future concerns, and additional costs may be required to meet NDEP’s closure requirements.  However, a reasonable estimate cannot be determined at this time as it is not possible to reasonably predict the outcome of our negotiations with NDEP.

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Other Mining Properties.  We also have mining claims and land purchased prior to 2006 which consist in part of (a) six patented mining claims known as the Chicago-London group, located near the town of Murray in Shoshone County, Idaho, (b) 34 unpatented mining claims in Marion County, Oregon, known as the Detroit property and (c) 83 unpatented mining claims in Sanders and Madison County, Montana.  The costs associated with these claims and properties are minimal and primarily relate to claim fees and property taxes.

Summary. The following is a summary of mining properties, land and water rights at September 30, 2019 and December 31, 2018 (in thousands):

	At		At
	September 30,		December 31,
	2019		2018
Mt. Hope Project:
Development costs	$	179,328	$	176,292
Mineral, land and water rights		9,423		11,324
Advance royalties		31,800		31,800
Total Mt. Hope Project		220,551		219,416
Total Liberty Project		8,374		9,678
Other Properties		0		81
Total	$	228,925	$	229,175

Development costs of $179.3 million as of September 30, 2019 include hydrology and drilling costs, expenditures to further the permitting process, capitalized salaries, project engineering costs, and other expenditures required to fully develop the Mt. Hope Project.  Deposits on project property, plant and equipment of $88.0 million as of September 30, 2019 represent ongoing progress payments on equipment orders for the custom-built grinding and milling equipment, related electric mill drives, and other processing equipment that require the longest lead times.

NOTE 4 — ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations (“ARO”) arise from the acquisition, development, construction and normal operation of mining property, plant and equipment due to government controls that protect the environment, and are primarily related to closure and reclamation of mining properties.  The exact nature of environmental issues and costs, if any, which the Company or the LLC may encounter in the future are subject to change, primarily because of the changing character of environmental requirements that may be enacted by governmental authorities.

The following table shows asset retirement obligations for future mine closure and reclamation costs in connection with the Mt. Hope Project and within the boundaries of the Plan of Operations (“PoO”):

	(in thousands)
At January 1, 2018	$	1,568
Accretion Expense		103
Adjustments*		(38)
At December 31, 2018	$	1,633
Accretion Expense		81
Adjustments*		34
At September 30, 2019	$	1,748

*Includes additions, annual changes to the escalation rate, the market-risk premium rate, or reclamation time periods.

The estimated future reclamation costs for the Mt. Hope Project have been discounted using a rate of 8%, which is the rate that existed at the time the liability was originally measured.  The total inflated and undiscounted estimated reclamation costs associated with current disturbance under the PoO at the Mt. Hope Project were $5.8 million at September 30, 2019, inclusive of $2.6 million for mitigation of sage grouse habitat that would be affected by development of the Mt. Hope Project.  Increases in ARO liabilities resulting from the passage of time are recognized as accretion expense.

As of September 30, 2019, the LLC had provided the appropriate regulatory authorities with $2.8 million in reclamation financial guarantees through the posting of surety bonds for reclamation of the Mt. Hope and had $0.3 million in cash deposits

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associated with these bonds which are specific to the PoO disturbance and accounted for as restricted cash and are unrelated to the inflated and undiscounted liability referenced above.  The LLC posted an additional $0.3 million as a cash bond with the BLM in April 2019 as a result of a required three-year update to the reclamation bond calculation.

The LLC has a smaller liability at the Mt. Hope Project for disturbance associated with exploration drilling which occurred outside the PoO boundaries.  The LLC has not discounted this reclamation liability as the total amount is less than $0.1 million.

Total restricted cash for surety bond collateral requirements and other long-term reclamation obligations at the Mt. Hope Project equal $0.6 million.  Another $0.1 million in cash collateral is associated with surety bonds at the Liberty Project.

The Company’s Liberty Project is currently in the exploration stage. As the Company is not currently performing any exploration activity at the Liberty Project, the reclamation liability incurred for historical operations and exploration of approximately $0.1 million has not been discounted as shown in the table below.

	Mt. Hope Project
	outside PoO
	boundary		Liberty
	(in thousands)
At January 1, 2018	$	15	$	121
Adjustments *		—		—
At December 31, 2018	$	15	$	121
Adjustments *		—		—
At September 30, 2019	$	15	$	121

*Includes reduced / reclaimed disturbance

NOTE 5 — CURRENT DEBT

In December 2014, the Company sold and issued 85,350 Units of Convertible Notes (the “Notes”) with warrants (the “Notes Warrants”) to qualified buyers pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, of which 23,750 Units were sold and issued to related parties, including several directors and each of our named executive officers. The Convertible Notes are unsecured obligations and are senior to any of the Company’s future secured obligations to the extent of the value of the collateral securing such obligations.

The transaction value of $8.5 million was allocated between debt for the Convertible Notes and equity for the Notes Warrants based on the relative fair value of the two instruments.   This resulted in recording $0.8 million in Additional Paid In Capital for the relative fair value of the Warrants and $7.7 million as Convertible Notes.  The Company received net proceeds from the sale of the Convertible Notes of approximately $8.0 million, after deducting offering expenses of approximately $0.5 million, which was allocated between debt and equity. As a result, the Company recognized $0.4 million as Debt Issuance Costs to be amortized over the expected redemption period, and $0.1 million recognized as a reduction to Additional Paid in Capital. Net proceeds from the sale are being used to fund ongoing operations until the Company’s portion of project financing is obtained.

The Convertible Notes bear interest at a rate of 10.0% per annum, payable in cash quarterly in arrears on each March 31, June 30, September 30, and December 31. The Convertible Notes mature on December 26, 2019 unless earlier redeemed, repurchased or converted. The Company may redeem the Convertible Notes for cash, either in whole or in part, at any time, in exchange for the sum of (i) a cash payment equal to the unpaid principal plus all accrued but unpaid interest through the date of redemption and (ii) the present value of the remaining scheduled interest payments discounted to the maturity date at the annual percentage yield on U.S. Treasury securities with maturity similar to the notes plus 25 basis points (the “Optional Redemption”). The Convertible Notes are mandatorily redeemable at par plus the present value of remaining coupons upon (i) the availability of cash from a financing for Mt. Hope and (ii) any other debt financing by the Company. In addition, 50% of any proceeds from the sale of assets cumulatively exceeding $250,000 will be used to prepay the Convertible Notes at par plus the present value of remaining coupons (the “Mandatory Redemption”).

The Convertible Notes are convertible at any time in an amount equal to 80% of the greater of (i) the average VWAP for the 30 Business Day period ending on the Business Day prior to the date of the conversion, or (ii) the average VWAP for the 30 Business Day period ending on the original issuance date of the note.  Each Convertible Note will convert into a maximum of 100 shares per note, resulting in the issuance of 8,535,000 shares, or 9.3% of shares outstanding as of December 31, 2014 (the “Conversion Option”). General Moly’s executive management team and board of directors who participate in the offering will be restricted from converting at a price less than $0.32, the most recent closing price at the time that the Notes were issued.

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If the Company undergoes a “fundamental change”, the Convertible Notes will be redeemed for cash at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased plus accrued and unpaid interest, including contingent interest and additional amounts, if any. Examples of a “fundamental change” include the reclassification of the common stock, consolidation or merger of the Company with another entity or sale of all or substantially all of the Company’s assets.

During the year ended December 31, 2015, certain holders of the Convertible Notes, including both directors and named executive officers of the Company, elected to convert notes totaling $2.6 million, reducing the principal balance of the Convertible Notes to $5.9 million. Upon conversion, the Convertible Notes holders received 2,625,000 shares of common stock, at conversion prices ranging from $0.3462 to $0.5485, and were issued non-convertible Senior Promissory Notes (“Promissory Notes”) of $1.3 million, pursuant to the terms of the share maximum provision of the Conversion Option.  The Promissory Notes have identical terms to the Convertible Notes, with the exception that the holder no longer has a Conversion Option. Accordingly, the Promissory Notes bear interest equal to 10.0% per annum, payable in cash quarterly in arrears on each March 31, June 30, September 30, and December 31 and mature on December 26, 2019.  The conversions resulted in a $0.2 million annual reduction in interest payments made by the Company in the servicing of the Notes. 

On September 26, 2019, the Company entered into a 90 day deferral and forbearance agreement with the primary holder of the Convertible Notes, along with certain of the Company’s members of management and directors who participated in the 2014 debt offering.  As a result, the Company deferred approximately $162,000 of interest payments that were due at the end of the third quarter 2019.

The Company has reached an agreement in principle (“AiP”) with the holder of $5 million of the Company’s Senior Convertible Promissory Notes and certain other holders of Senior Convertible Notes and Senior Promissory Notes (collectively, the “Senior Notes”) to exchange the Senior Notes for new units consisting of new senior non-convertible promissory notes in the same original principal amount bearing an interest rate between 12-14% and otherwise providing for similar terms (the “Exchange Notes”) and a three-year warrant to purchase Company common stock at $0.35 share (each a “Unit”).  The Exchange Notes will extend the maturity date until December 2022.

In addition to the exchange of Senior Notes, the largest holder of the Senior Notes, as well as the Company’s CEO, Bruce Hansen, have agreed, subject to execution of definitive documentation, to purchase new 13% Senior Promissory Notes due 2022 in the principal amount of $610,000 (representing 10% of the original principal amount of the Senior Notes to be exchanged) providing additional capital to the Company.  At this date, the total principal amount of Senior Notes contemplated to be extended by the AiP is $6.37 million out of the $7.25 million Senior Notes outstanding.  The maturity date for the outstanding Senior Notes is December 26, 2019.

Based on the redemption and conversion features discussed above, the Company determined that there were embedded derivatives that require bifurcation from the debt instrument and should be accounted for under ASC 815. Embedded derivatives are separated from the host contract, the Convertible Notes, and carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. The Company has concluded that the Mandatory Redemption and Conversion Option features embedded within the Convertible Notes meet these criteria and, as such, must be valued separate and apart from the Convertible Notes as one embedded derivative and recorded at fair value each reporting period (the “Embedded Derivatives”).

A probability-weighted calculation was utilized to estimate the fair value of the Mandatory Redemption. 

The Company used a binomial lattice model in order to estimate the fair value of the Conversion Option in the Convertible Notes. A binomial lattice model generates two probable outcomes, arising at each point in time, starting from the date of valuation until the maturity date. A lattice was initially used to determine if the Convertible Notes would be converted or held at each decision point. Within the lattice model, the Company assumes that the Convertible Notes will be converted early if the conversion value is greater than the holding value.

As of September 30, 2019 and December 31, 2018, respectively, the carrying value of the Convertible Notes, absent the embedded derivatives, was $5.9 million and $5.8 million inclusive of an unamortized debt discount of nil and $0.1 million, all of which is considered current debt. The fair value of the Convertible Notes was $3.8 million and $4.0 million at September 30, 2019 and December 31, 2018, respectively.

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As of September 30, 2019 and December 31, 2018, the carrying value of the Promissory Notes was $1.3 million. The fair value of the Promissory Notes was $0.9 million at September 30, 2019 and December 31, 2018.

The embedded derivatives recorded in Convertible Notes at fair value were ($30,000) and ($14,000) at September 30, 2019 and December 31, 2018, respectively. The changes in the estimated fair value of the embedded derivatives during the nine months ended September 30, 2019 resulted in a net loss of approximately $15,000.  Gain or loss on embedded derivatives is recognized as Interest Expense in the Statement of Operations.

The Company has estimated the fair value of the Convertible Notes and embedded derivatives based on Level 3 inputs. Changes in certain inputs into the binomial lattice valuation models can have a significant impact on changes in the estimated fair value. For example, the estimated fair value of the embedded derivatives will generally decrease with: (1) a decline in the stock price; (2) increases in the estimated stock volatility; and (3) an increase in the estimated credit spread.

The following inputs were utilized to measure the fair value of the Notes and embedded derivatives: (i) price of the Company’s common stock; (ii) Conversion Rate (as defined in the Convertible Note); (iii) Conversion Price (as defined in the Convertible Notes); (iv) maturity date; (v) risk-free interest rate; (vi) estimated stock volatility; (vii) estimated credit spread for the Company; (viii) default intensity; and (ix) recovery rate.

The following tables set forth the inputs to the models that were used to value the embedded derivatives:

	September 30, 2019		December 31, 2018
Stock Price	$	0.26	$	0.22
Maturity Date		December 31, 2019		December 31, 2019
Risk-Free Interest Rate		1.88%		2.63%
Estimated Stock Volatility		40.00%		40.00%
Default Intensity		2.00%		2.00%
Recovery Rate		30.00%		30.00%

Type of Event	Expected Date	Probability of Event
Mandatory Redemption	October 17, 2019	80%
Conversion Option	February 21, 2019	0%
Note Reaches Maturity	December 31, 2019	20%

NOTE 6 — COMMON STOCK UNITS, COMMON STOCK AND COMMON STOCK WARRANTS

During the nine months ended September 30, 2019, we issued 411,328 shares of common stock pursuant to stock awards under the 2006 Equity Incentive Plan.  No shares were issued under the 2006 Equity Incentive Plan during the three months then ended.

During the year ended December 31, 2018, 993,481 shares of common stock were issued pursuant to stock awards under the 2006 Equity Incentive Plan and 1,168,300 shares under the Company’s at-the-market offering facility.

We currently have 97,991,800 warrants outstanding at an exercise price between $0.35 and $5.00 per share. 

On December 26, 2014, the Company issued 8.5 million Notes Warrants in connection with the private placement of its Convertible Notes at a price of $1.00 per share and having a relative fair value of $0.8 million.  In addition, the $0.8 million value placed on the Notes Warrants was considered a debt discount and is being amortized over the expected redemption period.

On November 2, 2015, the Company issued a warrant for 80.0 million common shares to AMER in connection with the closing of tranche 1 of the amended AMER Investment Agreement at a price of $0.50 per share and a relative fair value of $0.5 million, resulting in an entry to additional paid-in capital. 

On April 12, 2017, the Company filed a prospectus supplement in both Canada and the United States to its U.S. base shelf prospectus and U.S. registration statement on Form S-3 which enabled the Company, at its discretion from time to time, to sell up to $20 million worth of common shares by way of an at-the-market offering.  Since the effectiveness of the prospectus supplement

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by the SEC on April 26, 2017 to September 30, 2019, a total of 1,168,300 common shares have been sold under the ATM, for net proceeds to the Company of $0.5 million.  In conjunction with the public offering discussed below, the Company agreed to suspend the ATM facility for a period of 2 years. 

On October 17, 2018, the Company announced an underwritten public offering of 9,151,000 units at a price of $0.25 per share, with each unit consisting of one share of common stock accompanied by one warrant exercisable for one share of common stock immediately upon closing at a price of $0.35 per share.  The offering provided net proceeds of approximately $1.9 million after underwriting commissions and expenses.  Mr. Bruce Hansen, Chief Executive Officer of the Company and a related party, participated in the offering for a total of $0.5 million.  The Company used the proceeds for general corporate purposes, including the ongoing preliminary drilling program for the exploration of zinc, copper and silver mineralization at the southeast area of the Mt. Hope Project.

Of the warrants outstanding at September 30, 2019, 8.5 million are exercisable at $1.00 per share at any time from June 26, 2015 through their expiration on December 26, 2019, 1.0 million are exercisable at $5.00 per share once General Moly has received financing necessary for the commencement of commercial production at the Mt. Hope Project and will expire one year thereafter, and the 80.0 million shares of the amended AMER Warrant will become exercisable upon availability of the Bank Loan, should such availability occur prior to the third anniversary of the issuance of the ROD for the Mt. Hope Project, discussed below in Note 11, and will expire five years thereafter.  The remaining warrants are exercisable at $0.35 per share with an expiration of October 2023.

Pursuant to our amended Certificate of Incorporation, approved by the stockholders at the general meeting of June 30, 2015, we are authorized to issue 650.0 million shares of $0.001 par value common stock.  All shares have equal voting rights, are non-assessable and have one vote per share.  Voting rights are not cumulative and therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. 

NOTE 7 — REDEEMABLE PREFERRED STOCK

Pursuant to our Certificate of Incorporation we are authorized to issue 10,000,000 shares of $0.001 per share par value preferred stock, of which 55,000 shares are designated as Series A Preferred Stock Shares and 5,000 are designated as Series B Preferred Stock Shares as of September 30, 2019.  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 the Board.  The Board has the authority to determine the preferences, limitations and relative rights of each series of preferred stock. 

During the nine months ended September 30, 2019, the Company issued 14,000 shares of Series A Preferred in a series of private placement agreements.  The Series A Preferred Shares were priced at $100.00/ share and are convertible at any time at the holder’s discretion into common shares whereby one preferred share converts at a price of $0.27/common share to 370.37 common shares. The conversion price was set at the closing price of the Company’s common stock on March 12, 2019, which was the day before announcement of the private placement. Upon maturity or full repayment of the Senior Convertible Notes and Promissory Notes currently outstanding, there will be mandatory redemption of the preferred shares in exchange for equivalent cash for the principal invested, plus any accrued and unpaid dividends.  The holders of the Series A Preferred Shares are entitled to receive, when and if declared by the Board of Directors and in preference to the common stock, cumulative cash or in-kind dividends at a rate per annum of 5% of the original issue price.   In the event of a liquidation, dissolution, or winding up of the Company, the proceeds would be distributed first to the holders of Series A Preferred Shares prior to any distributions to holders of other stock in an amount per share equal to the original issue price plus any declared but unpaid dividends.  The holders of Series A Preferred Shares are entitled to vote, together with the holders of common stock, as if the Series A Preferred Shares had been converted to common stock on all matters submitted to stockholders for vote.  In addition, the Series A Preferred Shares contains certain protective rights that require the vote or consent of the holders of at least a majority of the shares of Series A Preferred Shares. 

Of the 14,000 shares issued during the nine months ended September 30, 2019, 5,000 shares were issued to MHMI.  On May 29, 2019, MHMI assigned their interest in 4,500 of the shares to various investors in their entity.  MHMI retained 500 shares.  In addition to the Series A Convertible Preferred Shares terms described in Note 1 above, MHMI and their investors have a one-time right to require the Company to redeem all or a portion of the Series A Convertible Preferred Shares upon the receipt of a minimum of $5,000,000 from the close of Tranche 3 of the amended AMER Investment Agreement.

As the Series A Preferred Shares are redeemable upon maturity or full repayment of the Senior Convertible Notes and Promissory Notes, it has been classified as mezzanine equity in our Consolidated Balance Sheets.  The Company recognizes change in the redemption value as they occur by adjusting the carrying amount of the mezzanine equity at each reporting date.  The change in the redemption value of the Series A due to accrued and unpaid dividends since its issuance is insignificant.

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On August 2, 2019, the Company filed a Certificate of Designation of Series B Preferred Stock with the Delaware Secretary of State, designating 5,000 shares of preferred stock the Series B Convertible Preferred Shares.  On August 5, 2019, the Company executed the Series B Purchase Agreement with the Investors.  Pursuant to the Series B Purchase Agreement, the Investors agreed to purchase up to $400,000 of Series B Convertible Preferred Shares.  This transaction closed on August 7, 2019. 

The Series B Convertible Preferred Shares were issued at a price of $100.00 per share, and each Series B Convertible Preferred Share will be convertible at any time at the holder’s discretion into 500 shares of common stock of the Company.  The Series B Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares of Series B Convertible Preferred Shares or a combination thereof.  The Series B Convertible Preferred Shares, like the Series A Convertible Preferred Shares, are mandatorily redeemable at such time that the Company’s $7.2 million Convertible Note debt currently outstanding become due and payable in accordance with their terms, as such terms may be modified from time to time.

Prior to the issuance of the Series A and Series B Convertible Preferred Shares, no shares of preferred stock were issued or outstanding.

NOTE 8 — EQUITY INCENTIVES

In 2006, the Board and shareholders of the Company approved the 2006 Equity Incentive Plan (“2006 Plan”), and in May 2010, our shareholders approved an amendment and restatement of the 2006 Plan increasing the number of shares that may be issued under the plan by 4,500,000 shares to 9,600,000 shares and extend the expiration date of the 2006 Plan to May 2020, as well as making other technical changes related to tax law and accounting rule changes, and to make administrative clarifying changes.  In June 2016, our shareholders approved an additional amendment to the 2006 Plan increasing the number of shares that may be issued under the plan by 5,000,000 shares to 14,600,000 shares.  In June 2019, our shareholders approved an amendment and restatement of the 2006 Plan increasing the number of shares that may be issued under the plan by 6,500,000 shares to 21,100,000 shares.  The 2006 Plan authorizes the Board, or a committee of the Board, to issue or transfer up to an aggregate of 14,600,000 shares of common stock, of which 3,449,058 remain available for issuance as of September 30, 2019.  Awards under the 2006 Plan may include incentive stock options, non-statutory stock options, restricted stock units, restricted stock awards, and stock appreciation rights (“SARs”).  At the option of the Board, SARs may be settled with cash, shares, or a combination of cash and shares.  The Company settles the exercise of other stock-based compensation with newly issued common shares.

Stock-based compensation cost is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes option pricing model and is recognized as compensation ratably on a straight-line basis over the requisite vesting/service period.  As of September 30, 2019, there was $0.3 million of total unrecognized compensation cost related to share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 2.1 years.

Stock Options and Stock Appreciation Rights

All stock options and SARs are approved by the Board prior to or on the date of grant.  Stock options and SARs are granted at an exercise price equal to or greater than the Company’s closing stock price on the date of grant.  Both award types vest over a period of zero to three years with a contractual term of five years after vesting.  The Company estimates the fair value of stock options and SARs using the Black-Scholes valuation model.  Key inputs and assumptions used to estimate the fair value of stock options and SARs include the grant price of the award, expected option term, volatility of the Company’s stock, the risk-free rate and the Company’s dividend yield.

At September 30, 2019, the outstanding and exercisable (fully vested) SARs had an aggregate intrinsic value of nil and had a weighted-average remaining contractual term of 1.1 years.  No SARs were exercised during the three and nine months ended September 30, 2019.

Restricted Stock Units and Stock Awards

Grants of restricted stock units and stock awards (“Stock Awards”) have been granted as performance based awards, earned over a required service period, or to Board members and the Company Secretary without any service requirement.  Performance based grants are recognized as compensation based on the probable outcome of achieving the performance condition.  Stock Awards issued to members of the Board of Directors and the Company Secretary that are fully vested at the time of issuance are recognized as compensation upon grant of the award.

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The compensation expense recognized by the Company for Stock Awards is based on the closing market price of the Company’s common stock on the date of grant.  For the three and nine months ended September 30, 2019, the weighted-average grant date fair value for Stock Awards was $0.24.  The total fair value of stock awards vested during the three and nine months ended September 30, 2019 is $0.1 million.

Summary of Equity Incentive Awards

The following table summarizes activity under the Plans during the nine months ended September 30, 2019:

	SARs			Stock Awards
	Weighted		Number	Weighted
	Average		of Shares	Average
	Strike		Under	Grant		Number of
	Price		Option	Price		Shares
Balance at January 1, 2019	$	3.19	938,667	$	1.18	2,401,268
Awards Granted		—	—		0.24	135,000
Awards Exercised or Earned		—	—		0.63	(535,000)
Awards Forfeited		—	—		—	—
Awards Expired		—	—		—	—
Balance at September 30, 2019	$	3.19	938,667	$	1.34	2,001,268
Exercisable at September 30, 2019	$	2.14	56,523

A summary of the status of the non-vested awards as of September 30, 2019 and changes during the nine months there ended is presented below:

	SARs			Stock Awards
	Weighted		Number	Weighted
	Average		of Shares	Average
	Fair		Under	Fair		Number of
	Value		Option	Value		Shares
Balance at January 1, 2019	$	3.26	882,144	$	1.18	2,401,268
Awards Granted		—	—		0.24	135,000
Awards Vested or Earned		—	—		0.63	(535,000)
Awards Forfeited		—	—		—	—
Balance at September 30, 2019	$	3.26	882,144	$	1.34	2,001,268

NOTE 9 — CHANGES IN CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

	Activity for
	Nine Months Ended
	September 30,		September 30,
Changes CRNCI (Dollars in thousands)	2019		2018
Total CRNCI December 31, 2018 and 2017, respectively	$	172,261	$	172,633
Net Loss Attributable to CRNCI		(16)		(367)
Total CRNCI September 30, 2019 and 2018, respectively	$	172,245	$	172,266

	Activity for
	Nine Months Ended
	September 30,		September 30,
Changes Redeemable Preferred Stock (Dollars in thousands)	2019		2018
Total Redeemable Preferred Stock  December 31, 2018 and 2017, respectively	$	—	$	—
Redeemable Preferred Stock Issued		1,800		—
Total Redeemable Preferred Stock  September 30, 2019 and 2018, respectively	$	1,800	$	—

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NOTE 10 — INCOME TAXES

At September 30, 2019 and December 31, 2018, we had deferred tax assets principally arising from the net operating loss carry-forwards for income tax purposes multiplied by an expected rate of 21%. As management of the Company 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 net deferred tax asset has been established at September 30, 2019 and December 31, 2018. 

At September 30, 2019 and December 31, 2018, we had net operating loss carry-forwards of approximately $282.6 million and $275.7 million, respectively, which expire in the years 2021 through 2038.  The change in the allowance account from December 31, 2018 to September 30, 2019 was an increase of $3.9 million.

As of September 30, 2019 and December 31, 2018, the Company had no unrecognized tax benefits.  There was no change in the amount of unrecognized tax benefits as a result of tax positions taken during the year or in prior periods or due to settlements with taxing authorities or lapses of applicable statues of limitations. 

The Company and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state jurisdictions.  Without exception, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2015.  The Company is open to federal and state tax audits until the applicable statutes of limitations expire.

NOTE 11 — COMMITMENTS AND CONTINGENCIES

Mt. Hope Project

The Mt. Hope Project is owned/leased and will be operated by the LLC under the LLC Agreement.  The LLC currently has a lease (“Mt. Hope Lease”) with Mount Hope Mines, Inc. (“MHMI”) for a period of 30 years from October 19, 2005 and for so long thereafter as operations are being conducted on the property.  The lease may be terminated earlier at the election of the LLC, or upon a material breach of the agreement and failure to cure such breach.  If the LLC 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.  If MHMI terminates the lease, termination is effective upon receipt of a notice of termination due to a material breach, representation, warranty, covenant or term contained in the Mt. Hope Lease and followed by failure to cure such breach within 90 days of receipt of a notice of default.  MHMI may also elect to terminate the Mt. Hope Lease if the LLC has not cured the non-payment of obligations under the lease within 10 days of receipt of a notice of default.  In order to maintain the Lease Agreement, the LLC must pay certain minimum advance royalties as discussed below.

The Mt. Hope Lease requires a royalty advance (“Construction Royalty Advance”) of 3% of certain construction capital costs, as defined in the Mt. Hope Lease.  The LLC is obligated to pay a portion of the Construction Royalty Advance each time capital is raised for the Mt. Hope Project based on 3% of the expected capital to be used for those certain construction capital costs defined in the Mt. Hope Lease.  Through September 30, 2019, we have paid $25.6 million of the total royalty advance.  Based on our Mt. Hope Project capital budget we estimate that a final reconciliation payment on the Capital Construction Cost Estimate (the “Estimate”) will be due following the commencement of commercial production, after as-built costs are definitively determined.  The Company estimates, based on the revised capital estimate discussed above and the current timeline for the commencement of commercial production, that an additional $4.2 million will be due approximately 24 months after the commencement of construction.  This amount has been accrued for all periods presented as accrued advance royalties.  The capital estimates may be subject to escalation in the event the Company experiences continued delays in achieving full financing for the Mt. Hope Project.

The LLC is also obligated to make a minimum annual advance royalty payment (“Annual Advance Royalty”) of $0.5 million each October 19 for any year wherein commercial production has not been achieved or the MHMI Production Royalty (as hereinafter defined) is less than $0.5 million.  As commercial production is not anticipated to commence before early-2022, the Company has accrued $2.0 million in Annual Advance Royalty payments which will be due in four $0.5 million installments in October 2019, 2020, 2021, and 2022, respectively.  The 2019 payment was remitted on October 18, 2019.  The Estimate and the Annual Advance Royalty are collectively referred to as the “Advance Royalties.”  All Advance Royalties are credited against the MHMI Production Royalties once the mine has achieved commercial production.  After the mine begins production, the LLC estimates that the MHMI Production Royalties will be in excess of the Annual Advance Royalties for the life of the Mt. Hope Project.  Until the advance royalties are fully credited, the LLC will pay one half of the calculated Production Royalty annually.  Assuming a $12 molybdenum price, the Annual Advance Royalties will be consumed within the first five years of commercial production.

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On February 28, 2018, the LLC) and MHMI entered into a Second Amendment dated effective January 15, 2018 (the “Lease Amendment”), to the Mt. Hope Lease.  The Lease Amendment provides that following commencement of commercial production of any non- molybdenum minerals at the Mt. Hope Project, the LLC will pay a production royalty to MHMI as follows:

· For zinc, the production royalty shall be equal to (i) 4.0% of net returns when the average gross value for the calendar quarter is less than or equal to $2.00 per pound; (ii) 4.5% of net returns when the average gross value is between $2.01 and $2.49 per pound; and (iii) 5.0% of net returns when the average gross value is $2.50 per pound or greater; and

· For all other non-moly minerals, the production royalty shall be equal to 4.0% of net returns.

If commercial production of non-moly minerals commences before commercial production of molybdenum, the Lease Amendment provides that the LLC’s obligation to pay the annual advance royalty under the Mt. Hope Lease will continue until the LLC has paid MHMI an aggregate of $3 million in non-moly production royalties in a three-year period.  After this threshold is met, then payment of the advance royalty may be deferred in whole or in part if the non-moly production royalty exceeds specified levels.  After non-moly production royalties have exceeded $10,000,000, future payments may be credited against future production royalties under certain circumstances.

Additionally, Exxon Corporation will receive a perpetual 1% royalty interest in and to all ores, metals, minerals and metallic substances mineable or recoverable from the Mt. Hope Project in kind at the mine or may elect to receive cash payment equal to 1% of the total amount of gross payments received from the purchaser of ores mined/removed/sold from property net of certain deductions.

The Liberty Project

The Nevada Division of Environmental Protection (“NDEP”) has identified environmental concerns with some Liberty Project facilities acquired with the property.  NDEP’s concerns are related to aspects of previously approved closure plans required by Nevada regulation.  We have proposed options to NDEP to address these concerns.  In July 2018, we addressed one of those concerns by successfully completing a program, as approved by NDEP, to neutralize the acidic Liberty pit lake by adding hydrated lime to raise the pH.  2018 costs were consistent with budgeted spend.  We will continue to work with NDEP to evaluate ongoing options to address any future concerns, and additional costs may be required to meet NDEP’s closure requirements.  However, a reasonable estimate cannot be determined at this time as it is not possible to reasonably predict the outcome of our negotiations with NDEP.

Deposits on project property, plant and equipment

As discussed in Note 1, the LLC has active orders with varying stages of fabrication on milling process equipment comprised of two 230kV primary transformers and substation, a primary crusher, a semi-autogenous mill, two ball mills, and various motors for the mills with remaining cash commitments of $0.6 million due on these orders. 

Equipment and Supply Procurement

Through September 30, 2019, the LLC has made deposits and/or final payments of $88.0 million on equipment orders and has spent approximately $208.9 million for the development of the Mt. Hope Project, for a total Mt. Hope Project inception-to-date spend of $299.4 million.

In 2012, the LLC issued a firm purchase order for eighteen haul trucks.  The order provides for delivery of those haul trucks required to perform initial mine development, which will begin several months prior to commercial production.  Non-refundable down-payments of $1.2 million were made in 2012, with pricing subject to escalation as the trucks were not delivered prior to December 31, 2013.  Since that time, the LLC has renegotiated the timelines for truck delivery and delayed deliveries into December 2019.  The contract is cancellable with no further liability to the LLC.

Also in 2012, the LLC issued a firm purchase order for four mine production drills with a non-refundable down-payment of $0.4 million, and pricing was subject to escalation if the drills were not delivered by the end of 2013.  Since that time, the LLC accepted a change order which delayed delivery into December 2019.  The contract remains cancellable with no further liability to the LLC.

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On June 30, 2012, the LLC’s contract to purchase two electric shovels expired.  On July 11, 2012, we signed a letter of intent with the same vendor providing for the opportunity to purchase the electric shovels at prices consistent with the expired contract, less a special discount in the amount of $3.4 million to provide credit to the LLC for amounts paid as deposits under the expired contract.  The letter of intent provides that equipment pricing will remain subject to inflation indexes and guarantees production slots to ensure that the equipment is available when required by the LLC.  Since that time, the parties agreed to extend the letter of intent through December 31, 2019.

Obligations under capital and operating leases

We have contractual operating leases that will require a total of $0.3 million in payments over the next four years.  Operating leases consist primarily of rents on office facilities and office equipment.  Our expected payments are $0.1 million, $0.1 million, $0.1 million, and nil for the years ended December 31, 2019, 2020, 2021, and 2022, respectively.

Creation of Agricultural Sustainability Trust

On August 19, 2010, the LLC entered into an agreement with the Eureka Producers’ Cooperative (“EPC”), which was amended on October 15, 2018, whereby the LLC will fund a $5.6 million Sustainability Trust (“Trust”) in exchange for the cooperation of the EPC with respect to the LLC’s water rights and permitting of the Mt. Hope Project.  The Trust will be tasked with developing and implementing programs that will serve to enhance the sustainability and well-being of the agricultural economy in the Diamond Valley Hydrographic Basin through reduced water consumption.

The LLC has contributed $0.1 million into the Trust as of September 30, 2019.  The remaining contributions to the Trust may be funded by the LLC over several years based on the achievement of certain milestones, which are considered probable, and as such $5.5 million has been accrued in the Company’s financial statements and is included in mining properties, land, and water rights.  Additionally, as a result of a settlement of protests to the Mt. Hope project water applications, additional contributions will be made to the Trust, as discussed below under Key Terms of Settlements - Eureka County and the DNR.

Permitting Considerations

In the ordinary course of business, mining companies are required to seek governmental permits for expansion of existing operations or for the commencement of new operations. The LLC is required to obtain approval, in the form of a Record of Decision (“ROD”), from the BLM to implement the Mt. Hope Project Plan of Operations (“PoO”).  The LLC is also required to obtain various state and federal permits including, but not limited to, water protection, air quality, water rights and reclamation.  In addition to requiring permits for the development of the Mt. Hope Project, we will need to obtain and modify various mining and environmental permits during the life of the Mt. Hope Project.  Maintaining, modifying, and renewing the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and substantial expenditures.  The duration and success of the LLC’s efforts to obtain, modify or renew permits will be contingent upon many variables, some of which are not within the LLC’s control.  Increased costs or delays could occur, depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority.  All necessary permits may not be obtained and, if obtained, may not be renewed, or the costs involved in each case may exceed those that we previously estimated.  In addition, it is possible that compliance with such permits may result in additional costs and delays.

History of Record of Decision (ROD)

On November 16, 2012, the BLM issued its initial ROD authorizing development of the Mt. Hope Project.  The ROD was subsequently vacated by the U.S. Court of Appeals for the Ninth Circuit in December 2016, discussed below.  Also, on April 23, 2015, the BLM issued a Finding of No Significant Impact (“FONSI”) supporting their Decision to approve an amendment to the PoO.  The initial ROD and FONSI/Decision approved the PoO and amended PoO, respectively, for construction and operation of the mining and processing facilities and also granted the Right-of-Way, and amended Right-of-Way, respectively, for a 230kV power transmission line, discussed below.  Monitoring and mitigation measures identified in the initial ROD and FONSI, developed in collaboration with the regulatory agencies involved throughout the permitting process, will avoid, minimize, and mitigate environmental impacts, and reflect the Company’s commitment to be good stewards of the environment.  Ongoing changes to permits and the PoO during the life of mining operations are typical as design evolves and operations are optimized.

On February 15, 2013, Great Basin Resource Watch and the Western Shoshone Defense Project (“Plaintiffs”) filed a Complaint against the U.S. Department of the Interior and the BLM (“Defendants”) in the U.S. District Court, District of Nevada (“District Court”), seeking relief under the National Environmental Policy Act (“NEPA”) and other federal laws challenging the

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BLM’s issuance of the initial ROD for the Mt. Hope Project, and on February 20, 2013 filed a Motion for Preliminary Injunction.  The District Court allowed the LLC to intervene in the matter.

On August 22, 2013, the District Court denied, without prejudice, Plaintiffs’ Motion for Preliminary Injunction based on a Joint Stipulation to Continue Preliminary Injunction Oral Argument, which advised the District Court that as a result of economic conditions, including the Company’s ongoing financing efforts, all major ground disturbing activities had ceased at the Mt. Hope Project.

On July 23, 2014, the District Court denied Plaintiffs’ motion for summary judgment in its entirety and on August 1, 2014 the Court entered judgment in favor of the Defendants and the LLC, and against Plaintiffs regarding all claims raised in the Complaint. 

Thereafter, on September 22, 2014, the Plaintiffs filed their notice of appeal to the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) of the District Court’s dismissal.  Oral argument of the parties before the Ninth Circuit was completed on October 18, 2016.  On December 28, 2016, the Ninth Circuit issued its Opinion rejecting many of the arguments raised by the Plaintiffs challenging the Environmental Impact Statement ("EIS") completed for the Mt. Hope Project, but issued a narrow reversal of the BLM's findings related to air quality analysis and information related to potential public water resources. Because of this technical deficiency, the Court vacated the initial ROD.

Re-Issuance of Record of Decision Approving Supplemental Environmental Impact Statement (“SEIS”)

On remand to the BLM, the agency conducted additional evaluation of air quality impacts and resulting cumulative impact analysis under NEPA in preparation of a Supplemental Environmental Impact Statement (“SEIS”).  The SEIS disclosed additional information to the public related to the selection of appropriate background concentrations to use for dispersion modeling of air pollutants and information related to potential public water reserves.  Because the SEIS must be prepared in accordance with NEPA guidelines, the SEIS included three publications in the Federal Register, the first was the Notice of Intent (“NOI”) which was published on July 19, 2017, the second, the Notice of Availability (“NOA”) of the Draft SEIS (“DSEIS”) was published on March 6, 2019, and on September 27, 2019, the third NOA was published announcing that the BLM had re-issued the ROD marking completion of the NEPA process and approval of the SEIS.  On November 5, 2019, we announced that a Complaint was filed against the U.S. Department of Interior and the BLM in the U.S. District Court in Nevada, challenging the re-issuance of the ROD. We are reviewing the Complaint filed by Great Basin Resource Watch and the Western Shoshone Defense Project, and may seek permission from the Court to intervene on behalf of the Mt. Hope Project.

Reclamation Considerations

Environmental regulations related to reclamation require that the cost for a third party contractor to perform reclamation activities on the minesite be estimated.  In October 2015, we submitted a request to the BLM to reduce our reclamation liability to current surface disturbance.  Simultaneously, we submitted an application to NDEP-BMRR to modify the Reclamation Permit to reflect this reduced reclamation liability. On October 26, 2015, NDEP-BMRR approved the proposed permit modification, including the reduced reclamation liability amount.   On December 21, 2015, BLM approved the updated reclamation liability estimate, reducing of the reclamation liability to approximately $2.8 million.  In early 2019, the Company submitted, and BLM approved a required 3-year update to the reclamation liability estimate, resulting in an increased liability of approximately $3.1 million.  We worked with the LLC’s reclamation surety underwriters to satisfy the $2.8 million financial guarantee requirements under the approved amended PoO for the Mt. Hope Project and funded the $0.3 million increase in cash directly with the BLM in April 2019.  As of September 30, 2019, the surety bond program was funded with a cash collateral payment of $0.3 million.

Water Rights Considerations

History of Mt. Hope Water Permits

In July 2011, the Nevada State Engineer (“State Engineer”) initially approved our applications for new appropriation of water for mining and milling use, and applications to change existing water from agricultural use to mining and milling use for the Mt. Hope Project.  Subsequently, the State Engineer granted water permits associated with the approved applications and approved a Monitoring, Management and Mitigation Plan (“3M Plan”) for the Mt. Hope Project.  Eureka County, Nevada and two other parties comprised of water rights holders in Diamond Valley and Kobeh Valley appealed the State Engineer’s decision approving the applications and granting the water permits to the Nevada State District Court (“District Court”) and then filed a further appeal to the Nevada Supreme Court challenging the District Court’s decision affirming the State Engineer’s decision to approve the applications and grant the water permits.  In June 2013, the appeal was consolidated by the Nevada Supreme Court with an appeal

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of the State Engineer’s approval of the 3M Plan filed by two water rights holders.  The District Court previously upheld the State Engineer’s approval of the 3M Plan and the two parties subsequently appealed the District Court’s decision to the Nevada Supreme Court. 

On September 18, 2015, the Nevada Supreme Court issued an Order that reversed and remanded the cases to the District Court for further proceedings consistent with the Order.  On October 29, 2015, the Nevada Supreme Court issued the Order as a published Opinion.  The Nevada Supreme Court ruled that the State Engineer did not have sufficient evidence in the record at the time he approved the applications and granted the water permits to demonstrate that successful mitigation may be undertaken so as to dispel the threat to existing water rights holders.

On September 27, 2017, the Nevada Supreme Court affirmed a March 4, 2016 District Court Order vacating the 3M Plan, denying the water applications and vacating the permits issued by the State Engineer in July 2011 and June 2012.  This decision of the Nevada Supreme Court was final, and not subject to further appeal.

New Change Applications for Water Use at Mt. Hope Project

After the Company received the September 2017 decision from the Nevada Supreme Court, it proceeded with new applications to change existing agricultural irrigation and mining/milling water rights owned by the Company to use at the Mt. Hope Project.  These new change applications had been filed with the State Engineer in 2015 and 2016 while the above described appeals were pending before the Nevada Supreme Court.  Originally, these applications and other new appropriation applications were to be addressed at a pre-hearing conference scheduled on August 25, 2016 before the State Engineer.  These applications were the subject of a Writ of Prohibition or Mandamus (“Writ”) filed by Eureka County on August 23, 2016 to the Nevada Supreme Court seeking the Supreme Court’s intervention to stop further action by the State Engineer while the appeals discussed above were pending.  On December 22, 2017 the Nevada Supreme Court denied Eureka County’s Writ Petition.  As a result, the State Engineer allowed a pre-hearing conference held on January 24, 2018.  At the pre-hearing conference the State Engineer and his hearing officer scheduled review of the new change applications for a September 11, 2018 hearing in Carson City, Nevada. 

On January 2, 2018, Eureka County, and later joined by the other two protestants representing a rancher in Kobeh Valley and a ranching group in Diamond Valley, filed a motion to dismiss with the State Engineer asserting that our applications were precluded from review and approval asserting that they were repetitive of the applications denied previously by the Nevada Supreme Court in its September 2017 decision.  On March 26, 2018, the State Engineer issued a non-final order denying the motion to dismiss finding that the applications to be reviewed at the upcoming hearing were not identical issues and that further consideration of the motion could be taken at the hearing.  On May 14, 2018, Eureka County, joined by the other protestants filed a Writ to the Nevada Supreme Court and later a Motion to Stay the September hearing date, asserting that the denial of the Motion to Dismiss was erroneous and that the Nevada Supreme Court should order that the applications be denied and/or the September 2018 hearing should be delayed until the Nevada Supreme Court can consider the Writ and underlying motion to dismiss.  The Company filed its objection on June 27, 2018, and on August 30, 2018, the Nevada Supreme Court denied the Writ, permitting the September 2018 hearing before the Nevada State Engineer to proceed. 

On the second day of the September hearing, all protest issues raised by Eureka County and the Diamond Natural Resources Protections & Conservation Association (“DNR”) concerning the Mt. Hope water rights applications were resolved through a Stipulation, Settlement Agreement and Withdrawal of Protest (“Settlement”).  After Eureka County and DNR were excused, the hearing continued with evidence addressing concerns raised by another protestant representing a Kobeh Valley ranching family and cattle company that refused to participate in the Settlement. At the public hearing, the Company presented expert testimony in support of its augmentation and monitoring plan to the Nevada State Engineer, which will protect senior water rights in the Kobeh Valley basin when the Company commences construction and operation of its proposed Mt. Hope molybdenum project near the town of Eureka, Nevada.  The hearing concluded on September 21, 2018. 

Effective April 30, 2019,  the Company, through its wholly owned subsidiary Kobeh Valley Ranch LLC (“KVR”) and the entered into a settlement agreement with a Kobeh Valley, Nevada ranching family (“Ranchers”), resolving the last set of protests pending before the Nevada State Engineer pertaining to the Mt. Hope Project’s water rights applications.

On June 6, 2019, the Nevada State Engineer issued Ruling 6464 granting the Company’s water rights applications for mining purposes.  The water right permits for the Mt. Hope Project were issued on July 24, 2019.  With receipt of and in compliance with the terms of the water permits, the water is available for consumptive use at the Mt. Hope Project.

Key Terms of Settlements

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Eureka County and the DNR

Under the terms of the Settlement with Eureka County and the DNR, the Company and the LLC agreed to convey all related water rights for Mt. Hope Project at the future cessation of all mining activity to assist Eureka County and the DNR’s efforts to mitigate the pre-existing effects of agricultural groundwater pumping in Diamond Valley. Furthermore, upon construction of certain power infrastructure and grants of right of way by the LLC at the Mt. Hope Project, the Company and the LLC will work cooperatively with Eureka County to allow use of and access to such infrastructure to lessen the pre-existing effects of Diamond Valley groundwater pumping. Eureka County, and the Company and the LLC, also agreed to work cooperatively to seek opportunities to improve and implement groundwater monitoring efforts.

In addition, the Company withdrew its protests to Eureka County’s pending applications with the Nevada State Engineer to appropriate water from the Kobeh Valley basin, and at the request of DNR, the Company also agreed to publicly support the proposed Diamond Valley Ground Water Management Plan currently pending before the Nevada State Engineer.

With receipt of the water permits, the LLC increased its financial contributions to the existing Agricultural Sustainability Trust Agreement, discussed above, with the Eureka Producers’ Cooperative (“EPC”) in Diamond Valley with an additional $50,000 to EPC.  Initially, upon execution of the Settlement, the LLC made a payment of $50,000. 

The LLC will make additional contributions of $750,000 each after the commencement of molybdenum production at the Mt. Hope Project and on the one year anniversary of production, for a total contribution obligation to the Sustainability Trust of $5.6 million, an increase of $1.6 million related to the terms of the Settlement. The amount has been accrued under mining properties, land, and water rights in the Company’s financial statements in addition to the previously accrued $4.0 million resulting in a total accrual of $5.6 million.  The LLC has contributed $0.1 million into the Trust as of September 30, 2019.

The Sustainability Trust is tasked with developing and implementing programs that will serve to slow groundwater drawdown and thereby improve the sustainability of the agricultural economy in the Diamond Valley Hydrographic Basin.  

Kobeh Valley Ranching Family

At the execution of the settlement agreement, the LLC funded an initial payment of $1 million into a trust account; distribution to the Ranchers occurred when the water permits were issued on July 24, 2019.  Upon receipt of the initial $1,000,000 into the trust account, the Ranchers withdrew their protests and forfeited any judicial review of Ruling 6464 and the water applications and issuance of the water permits issued on July 24, 2019 by the Nevada State Engineer.

When conditions exist for the LLC to secure project financing additional consideration representing less than 1.5 % of the remaining project capital budget will be payable to the Ranchers.  If the LLC has not secured Mt. Hope Project financing within 12 months of the executed settlement agreement, the LLC will make monthly payments of $10,000 to the Ranchers until financing is achieved and the remaining consideration will be paid to the Ranchers.

Funding for the $1 million was advanced to the LLC by the Company, to preserve the joint venture’s existing reserve account.  General Moly sourced $500,000 from its available cash, and received the remaining $500,000 from closing a sale of Series A Convertible Preferred Shares in a private placement with Mount Hope Mines Inc. (“MHMI”) discussed in Notes 1 and 7 above, the Mt. Hope Project’s claim/land lessor.

In exchange for General Moly advancing the $1,000,000 initial settlement funding, the LLC members have agreed to repay the $1 million advance from the proceeds of ongoing sales of non-critical LLC assets and lands.  On September 27, 2019, the Company and POS-Minerals entered into a Consent Agreement for a reimbursement schedule concerning the approximately $700,000 owed to the Company by the LLC in return for its advance of funding to settle protests related to the water right applications for the Mt. Hope Project.  Under the Consent Agreement, $200,000 was reimbursed from the Reserve Account to the Company on September 30, 2019 and an additional $200,000 was reimbursed in early November.  The remaining approximately $300,000 will be reimbursed in December, provided that the LLC has sold a minimum of $400,000 in non-critical Mt. Hope Project related equipment. 

Environmental Considerations

Our mineral property holdings in Shoshone County, Idaho include lands contained in mining districts that have been designated as a “Superfund Site” pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act.  This “Superfund Site” was established to investigate and remediate primarily the Bunker Hill properties of Smelterville, Idaho, a small

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portion of Shoshone County where a large smelter was located.  However, because of the extent of environmental impact caused by the historical mining in the mining district, the Superfund Site covers the majority of Shoshone County including our Chicago-London and Little Pine Creek properties as well as many small towns located in Northern Idaho.  We have conducted a property environmental investigation of these properties, which revealed no evidence of material adverse environmental effects at either property.  We are unaware of any pending action or proceeding relating to any regulatory matters that would affect our financial position due to these inactive mining claims in Shoshone County.

NOTE 12 — SUBSEQUENT EVENTS

On October 14, 2019, the Company announced that it had entered into an agreement with AMER to extend the dispute negotiation period (“Extension Agreement”).  Under the terms of the Extension Agreement, the Company received $300,000 from AMER in exchange for an extension of the negotiation period to November 15, 2019, on which date the Company’s CEO Bruce Hansen and AMER Chairman Wang Wenyin met to discuss settlement options.  With the payment, AMER shall have the right, at its option, to credit the Extension Fee among the following: (1) credit against a final negotiated settlement; (2) credit against any AMER payment obligation to the Company, pursuant to an arbitration award; or (3) apply the Extension Fee as consideration for the purchase of the Company’s common stock, priced at the 30-day volume weighted average price, as of the date immediately prior to the date that AMER demands delivery of such shares.  As announced on November 19, 2019, the Company and AMER are continuing negotiations and hope to reach a mutually beneficial resolution within the next two weeks.

The Company has reached an agreement in principle (“AiP”) with the holder of $5 million of the Company’s Senior Convertible Promissory Notes and certain other holders of Senior Convertible Notes and Senior Promissory Notes (collectively, the “Senior Notes”) to exchange the Senior Notes for new units consisting of new senior non-convertible promissory notes in the same original principal amount bearing an interest rate between 12-14% and otherwise providing for similar terms (the “Exchange Notes”) and a three-year warrant to purchase Company common stock at $0.35 share (each a “Unit”).  The Exchange Notes will extend the maturity date until December 2022.

In addition to the exchange of Senior Notes, the largest holder of the Senior Notes, as well as the Company’s CEO, Bruce Hansen, have agreed, subject to execution of definitive documentation, to purchase new 13% Senior Promissory Notes due 2022 in the principal amount of $610,000 (representing 10% of the original principal amount of the Senior Notes to be exchanged) providing additional capital to the Company.  At this date, the total principal amount of Senior Notes contemplated to be extended by the AiP is $6.37 million out of the $7.25 million Senior Notes outstanding.  The maturity date for the outstanding Senior Notes is December 26, 2019.

On November 5, 2019, we announced that a Complaint was filed against the U.S. Department of Interior and the BLM in the U.S. District Court in Nevada, challenging the re-issuance of the ROD. We are reviewing the Complaint filed by Great Basin Resource Watch and the Western Shoshone Defense Project, and may seek permission from the Court to intervene on behalf of the Mt. Hope Project.

Unless discussed elsewhere in this document, no other subsequent events exist.

ITEM 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References made in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” or the “Company,” 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 and nine months ended September 30, 2019, and 2018.  This discussion should be read in conjunction with the consolidated financial statements and notes thereto contained elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2018, which was filed on March 21, 2019.

We routinely post important information about us on our Company website.  Our website address is www.generalmoly.com.  We do not incorporate the information on our website into this document and you should not consider any information on, or that can be accessed through, our website as part of this document.

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AMER Default on Tranche 3 Private Placement Obligation

The last closing conditions for Tranche 3 under the AMER Investment Agreement included issuance of water permits for the Mt. Hope Project.  The water permits were issued by the Nevada State Engineer on July 24, 2019.  On July 26, 2019, the Company provided formal notice to AMER that the conditions to closing of Tranche 3 had been satisfied, and that AMER would have two business days (until the close of business on Tuesday, July 30, 2019) to close the transaction.  On July 31, 2019, the Company sent a Notice of Default, as AMER failed to fund and close Tranche 3 by the July 30, 2019 deadline.

On August 1, 2019, the Company received a letter from AMER dated July 30, 2019, purporting to terminate the AMER Investment Agreement, referencing its earlier letter received by the Company on July 18, 2019, in which AMER has alleged uncured material adverse effects and alleged breaches of the AMER Investment Agreement by the Company (which include concerns related to US/China relations, concerns regarding the delay in obtaining environmental permits and solvency concerns).  The Company believes such assertions to be inaccurate and wholly without merit under the terms of the AMER Investment Agreement.  As AMER has failed to timely fund and close Tranche 3 and is now in default, the Company believes that AMER’s attempted termination of the AMER Investment Agreement is ineffective.  With AMER’s default with respect to its obligation to fund Tranche 3, the Company will have inadequate cash to continue operations and will have to evaluate its options going forward, including pursuing asset sales, short-term financing options and, if unsuccessful in obtaining sufficient financing, the possibility of seeking bankruptcy protection.  General Moly is seeking immediate sources of liquidity and is evaluating potential strategic alternatives, including sourcing of potential incremental capital financing, sale of interest(s) in the assets of the Company or the Company, and restructuring of the convertible and non-convertible debt from the 2014 private placement, which matures in December 2019. 

On August 28, 2019, the Company engaged King & Spalding, an international arbitration and litigation firm, to represent the Company in its dispute against AMER for AMER’s default under the amended Investment Securities Purchase Agreement (“Agreement”).  The Company formally notified AMER that a dispute exists between the parties as a result of their failure to close Tranche 3.  The notification requires that one representative of each of the executive management of the parties be designated and authorized to attempt to settle the Dispute and the representatives are to meet in good faith to resolve the Dispute.  If the designated representatives do not resolve the Dispute within 10 business days after delivery of the Notice, the Dispute will be subject to resolution by binding arbitration, pursuant to the AMER Investment Agreement.  Any arbitration is to be held in Hong Kong under the rules of the International Chamber of Commerce.

On October 14, 2019, the Company announced that it had entered into an agreement with AMER to extend the dispute negotiation period (“Extension Agreement”).  Under the terms of the Extension Agreement, the Company received $300,000 from AMER in exchange for an extension of the negotiation period to November 15, 2019, on which date the Company’s CEO Bruce Hansen and AMER Chairman Wang Wenyin met to discuss settlement options.  With the payment, AMER shall have the right, at its option, to credit the Extension Fee among the following: (1) credit against a final negotiated settlement; (2) credit against any AMER payment obligation to the Company, pursuant to an arbitration award; or (3) apply the Extension Fee as consideration for the purchase of the Company’s common stock, priced at the 30-day volume weighted average price, as of the date immediately prior to the date that AMER demands delivery of such shares.  As announced on November 19, 2019, the Company and AMER are continuing negotiations and hope to reach a mutually beneficial resolution within the next two weeks.

Overview

We began the development of the Mt. Hope Project on October 4, 2007.  During the year ended December 31, 2008 we also completed work on a pre-feasibility study of our Liberty Project, which we updated during 2014.

Project Ownership

From October 2005 to January 2008, we owned the rights to 100% of the Mt. Hope Project.  Effective as of January 1, 2008, we contributed all of our interest in the assets related to the Mt. Hope Project, the Mt. Hope Lease, discussed above, into the LLC, and in February 2008 entered into an joint venture agreement (“LLC Agreement”) for the development and operation of the Mt. development and operation of the Mt. Hope Project with POS-Minerals Corporation (“POS-Minerals”).  Under the LLC Agreement, POS-Minerals owns a 20% interest in the LLC and General Moly, through Nevada Moly, LLC (“Nevada Moly”), a wholly-owned subsidiary, owns an 80% interest.  The ownership interests and/or required capital contributions under the LLC Agreement can change as discussed below.

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Pursuant to the terms of the LLC Agreement, POS-Minerals made its first and second capital contributions to the LLC totaling $100.0 million during the year ended December 31, 2008 (“Initial Contributions”).  Additional amounts of $100.7 million were received from POS-Minerals in December 2012, following receipt of major operating permits for the Mt. Hope Project, including the initial Record of Decision (“ROD”) from the U.S. Bureau of Land Management (“BLM”).

Under the terms of the LLC Agreement, since commercial production at the Mt. Hope Project was not achieved by December 31, 2011, the LLC will be required to return to POS-Minerals $36.0 million, since reduced to $33.6 million as discussed below, of its capital contributions (“Return of Contributions”), with no corresponding reduction in POS-Minerals’ ownership percentage.  Effective January 1, 2015, as part of a comprehensive agreement concerning the release of the reserve account described below, Nevada Moly and POS-Minerals agreed that the Return of Contributions will be payable to POS-Minerals on December 31, 2020; provided that, at any time on or before November 30, 2020, Nevada Moly and POS-Minerals may agree in writing to extend the due date to December 31, 2021; and if the due date has been so extended, at any time on or before November 30, 2021, Nevada Moly and POS-Minerals may agree in writing to extend the due date to December 31, 2022.  If the repayment date is extended, the unpaid amount will bear interest at a rate per annum of LIBOR plus 5%, which interest shall compound quarterly, commencing on December 31, 2020 through the date of payment in full.  Payments of accrued but unpaid interest, if any, shall be made on the repayment date.  Nevada Moly may elect, on behalf of the Company, to cause the Company to prepay, in whole or in part, the Return of Contributions at any time, without premium or penalty, along with accrued and unpaid interest, if any.

The original Return of Contributions amount due to POS-Minerals is reduced, dollar for dollar, by the amount of capital contributions for equipment payments required from POS-Minerals under approved budgets of the LLC, as discussed further below.  As of September 30, 2019, this amount has been reduced by $2.4 million, consisting of POS-Mineral’s 20% share of equipment purchases, such that the remaining amount due to POS-Minerals is $33.6 million.  If Nevada Moly does not fund its additional capital contribution in order for the LLC to make the required Return of Contributions to POS-Minerals set forth above, POS-Minerals has an election to either make a secured loan to the LLC to fund the Return of Contributions or receive an additional interest in the LLC estimated to be 5%.  In the latter case, Nevada Moly’s interest in the LLC is subject to dilution by a percentage equal to the ratio of 1.5 times the amount of the unpaid Return of Contributions over the aggregate amount of deemed capital contributions (as determined under the LLC Agreement) of both parties to the LLC (“Dilution Formula”).  At September 30, 2019, the aggregate amount of deemed capital contributions of both parties was $1,090.3 million.

Furthermore, the LLC Agreement permits POS-Minerals to put/sell its interest in the LLC to Nevada Moly after a change of control of Nevada Moly or the Company, as defined in the LLC Agreement, followed by a failure by us or our successor company to use standard mining industry practice in connection with the development and operation of the Mt. Hope Project as contemplated by the parties for a period of twelve (12) consecutive months.  If POS-Minerals exercises its option to put or sell its interest, Nevada Moly or its transferee or surviving entity would be required to purchase the interest for 120% of POS-Minerals’ total contributions to the LLC, which, if not paid timely, would be subject to 10% interest per annum.

In November 2012, the Company and POS-Minerals began making monthly pro rata capital contributions to the LLC to fund costs incurred as required by the LLC Agreement.  The interest of a party in the LLC that does not make its monthly pro rata capital contributions to fund costs incurred is subject to dilution based on the Dilution Formula.  The Company and POS-Minerals consented, effective July 1, 2013, to Nevada Moly accepting financial responsibility for POS-Minerals’ 20% interest in costs related to Nevada Moly’s compensation and reimbursement as Manager of the LLC, and certain owners’ costs associated with Nevada Moly’s ongoing progress to complete project financing for its 80% interest, resulting in $2.9 million paid by Nevada Moly on behalf of POS-Minerals during the term of the consensual agreement, which ended on June 30, 2014.  From July 1, 2014 to December 31, 2014, POS-Minerals once again contributed its 20% interest in all costs incurred by the LLC.  Subject to the terms above, all required monthly contributions have been made by both parties.

The Reserve Account

Effective January 1, 2015, Nevada Moly and POS-Minerals signed an amendment to the LLC Agreement under which a separate $36.0 million belonging to Nevada Moly, held by the LLC in a reserve account established in December 2012, is being released for the mutual benefit of both members related to annual jointly approved Mt. Hope Project expenses into 2021.  In January 2015, the reserve account funded a reimbursement of contributions made by the members during the fourth quarter of 2014, inclusive of $0.7 million to POS-Minerals and $2.7 million to Nevada Moly.  The remaining reserve account funds are now being used to pay ongoing jointly approved expenses of the LLC until the Company obtains full financing for its portion of the Mt. Hope Project construction cost, or until the reserve account is exhausted.  Any remaining funds after financing is obtained will be returned to the Company.  The balance of the reserve account was $4.1 million and $6.2 million at September 30, 2019 and December 31, 2018, respectively. 

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Permitting Considerations

In the ordinary course of business, mining companies are required to seek governmental permits for expansion of existing operations or for the commencement of new operations. The LLC is required to obtain approval, in the form of a Record of Decision (“ROD”), from the BLM to implement the Mt. Hope Project Plan of Operations (“PoO”).  The LLC is also required to obtain various state and federal permits including, but not limited to, water protection, air quality, water rights and reclamation.  In addition to requiring permits for the development of the Mt. Hope Project, we will need to obtain and modify various mining and environmental permits during the life of the Mt. Hope Project.  Maintaining, modifying, and renewing the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and substantial expenditures.  The duration and success of the LLC’s efforts to obtain, modify or renew permits will be contingent upon many variables, some of which are not within the LLC’s control.  Increased costs or delays could occur, depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority.  All necessary permits may not be obtained and, if obtained, may not be renewed, or the costs involved in each case may exceed those that we previously estimated.  In addition, it is possible that compliance with such permits may result in additional costs and delays.

History of Record of Decision (ROD)

On November 16, 2012, the BLM issued its initial ROD authorizing development of the Mt. Hope Project.  The ROD was subsequently vacated by the U.S. Court of Appeals for the Ninth Circuit in December 2016, discussed below.  Also, on April 23, 2015, the BLM issued a Finding of No Significant Impact (“FONSI”) supporting their Decision to approve an amendment to the PoO.  The initial ROD and FONSI/Decision approved the PoO and amended PoO, respectively, for construction and operation of the mining and processing facilities and also granted the Right-of-Way, and amended Right-of-Way, respectively, for a 230kV power transmission line, discussed below.  Monitoring and mitigation measures identified in the initial ROD and FONSI, developed in collaboration with the regulatory agencies involved throughout the permitting process, will avoid, minimize, and mitigate environmental impacts, and reflect the Company’s commitment to be good stewards of the environment.  Ongoing changes to permits and the PoO during the life of mining operations are typical as design evolves and operations are optimized.

On February 15, 2013, Great Basin Resource Watch and the Western Shoshone Defense Project (“Plaintiffs”) filed a Complaint against the U.S. Department of the Interior and the BLM (“Defendants”) in the U.S. District Court, District of Nevada (“District Court”), seeking relief under the National Environmental Policy Act (“NEPA”) and other federal laws challenging the BLM’s issuance of the initial ROD for the Mt. Hope Project, and on February 20, 2013 filed a Motion for Preliminary Injunction.  The District Court allowed the LLC to intervene in the matter.

On August 22, 2013, the District Court denied, without prejudice, Plaintiffs’ Motion for Preliminary Injunction based on a Joint Stipulation to Continue Preliminary Injunction Oral Argument, which advised the District Court that as a result of economic conditions, including the Company’s ongoing financing efforts, all major ground disturbing activities had ceased at the Mt. Hope Project.

On July 23, 2014, the District Court denied Plaintiffs’ motion for summary judgment in its entirety and on August 1, 2014 the Court entered judgment in favor of the Defendants and the LLC, and against Plaintiffs regarding all claims raised in the Complaint. 

Thereafter, on September 22, 2014, the Plaintiffs filed their notice of appeal to the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) of the District Court’s dismissal.  Oral argument of the parties before the Ninth Circuit was completed on October 18, 2016.  On December 28, 2016, the Ninth Circuit issued its Opinion rejecting many of the arguments raised by the Plaintiffs challenging the Environmental Impact Statement ("EIS") completed for the Mt. Hope Project, but issued a narrow reversal of the BLM's findings related to air quality analysis and information related to potential public water resources. Because of this technical deficiency, the Court vacated the initial ROD.

Re-Issuance of Record of Decision Approving Supplemental Environmental Impact Statement (“SEIS”)

On remand to the BLM, the agency conducted additional evaluation of air quality impacts and resulting cumulative impact analysis under NEPA in preparation of a Supplemental Environmental Impact Statement (“SEIS”).  The SEIS disclosed additional information to the public related to the selection of appropriate background concentrations to use for dispersion modeling of air pollutants and information related to potential public water reserves.  Because the SEIS must be prepared in accordance with NEPA guidelines, the SEIS included three publications in the Federal Register, the first was the Notice of Intent (“NOI”) which was published on July 19, 2017, the second, the Notice of Availability (“NOA”) of the Draft SEIS (“DSEIS”) was published on March

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6, 2019, and on September 27, 2019, the third NOA was published announcing that the BLM had re-issued the ROD marking completion of the NEPA process and approval of the SEIS. 

Reclamation Considerations

Environmental regulations related to reclamation require that the cost for a third party contractor to perform reclamation activities on the minesite be estimated.  In October 2015, we submitted a request to the BLM to reduce our reclamation liability to current surface disturbance.  Simultaneously, we submitted an application to NDEP-BMRR to modify the Reclamation Permit to reflect this reduced reclamation liability. On October 26, 2015, NDEP-BMRR approved the proposed permit modification, including the reduced reclamation liability amount.   On December 21, 2015, BLM approved the updated reclamation liability estimate, reducing of the reclamation liability to approximately $2.8 million.  In early 2019, the Company submitted, and BLM approved a required 3-year update to the reclamation liability estimate, resulting in an increased liability of approximately $3.1 million.  We worked with the LLC’s reclamation surety underwriters to satisfy the $2.8 million financial guarantee requirements under the approved amended PoO for the Mt. Hope Project and funded the $0.3 million increase in cash directly with the BLM in April 2019.  As of September 30, 2019, the surety bond program was funded with a cash collateral payment of $0.3 million.

Water Rights Considerations

History of Mt. Hope Water Permits

In July 2011, the Nevada State Engineer (“State Engineer”) initially approved our applications for new appropriation of water for mining and milling use, and applications to change existing water from agricultural use to mining and milling use for the Mt. Hope Project.  Subsequently, the State Engineer granted water permits associated with the approved applications and approved a Monitoring, Management and Mitigation Plan (“3M Plan”) for the Mt. Hope Project.  Eureka County, Nevada and two other parties comprised of water rights holders in Diamond Valley and Kobeh Valley appealed the State Engineer’s decision approving the applications and granting the water permits to the Nevada State District Court (“District Court”) and then filed a further appeal to the Nevada Supreme Court challenging the District Court’s decision affirming the State Engineer’s decision to approve the applications and grant the water permits.  In June 2013, the appeal was consolidated by the Nevada Supreme Court with an appeal of the State Engineer’s approval of the 3M Plan filed by two water rights holders.  The District Court previously upheld the State Engineer’s approval of the 3M Plan and the two parties subsequently appealed the District Court’s decision to the Nevada Supreme Court. 

On September 18, 2015, the Nevada Supreme Court issued an Order that reversed and remanded the cases to the District Court for further proceedings consistent with the Order.  On October 29, 2015, the Nevada Supreme Court issued the Order as a published Opinion.  The Nevada Supreme Court ruled that the State Engineer did not have sufficient evidence in the record at the time he approved the applications and granted the water permits to demonstrate that successful mitigation may be undertaken so as to dispel the threat to existing water rights holders.

On September 27, 2017, the Nevada Supreme Court affirmed a March 4, 2016 District Court Order vacating the 3M Plan, denying the water applications and vacating the permits issued by the State Engineer in July 2011 and June 2012.  This decision of the Nevada Supreme Court was final, and not subject to further appeal.

New Change Applications for Water Use at Mt. Hope Project

After the Company received the September 2017 decision from the Nevada Supreme Court, it proceeded with new applications to change existing agricultural irrigation and mining/milling water rights owned by the Company to use at the Mt. Hope Project.  These new change applications had been filed with the State Engineer in 2015 and 2016 while the above described appeals were pending before the Nevada Supreme Court.  Originally, these applications and other new appropriation applications were to be addressed at a pre-hearing conference scheduled on August 25, 2016 before the State Engineer.  These applications were the subject of a Writ of Prohibition or Mandamus (“Writ”) filed by Eureka County on August 23, 2016 to the Nevada Supreme Court seeking the Supreme Court’s intervention to stop further action by the State Engineer while the appeals discussed above were pending.  On December 22, 2017 the Nevada Supreme Court denied Eureka County’s Writ Petition.  As a result, the State Engineer allowed a pre-hearing conference held on January 24, 2018.  At the pre-hearing conference the State Engineer and his hearing officer scheduled review of the new change applications for a September 11, 2018 hearing in Carson City, Nevada. 

On January 2, 2018, Eureka County, and later joined by the other two protestants representing a rancher in Kobeh Valley and a ranching group in Diamond Valley, filed a motion to dismiss with the State Engineer asserting that our applications were precluded from review and approval asserting that they were repetitive of the applications denied previously by the Nevada

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Supreme Court in its September 2017 decision.  On March 26, 2018, the State Engineer issued a non-final order denying the motion to dismiss finding that the applications to be reviewed at the upcoming hearing were not identical issues and that further consideration of the motion could be taken at the hearing.  On May 14, 2018, Eureka County, joined by the other protestants filed a Writ to the Nevada Supreme Court and later a Motion to Stay the September hearing date, asserting that the denial of the Motion to Dismiss was erroneous and that the Nevada Supreme Court should order that the applications be denied and/or the September 2018 hearing should be delayed until the Nevada Supreme Court can consider the Writ and underlying motion to dismiss.  The Company filed its objection on June 27, 2018, and on August 30, 2018, the Nevada Supreme Court denied the Writ, permitting the September 2018 hearing before the Nevada State Engineer to proceed. 

On the second day of the September hearing, all protest issues raised by Eureka County and the Diamond Natural Resources Protections & Conservation Association (“DNR”) concerning the Mt. Hope water rights applications were resolved through a Stipulation, Settlement Agreement and Withdrawal of Protest (“Settlement”).  After Eureka County and DNR were excused, the hearing continued with evidence addressing concerns raised by another protestant representing a Kobeh Valley ranching family and cattle company that refused to participate in the Settlement. At the public hearing, the Company presented expert testimony in support of its augmentation and monitoring plan to the Nevada State Engineer, which will protect senior water rights in the Kobeh Valley basin when the Company commences construction and operation of its proposed Mt. Hope molybdenum project near the town of Eureka, Nevada.  The hearing concluded on September 21, 2018. 

Effective April 30, 2019,  the Company, through its wholly owned subsidiary Kobeh Valley Ranch LLC (“KVR”) and the entered into a settlement agreement with a Kobeh Valley, Nevada ranching family (“Ranchers”), resolving the last set of protests pending before the Nevada State Engineer pertaining to the Mt. Hope Project’s water rights applications.

On June 6, 2019, the Nevada State Engineer issued Ruling 6464 granting the Company’s water rights applications for mining purposes.  The water right permits for the Mt. Hope Project were issued on July 24, 2019.  With receipt of and in compliance with the terms of the water permits, the water is available for consumptive use at the Mt. Hope Project.

Key Terms of Settlements

Eureka County and the DNR

Under the terms of the Settlement with Eureka County and the DNR, the Company and the LLC agreed to convey all related water rights for Mt. Hope Project at the future cessation of all mining activity to assist Eureka County and the DNR’s efforts to mitigate the pre-existing effects of agricultural groundwater pumping in Diamond Valley. Furthermore, upon construction of certain power infrastructure and grants of right of way by the LLC at the Mt. Hope Project, the Company and the LLC will work cooperatively with Eureka County to allow use of and access to such infrastructure to lessen the pre-existing effects of Diamond Valley groundwater pumping. Eureka County, and the Company and the LLC, also agreed to work cooperatively to seek opportunities to improve and implement groundwater monitoring efforts.

In addition, the Company withdrew its protests to Eureka County’s pending applications with the Nevada State Engineer to appropriate water from the Kobeh Valley basin, and at the request of DNR, the Company also agreed to publicly support the proposed Diamond Valley Ground Water Management Plan currently pending before the Nevada State Engineer.

With receipt of the water permits, the LLC increased its financial contributions to the existing Agricultural Sustainability Trust Agreement, discussed above, with the Eureka Producers’ Cooperative (“EPC”) in Diamond Valley with an additional $50,000 to EPC.  Initially, upon execution of the Settlement, the LLC made a payment of $50,000. 

The LLC will make additional contributions of $750,000 each after the commencement of molybdenum production at the Mt. Hope Project and on the one year anniversary of production, for a total contribution obligation to the Sustainability Trust of $5.6 million, an increase of $1.6 million related to the terms of the Settlement. The amount has been accrued under mining properties, land, and water rights in the Company’s financial statements in addition to the previously accrued $4.0 million resulting in a total accrual of $5.6 million.  The LLC has contributed $0.1 million into the Trust as of September 30, 2019.

The Sustainability Trust is tasked with developing and implementing programs that will serve to slow groundwater drawdown and thereby improve the sustainability of the agricultural economy in the Diamond Valley Hydrographic Basin.  

Kobeh Valley Ranching Family

At the execution of the settlement agreement, the LLC funded an initial payment of $1 million into a trust account;

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distribution to the Ranchers occurred when the water permits were issued on July 24, 2019.  Upon receipt of the initial $1,000,000 into the trust account, the Ranchers withdrew their protests and forfeited any judicial review of Ruling 6464 and the water applications and issuance of the water permits issued on July 24, 2019 by the Nevada State Engineer.

When conditions exist for the LLC to secure project financing additional consideration representing less than 1.5 % of the remaining project capital budget will be payable to the Ranchers.  If the LLC has not secured Mt. Hope Project financing within 12 months of the executed settlement agreement, the LLC will make monthly payments of $10,000 to the Ranchers until financing is achieved and the remaining consideration will be paid to the Ranchers.

Funding for the $1 million was advanced to the LLC by the Company, to preserve the joint venture’s existing reserve account.  General Moly sourced $500,000 from its available cash, and received the remaining $500,000 from closing a sale of Series A Convertible Preferred Shares in a private placement with Mount Hope Mines Inc. (“MHMI”) discussed in Notes 1 and 7 above, the Mt. Hope Project’s claim/land lessor.

In exchange for General Moly advancing the $1,000,000 initial settlement funding, the LLC members have agreed to repay the $1 million advance from the proceeds of ongoing sales of non-critical LLC assets and lands.  On September 27, 2019, the Company and POS-Minerals entered into a Consent Agreement for a reimbursement schedule concerning the approximately $700,000 owed to the Company by the LLC in return for its advance of funding to settle protests related to the water right applications for the Mt. Hope Project.  Under the Consent Agreement, $200,000 was reimbursed from the Reserve Account to the Company on September 30, 2019 and an additional $200,000 was reimbursed in early November.  The remaining approximately $300,000 will be reimbursed in December, provided that the LLC has sold a minimum of $400,000 in non-critical Mt. Hope Project related equipment. 

Capital & Operating Cost Estimates

Presently, the development of the Mt. Hope Project has a Project Capital Estimate of $1,312 million, which includes development costs of approximately $1,245 million and $67 million in cash financial guaranty/bonding requirements, advance royalty payments, and power pre-payment estimates.  These capital costs were updated in the third quarter of 2012, and were then escalated by approximately 3% in the third quarter of 2013, for those items not yet procured or committed to by contract.  The Mt. Hope Project has not materially changed in scope and remains currently designed at approximately 65% engineering completion, with solid scope definition.  The pricing associated with this estimate remains subject to escalation associated with equipment, construction labor and commodity price increases, and project delays, which will continue to be reviewed periodically.  The Project Capital Estimate does not include financing costs or amounts necessary to fund operating working capital and potential capital overruns, is subject to additional holding costs as financing activities for construction of the Mt. Hope Project are delayed, and may be subject to other escalation and de-escalation as contracts and purchase arrangements are finalized at then current pricing.  From October 2007 through the quarter ended September 30, 2019, the LLC spent approximately $296.9 million of the estimated $1,312 million on development of the Mt. Hope Project.

The LLC’s Project Operating Cost Estimate forecasts molybdenum production of approximately 41 million pounds per year for the first five years of operations at estimated average direct operating costs of $6.16 per pound based on a $8.00/lb reserve and $90 per barrel oil equivalent energy prices.  The Costs Applicable to Sales (“CAS”) per pound, including anticipated royalties calculated at a market price of $15 per pound molybdenum, are anticipated to average $6.84 per pound for the first 5 years.  These cost estimates are based on 2013 constant dollars and are subject to cost inflation or deflation.

Equipment and Supply Procurement

Through September 30, 2019, the LLC has made deposits and/or final payments of $88.0 million on equipment orders.

In 2012, the LLC issued a firm purchase order for eighteen haul trucks.  The order provides for delivery of those haul trucks required to perform initial mine development, which will begin several months prior to commercial production.  Non-refundable down-payments of $1.2 million were made in 2012, with pricing subject to escalation as the trucks were not delivered prior to December 31, 2013.  Since that time, the LLC has renegotiated the timelines for truck delivery and delayed deliveries into December 2019.  The contract is cancellable with no further liability to the LLC.

Also in 2012, the LLC issued a firm purchase order for four mine production drills with a non-refundable down-payment of $0.4 million, and pricing was subject to escalation if the drills were not delivered by the end of 2013.  Since that time, the LLC has renegotiated the contract to further delay delivery into December 2019.  The contract remains cancellable with no further liability to the LLC.

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On June 30, 2012, the LLC’s contract to purchase two electric shovels expired.  On July 11, 2012, we signed a letter of intent with the same vendor providing for the opportunity to purchase the electric shovels at prices consistent with the expired contract, less a special discount in the amount of $3.4 million to provide credit to the LLC for amounts paid as deposits under the expired contract.  The letter of intent provides that equipment pricing will remain subject to inflation indexes and guarantees production slots to ensure that the equipment is available when required by the LLC.  Since that time, the parties have agreed to extend the letter of intent through December 31, 2019.

Molybdenum Market Update

The molybdenum oxide daily global spot price per pound is currently at $8.85 compared with $11.88 at yearend 2018, according to Platts. The molybdenum price ranged from a low of $11.53/lb to a high of $12.00/lb during the third quarter, but The molybdenum oxide daily global spot price per pound is currently at $8.85 compared with $11.88 at yearend 2018, according to Platts. The molybdenum price ranged from a low of $11.53/lb to a high of $12.00/lb during the third quarter, but declined to a two-year low at $8.38 per pound on November 11, 2019 before recovering to $8.85. The $11.74 average for the year-to-date through November 10, 2019 is, however, only 1.9% lower than the average of the same period of 2018.

The recent lower molybdenum prices may be attributed to the heightened U.S.-China trade tensions that led to a weakened Renminbi which further exacerbated the price fall when expressed in dollars. China is the world’s largest consumer and producer of molybdenum, noted the CPM Group, an econometrics and commodities research firm in New York. Increased fears about a more severe global economic slowdown may also have dampened molybdenum demand. An evident shift in demand in China away from nickel-rich 300-series stainless steel to a cheaper and less molybdenum-intensive 200-series might have had a further impact. Such shifts occurred in the past as well.

Molybdenum prices can be volatile. The CPM Group expects molybdenum prices to strengthen over the next several years. CPM projects per pound average real prices of $11.44 in 2019, $13.55 in 2020, $14.64 in 2021, and $15.30 declining to $14.32 in 2022-2025. (CPM is currently reviewing its price forecasts for 2021 to 2025 but for now is using these earlier projections.)

While noting that it is still investigating what all of the factors contributing to the perplexing recent precipitous price downturn, CPM states that the fundamentals are still looking reasonably robust, including that molybdenum production continues to contract, and that this price decrease may have been a seasonal dip from destocking inventory in October, exacerbated by the depreciation of the Renminbi. Indeed, the present decline in prices is likely to sharpen the decline in molybdenum production and encourage increased use of the metal once again. 

Approximately 70% of molybdenum’s first use is for steel production as molybdenum is a premier alloy to strengthen steel and make it corrosion resistant. Most of molybdenum in steel is consumed by the specialty steels, an expanding, value-added segment accounting for approximately 10% of overall steel production. Within the specialty steels segment, stainless steel accounts for the largest use of molybdenum at 21%, and full alloy steel accounts for 20% of total molybdenum consumption.

The ISSF projected that world stainless steel consumption is estimated to increase by 2.4% in 2019 over 2018 and by 4.4% year-over-year in 2020. ISSF also reported that the first half of 2019 showed a 2% increase in stainless steel melt shop production to 26.1 million metric tons over the 2018 period, led by a 9% increase in output of 14.4 million metric tons from China.

On the supply side, the CPM Group estimates that the molybdenum market was near equilibrium with a growing deficit in 2020-2021. CPM projects that the deficit will shrink in 2022 followed by small surpluses in 2023-2025.

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Molybdenum Price Chart (Weekly, 2004 – 11/15/2019)

Source: Platts

Outlook

  We believe the molybdenum market is in the early stages of an extended recovery and view the long-term outlook for our business positively, supported by limitations on long-term supplies of molybdenum, the requirements for molybdenum in the steel industry, and a stable oil and gas industry.  World market prices for molybdenum and other commodities have fluctuated historically and are affected by numerous factors beyond our control.  We believe the underlying long-term fundamentals of the molybdenum business remain positive, supported by the significant role of molybdenum in the steel industry and a challenging long-term supply environment attributable to the difficulty in replacing output from both existing and high-cost mines with new production sources.  

Future molybdenum prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, as well as the strength or weakness of the U.S. dollar, U.S.-China trade tariffs, economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of molybdenum, and production levels of mines, including primary molybdenum production from China.

Liquidity, Capital Resources and Capital Requirements

For the period from December 31, 2018 to September 30, 2019

Our total consolidated cash balance at September 30, 2019 was $1.1 million compared to $2.0 million at December 31, 2018, representing a decrease of $0.9 million due to a variety of cash inflows and outflows.  Outflows included $3.0 million in development costs for the Mt. Hope Project, $0.4 million at the Liberty Project, $1.1 million in general and administrative costs, offset by an inflow of funds released from a long-term funding mechanism associated with reclamation at the Mt. Hope Project of $0.4 million, release of $1.5 million from the reserve account held at EMLLC, $0.2 million received from the exercise of warrants and funds received from the issuance of shares under a private placement of Series A and Series B Convertible Preferred Shares of $1.8 million. 

The $36.0 million Reserve Account established in December of 2012, at the direction of the LLC management committee, was payable to Nevada Moly upon release, at which time the funds would have become available for use by the Company. 

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Effective January 1, 2015, Nevada Moly and POS-Minerals signed an amendment to the LLC agreement under which $36.0 million owed to Nevada Moly and held by the LLC in the reserve account will be released over the next few years, but only for the mutual benefit of both members related to jointly approved Mt. Hope Project expenses as discussed above.  The balance of the reserve account at September 30, 2019 was $4.1 million, compared to $6.2 million at December 31, 2018.

The cash needs for the construction and development of the Mt. Hope Project are significant and require that we arrange for financing to be combined with funds anticipated to be received from POS-Minerals in order to retain its 20% membership interest.  The Company estimates the go-forward capital required for the Mt. Hope Project, based on 65% completed engineering, to be approximately $1,023 million, of which the Company’s 80% capital requirement is $818 million.  There is no assurance that the Company will be successful in obtaining the financing required to complete the Mt. Hope Project, or in raising additional financing in the future on terms acceptable to the Company, or at all.

Additionally, on March 28, 2019, the Company executed a the Series A Purchase Agreement with the Investors, effective as of March 21, 2019.  Pursuant to the Series A Purchase Agreement, the Investors agreed to purchase up to $900,000 of Series A Preferred Shares.  The Company requested three separate closings of sales of Series A Convertible Preferred Shares to the Investors between the date of the Series A Purchase Agreement and June 30, 2019.  Each closing was in the amount of $300,000 of Series A Convertible Preferred Shares. 

The Series A Convertible Preferred Shares were priced at $100.00/preferred share, convertible at any time at the holder’s discretion into common shares whereby one preferred share converts at a price of $0.27/common share into 370.37 common shares. The conversion price was set as the closing price of the common stock on March 12, 2019, which was the day before announcement of the private placement. The Series A Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares or a combination thereof.  Upon maturity or full repayment of the $7.2 million Convertible Note debt, described below, currently outstanding, there will be mandatory redemption of the Series A Convertible Preferred Shares into equivalent cash for the principal invested, plus any accrued and unpaid dividends.

On May 2, 2019, the Company also executed a Securities Purchase Agreement (the “MHMI Series A Purchase Agreement”) with Mount Hope Mines, Inc. (“MHMI”), later assigned in part to members of MHMI individually.  Pursuant to the MHMI Series A Purchase Agreement, MHMI agreed to purchase $500,000 of Series A Convertible Preferred Shares, as  described above.

The Series A Convertible Preferred Shares were issued at a price of $100.00 per share, and each Series A Convertible Preferred Share will be convertible at any time at the holder’s discretion into 370.37 shares of common stock of the Company.  The Series A Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares or a combination thereof.  Upon maturity or full repayment of the $7.2 million Convertible Note debt currently outstanding, there will be mandatory redemption of the preferred shares into equivalent cash for the principal invested, plus any accrued and unpaid dividends.

The last closing conditions for the Tranche 3 closing under the AMER Investment Agreement included issuance of water permits for the Mt. Hope Project.  The water permits were issued by the Nevada State Engineer on July 24, 2019.  On July 29, 2019, the Company provided formal notice to AMER that the conditions to closing of Tranche 3 had been satisfied, and that AMER would have two business days (until the close of business on Tuesday, July 30, 2019) to close the transaction.  On July 31, 2019, the Company sent a Notice of Default, as AMER failed to fund and close Tranche 3 by the July 30, 2019 deadline.

On August 1, 2019, the Company received a letter from AMER dated July 30, 2019, purporting to terminate the AMER Investment Agreement, referencing its earlier letter received by the Company on July 18, 2019, in which AMER has alleged uncured material adverse effects and alleged breaches of the AMER Investment Agreement by the Company (which include concerns related to US/China relations, concerns regarding the delay in obtaining environmental permits and solvency concerns).  The Company believes such assertions to be inaccurate and wholly without merit under the terms of the AMER Investment Agreement.  As AMER has failed to timely fund and close Tranche 3 and is now in default, the Company believes that AMER’s attempted termination of the AMER Investment Agreement is ineffective.  With AMER’s default with respect to its obligation to fund Tranche 3, the Company will have inadequate cash to continue operations and will have to evaluate its options going forward, including pursuing asset sales, short-term financing options and, if unsuccessful in obtaining sufficient financing, the possibility of seeking bankruptcy protection.  General Moly is seeking immediate sources of liquidity and is evaluating potential strategic alternatives, including sourcing of potential incremental capital financing, sale of interest(s) in the assets of the Company or the Company, and restructuring of the convertible and non-convertible debt from the 2014 private placement, which matures in December 2019. 

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On August 28, 2019, the Company engaged King & Spalding, an international arbitration and litigation firm, to represent the Company in its dispute against AMER for AMER’s default under the amended Investment Securities Purchase Agreement (“Agreement”).  The Company formally notified AMER that a dispute exists between the parties as a result of their failure to close Tranche 3.  The notification requires that one representative of each of the executive management of the parties be designated and authorized to attempt to settle the Dispute and the representatives are to meet in good faith to resolve the Dispute.  If the designated representatives do not resolve the Dispute within 10 business days after delivery of the Notice, the Dispute will be subject to resolution by binding arbitration, pursuant to the AMER Investment Agreement.  Any arbitration is to be held in Hong Kong under the rules of the International Chamber of Commerce.

On October 14, 2019, the Company announced that it had entered into an agreement with AMER to extend the dispute negotiation period (“Extension Agreement”).  Under the terms of the Extension Agreement, the Company received $300,000 from AMER in exchange for an extension of the negotiation period to November 15, 2019, on which date the Company’s CEO Bruce Hansen and AMER Chairman Wang Wenyin met to discuss settlement options.  With the payment, AMER shall have the right, at its option, to credit the Extension Fee among the following: (1) credit against a final negotiated settlement; (2) credit against any AMER payment obligation to the Company, pursuant to an arbitration award; or (3) apply the Extension Fee as consideration for the purchase of the Company’s common stock, priced at the 30-day volume weighted average price, as of the date immediately prior to the date that AMER demands delivery of such shares.  As announced on November 19, 2019, the Company and AMER are continuing negotiations and hope to reach a mutually beneficial resolution within the next two weeks.

On August 5, 2019, the Company executed the Series B Purchase Agreement with the  Investors.  Pursuant to the Series B Purchase Agreement, the Investors agreed to purchase up to $400,000 of convertible shares of Series B Preferred Stock, par value $0.001 per share (the “Series B Convertible Preferred Shares”), of the Company.  This transaction closed on August 7, 2019.

The Series B Convertible Preferred Shares were issued at a price of $100.00 per share, and each Series B Convertible Preferred Shares will be convertible at any time at the holder’s discretion into 500 shares of common stock of the Company.  The Series B Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional Series B Convertible Preferred Shares or a combination thereof.  The Series B Convertible Preferred Shares, like the Series A Convertible Preferred Shares, are mandatorily redeemable at such time that the Company’s $7.2 million Convertible Note debt currently outstanding become due and payable in accordance with their terms, as such terms may be modified from time to time.

With our cash conservation plan, our Corporate and Liberty related cash requirements have declined to approximately $1.2 million per quarter, while all Mt. Hope Project related funding is payable out of the reserve account into 2021.  Based on our updated current operating forecast, including the drilling and exploration program, and the combination of the liquidity provided by the proceeds from the Redeemable Preferred Shares private placements, our public offering in October 2018 and our current cash on hand, the Company only expects to be able to fund its operations and meet its financial obligations into December 2019. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

Additional potential funding sources for the Company include public or private equity offerings, including sale of other assets wholly-owned by the Company or with EMLLC partner POS-Minerals at the Mt. Hope Project.  The Company is obligated to use a portion of the proceeds from the sales of assets owned by the Company to pre-pay the senior notes.   There is no assurance that the Company will be successful in securing additional funding.  This could result in further cost reductions, contract cancellations, and potential delays which ultimately may jeopardize the development of the Mt. Hope Project.

Currently the Company has no plans or intentions to enter into restructuring or liquidation. The Company has engaged XMS Capital Partners, Headwall Partners, and Odinbrook Global Advisors (collectively, the “Advisors”)to assist in securing interim financing and negotiating with debt holders and other potential stakeholders. While the advisors would have the capability to assist with a restructuring if needed, we do not intend to engage them (or other parties) for these services at this time.

Additional funding for the Mt. Hope Project, will allow us to restart equipment procurement, and agreements that were suspended or terminated will be renegotiated under current market terms and conditions, as necessary.  In the event of an extended delay related to availability of the Company’s portion of full financing for the Mt. Hope Project, the Company will make its best efforts to work with its EMLLC joint venture partner POS-Minerals to revise procurement and construction commitments to preserve liquidity, including Mt. Hope Project equipment deposits and pricing structures.  Major changes in commodity prices or a change in the probability of a sale of all or a portion our interest in the Mt. Hope Project resulting in a change to our weighted average cash flow projections could result in a significant reduction in the valuation of our assets thereby causing an impairment to our assets at that time.  There can be no assurance that additional funding will be obtained or that impairment charges will not be incurred.

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Total assets as of September 30, 2019 decreased to $325.9 million compared to $329.5 million as of December 31, 2018 primarily due to general and administrative expenses.

Other Capital Requirements

We also require additional capital to maintain our mining claims and other rights related to the Liberty Project, as well as continue payment of ongoing general and administrative costs associated with supporting our planned operations.

Results of Operations

Three Months Ended September 30, 2019 Compared to Three Months Ended September 30, 2018

For the three months ended September 30, 2019, we had a consolidated net loss of $3.0 million compared with a net loss of $3.0 million in the same period for 2018. 

For the three months ended September 30, 2019 and 2018, exploration and evaluation expenses were $0.2 million and $0.4 million, due to ongoing care and maintenance expenses.

For the three months ended September 30, 2019 and 2018, general and administrative expenses were $1.0 million and $2.5 million, respectively.  We transitioned to a new accounting software in 2018, and as such, the amount for 2018 includes approximately $1.7 million in costs associated with accelerated depreciation of acquisition and installation costs associated with the prior system.  Additionally, in 2019, we had a $1.6 million loss on the sale of non-core property related to the sale of a ranch in Nevada that was determined to be no longer needed by the Mt. Hope Project. 

Interest expense for the three months ended September 30, 2019 and 2018 was $0.2 million and $0.2 million, respectively, due primarily to a larger non-cash mark to market adjustment related to the Senior Convertible Promissory Notes in 2019 than 2018.

Nine Months Ended September 30, 2019 Compared to Nine Months Ended September 30, 2018

For the nine months ended September 30, 2019, we had a consolidated net loss of $6.9 million compared with a net loss of $8.6 million in the same period for 2018. 

For the nine months ended September 30, 2019 and 2018, exploration and evaluation expenses were $0.4 million and $0.7 million, respectively due to leach pad maintenance and repair performed at our Liberty property in 2018 as well as ongoing care and maintenance.

For the nine months ended September 30, 2019 and 2018, general and administrative expenses were $3.0 million and $7.7 million, respectively.  Approximately $0.7 million of the spend in 2018 was associated with due diligence efforts assessing value-accretive acquisition opportunities in base metal projects jointly with our long-term strategic partner AMER and approximately $1.7 million in costs associated with accelerated depreciation of acquisition and installation costs associated with the prior system upon transition to a new system.   Additionally, in 2019, we had a $2.9 million loss on the sale of non-core property related to the sale of 2 ranches in Nevada that were determined to be no longer needed by the Mt. Hope Project. 

Interest expense for the nine months ended September 30, 2019 and 2018 was $0.6 million and $0.6 million, respectively.

Contractual Obligations

Through September 30, 2019, the LLC has made deposits and/or final payments of $88.0 million on equipment orders.  See “—Overview—Equipment and Supply Procurement” above.  Of these deposits, $71.7 million relate to fully fabricated items, primarily milling equipment, for which the LLC has additional contractual commitments of $2.0 million.  The remaining $16.3 million reflects both partially fabricated milling equipment, and non-refundable deposits on mining equipment.  As discussed in Note 11 to the consolidated financial statements contained elsewhere in this report, the mining equipment agreements remain cancellable with no further liability to the LLC. The underlying value and recoverability of these deposits and our mining properties in our consolidated balance sheets are dependent on the LLC’s ability to fund development activities that would lead to profitable production and positive cash flow from operations or proceeds from the disposition of these assets. There can be no assurance that the LLC will be successful in obtaining project financing, in generating future profitable operations, disposing of these assets or the

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Company securing additional funding in the future on terms acceptable to us or at all.  Our audited consolidated financial statements do not include any adjustments relating to recoverability and classification of recorded assets or liabilities.

If the LLC does not make the payments contractually required under these purchase contracts, it could be subject to claims for breach of contract or to cancellation of the respective purchase contract.  In addition, the LLC may proceed to selectively suspend, cancel or attempt to renegotiate additional purchase contracts, if necessary, to further conserve cash.  See “—Liquidity, Capital Resources and Capital Requirements” above.  If the LLC cancels or breaches any contracts, the LLC will take all appropriate action to minimize any losses, but could be subject to liability under the contracts or applicable law.  The cancellation of certain key contracts could cause a delay in the commencement of operations and could add to the cost to develop the Company’s interest in the Mt. Hope Project.

Obligations under capital and operating leases

We have contractual operating leases that will require a total of $268,000 in payments over the next three years.  Operating leases consist primarily of rents on office facilities and office equipment.  Our expected payments are $52,000, $91,000, $93,000 and $32,000 for the years ended December 31, 2019, 2020, 2021, and 2022 respectively.

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, our financial performance could be materially affected by fluctuations in the market price of molybdenum and other metals we may mine.  The market prices of metals can fluctuate widely due to a number of factors.  These factors include fluctuations with respect to the rate of inflation, the exchange rates of the U.S. dollar and other currencies, interest rates, global or regional political and economic conditions, banking environment, global and regional demand, production costs, and investor sentiment.  See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Molybdenum Market Update” for a discussion of molybdenum prices.

In order to better manage commodity price risk and to seek to reduce the negative impact of fluctuations in prices, we will seek to enter into long-term supply contracts for our portion of the Mt. Hope production.  On December 28, 2007, we entered into a molybdenum supply agreement with ArcelorMittal S.A. (“ArcelorMittal”), the world’s largest steel company, that provides for ArcelorMittal to purchase 6.5 million pounds of molybdenum per year, plus or minus 10%, once the Mt. Hope Project commences commercial operations at minimum specified levels. 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.  Both the floor and threshold levels at which the percentage discounts change are indexed to a producer price index. According to public filings, on January 25, 2011, the boards of directors of ArcelorMittal S.A. and APERAM each approved the transfer of the assets comprising ArcelorMittal’s stainless and specialty steels businesses from its carbon steel and mining businesses to APERAM, a separate entity incorporated in the Grand Duchy of Luxembourg.  This transfer did not include the supply agreement the Company had in place with ArcelorMittal.  The shares of the Company’s common stock previously owned by ArcelorMittal were transferred to APERAM. 

Additionally, on May 14, 2008, we entered into a molybdenum supply agreement with SeAH Besteel Corporation (“SeAH Besteel”), Korea’s largest manufacturer of specialty steels, which provides for SeAH Besteel to purchase 4.0 million pounds of molybdenum per year, plus or minus 10%, once the Mt. Hope Project commences commercial operations at minimum specified levels. Like the APERAM supply agreement, the supply agreement with SeAH Besteel provides for a floor price along with staged discounts for spot prices above the floor price and expires five years from the date of first supply under the agreement.  Both the floor and threshold levels at which the percentage discounts change are indexed to a producer price index.  On July 22, 2015, the Company and SeAH Besteel entered into a first amendment to the molybdenum supply agreement, which provides that the agreement will terminate on December 31, 2020, if commercial operations at the minimum specified levels have not commenced by that date.

On August 8, 2008, the Company entered into a molybdenum supply agreement (“Sojitz Agreement”) with Sojitz Corporation (“Sojitz”).  The Sojitz Agreement provides for the supply of 5.0 million pounds per year of molybdenum for five years, beginning once the Mt. Hope Project reaches certain minimum commercial production levels.  One million annual pounds sold under the Sojitz Agreement will be subject to a per-pound molybdenum floor price and is offset by a flat discount to spot molybdenum prices above the floor.  The remaining 4.0 million annual pounds sold under the Sojitz Agreement will be sold with reference to spot molybdenum prices without regard to a floor price.  The Sojitz Agreement includes a provision that allows Sojitz the option to cancel in the event that supply from the Mt. Hope Project had not begun by January 1, 2013.  The described option is

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available up to ten days following the achievement of certain production levels at the Mt. Hope Project.  As commercial production at the Mt. Hope Project has not commenced, Sojitz currently has the option to cancel its contract or participate in the molybdenum supply agreement as described above.

The long-term supply agreements provide for supply only after commercial production levels are achieved, and no provisions require the Company to deliver product or make any payments if commercial production is never achieved or declines in later periods and have floor prices ranging from $14.00 to $14.75 per pound and incremental discounts above the floor price.  The agreements require that monthly shortfalls be made up only if the Company’s portion of Mt. Hope production is available for delivery, after POS-Minerals has taken its 20% share.  In no event do these requirements to make up monthly shortfalls become obligations of the Company if production does not meet targeted levels.

Furthermore, each of the agreements remain as contractual obligations and have take-or-pay provisions that require the buyers to either take delivery of product made available by the Company, or to pay as though they had taken delivery pursuant to the term of the agreements.  In the event that our contract parties choose not to honor their contractual obligations or attempt to terminate these agreements as a result of the continuing delay in achieving production, our profitability may be adversely impacted.  We may be unable to sell any product our contract parties fail to purchase in a timely manner, at comparable prices, or at all.

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 September 30, 2019, we had a balance of cash and cash equivalents of $1.1 million and restricted cash of $4.5 million.  Interest rates on short term, highly liquid investments have not changed materially since December 31, 2010, and continue to be 1% or less on an annualized basis.

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 Annual Report on Form 10-K.  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 September 30, 2019 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

Permitting Considerations

In the ordinary course of business, mining companies are required to seek governmental permits for expansion of existing operations or for the commencement of new operations. The LLC is required to obtain approval, in the form of a Record of Decision (“ROD”), from the BLM to implement the Mt. Hope Project Plan of Operations (“PoO”).  The LLC is also required to obtain various state and federal permits including, but not limited to, water protection, air quality, water rights and reclamation.  In addition to requiring permits for the development of the Mt. Hope Project, we will need to obtain and modify various mining and environmental permits during the life of the Mt. Hope Project.  Maintaining, modifying, and renewing the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and substantial expenditures.  The duration and success of the LLC’s efforts to obtain, modify or renew permits will be contingent upon many variables, some of which are not within the LLC’s control.  Increased costs or delays could occur, depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority.  All necessary permits may not be obtained and, if obtained, may not be renewed, or the costs involved in each case may exceed those that we previously estimated.  In addition, it is possible that compliance with such permits may result in additional costs and delays.

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History of Record of Decision (ROD)

On November 16, 2012, the BLM issued its initial ROD authorizing development of the Mt. Hope Project.  The ROD was subsequently vacated by the U.S. Court of Appeals for the Ninth Circuit in December 2016, discussed below.  Also, on April 23, 2015, the BLM issued a Finding of No Significant Impact (“FONSI”) supporting their Decision to approve an amendment to the PoO.  The initial ROD and FONSI/Decision approved the PoO and amended PoO, respectively, for construction and operation of the mining and processing facilities and also granted the Right-of-Way, and amended Right-of-Way, respectively, for a 230kV power transmission line, discussed below.  Monitoring and mitigation measures identified in the initial ROD and FONSI, developed in collaboration with the regulatory agencies involved throughout the permitting process, will avoid, minimize, and mitigate environmental impacts, and reflect the Company’s commitment to be good stewards of the environment.  Ongoing changes to permits and the PoO during the life of mining operations are typical as design evolves and operations are optimized.

On February 15, 2013, Great Basin Resource Watch and the Western Shoshone Defense Project (“Plaintiffs”) filed a Complaint against the U.S. Department of the Interior and the BLM (“Defendants”) in the U.S. District Court, District of Nevada (“District Court”), seeking relief under the National Environmental Policy Act (“NEPA”) and other federal laws challenging the BLM’s issuance of the initial ROD for the Mt. Hope Project, and on February 20, 2013 filed a Motion for Preliminary Injunction.  The District Court allowed the LLC to intervene in the matter.

On August 22, 2013, the District Court denied, without prejudice, Plaintiffs’ Motion for Preliminary Injunction based on a Joint Stipulation to Continue Preliminary Injunction Oral Argument, which advised the District Court that as a result of economic conditions, including the Company’s ongoing financing efforts, all major ground disturbing activities had ceased at the Mt. Hope Project.

On July 23, 2014, the District Court denied Plaintiffs’ motion for summary judgment in its entirety and on August 1, 2014 the Court entered judgment in favor of the Defendants and the LLC, and against Plaintiffs regarding all claims raised in the Complaint. 

Thereafter, on September 22, 2014, the Plaintiffs filed their notice of appeal to the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) of the District Court’s dismissal.  Oral argument of the parties before the Ninth Circuit was completed on October 18, 2016.  On December 28, 2016, the Ninth Circuit issued its Opinion rejecting many of the arguments raised by the Plaintiffs challenging the Environmental Impact Statement ("EIS") completed for the Mt. Hope Project, but issued a narrow reversal of the BLM's findings related to air quality analysis and information related to potential public water resources. Because of this technical deficiency, the Court vacated the initial ROD.

Re-Issuance of Record of Decision Approving Supplemental Environmental Impact Statement (“SEIS”)

On remand to the BLM, the agency conducted additional evaluation of air quality impacts and resulting cumulative impact analysis under NEPA in preparation of a Supplemental Environmental Impact Statement (“SEIS”).  The SEIS disclosed additional information to the public related to the selection of appropriate background concentrations to use for dispersion modeling of air pollutants and information related to potential public water reserves.  Because the SEIS must be prepared in accordance with NEPA guidelines, the SEIS included three publications in the Federal Register, the first was the Notice of Intent (“NOI”) which was published on July 19, 2017, the second, the Notice of Availability (“NOA”) of the Draft SEIS (“DSEIS”) was published on March 6, 2019, and on September 27, 2019, the third NOA was published announcing that the BLM had re-issued the ROD marking completion of the NEPA process and approval of the SEIS.  On November 5, 2019, we announced that a Complaint was filed against the U.S. Department of Interior and the BLM in the U.S. District Court in Nevada, challenging the re-issuance of the ROD. We are reviewing the Complaint filed by Great Basin Resource Watch and the Western Shoshone Defense Project, and may seek permission from the Court to intervene on behalf of the Mt. Hope Project.

Reclamation Considerations

Environmental regulations related to reclamation require that the cost for a third party contractor to perform reclamation activities on the minesite be estimated.  In October 2015, we submitted a request to the BLM to reduce our reclamation liability to current surface disturbance.  Simultaneously, we submitted an application to NDEP-BMRR to modify the Reclamation Permit to reflect this reduced reclamation liability. On October 26, 2015, NDEP-BMRR approved the proposed permit modification, including the reduced reclamation liability amount.   On December 21, 2015, BLM approved the updated reclamation liability estimate, reducing of the reclamation liability to approximately $2.8 million.  In early 2019, the Company submitted, and BLM approved a required 3-year update to the reclamation liability estimate, resulting in an increased liability of approximately $3.1

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million.  We worked with the LLC’s reclamation surety underwriters to satisfy the $2.8 million financial guarantee requirements under the approved amended PoO for the Mt. Hope Project and funded the $0.3 million increase in cash directly with the BLM in April 2019.  As of September 30, 2019, the surety bond program was funded with a cash collateral payment of $0.3 million.

Water Rights Considerations

History of Mt. Hope Water Permits

In July 2011, the Nevada State Engineer (“State Engineer”) initially approved our applications for new appropriation of water for mining and milling use, and applications to change existing water from agricultural use to mining and milling use for the Mt. Hope Project.  Subsequently, the State Engineer granted water permits associated with the approved applications and approved a Monitoring, Management and Mitigation Plan (“3M Plan”) for the Mt. Hope Project.  Eureka County, Nevada and two other parties comprised of water rights holders in Diamond Valley and Kobeh Valley appealed the State Engineer’s decision approving the applications and granting the water permits to the Nevada State District Court (“District Court”) and then filed a further appeal to the Nevada Supreme Court challenging the District Court’s decision affirming the State Engineer’s decision to approve the applications and grant the water permits.  In June 2013, the appeal was consolidated by the Nevada Supreme Court with an appeal of the State Engineer’s approval of the 3M Plan filed by two water rights holders.  The District Court previously upheld the State Engineer’s approval of the 3M Plan and the two parties subsequently appealed the District Court’s decision to the Nevada Supreme Court. 

On September 18, 2015, the Nevada Supreme Court issued an Order that reversed and remanded the cases to the District Court for further proceedings consistent with the Order.  On October 29, 2015, the Nevada Supreme Court issued the Order as a published Opinion.  The Nevada Supreme Court ruled that the State Engineer did not have sufficient evidence in the record at the time he approved the applications and granted the water permits to demonstrate that successful mitigation may be undertaken so as to dispel the threat to existing water rights holders.

On September 27, 2017, the Nevada Supreme Court affirmed a March 4, 2016 District Court Order vacating the 3M Plan, denying the water applications and vacating the permits issued by the State Engineer in July 2011 and June 2012.  This decision of the Nevada Supreme Court was final, and not subject to further appeal.

New Change Applications for Water Use at Mt. Hope Project

After the Company received the September 2017 decision from the Nevada Supreme Court, it proceeded with new applications to change existing agricultural irrigation and mining/milling water rights owned by the Company to use at the Mt. Hope Project.  These new change applications had been filed with the State Engineer in 2015 and 2016 while the above described appeals were pending before the Nevada Supreme Court.  Originally, these applications and other new appropriation applications were to be addressed at a pre-hearing conference scheduled on August 25, 2016 before the State Engineer.  These applications were the subject of a Writ of Prohibition or Mandamus (“Writ”) filed by Eureka County on August 23, 2016 to the Nevada Supreme Court seeking the Supreme Court’s intervention to stop further action by the State Engineer while the appeals discussed above were pending.  On December 22, 2017 the Nevada Supreme Court denied Eureka County’s Writ Petition.  As a result, the State Engineer allowed a pre-hearing conference held on January 24, 2018.  At the pre-hearing conference the State Engineer and his hearing officer scheduled review of the new change applications for a September 11, 2018 hearing in Carson City, Nevada. 

On January 2, 2018, Eureka County, and later joined by the other two protestants representing a rancher in Kobeh Valley and a ranching group in Diamond Valley, filed a motion to dismiss with the State Engineer asserting that our applications were precluded from review and approval asserting that they were repetitive of the applications denied previously by the Nevada Supreme Court in its September 2017 decision.  On March 26, 2018, the State Engineer issued a non-final order denying the motion to dismiss finding that the applications to be reviewed at the upcoming hearing were not identical issues and that further consideration of the motion could be taken at the hearing.  On May 14, 2018, Eureka County, joined by the other protestants filed a Writ to the Nevada Supreme Court and later a Motion to Stay the September hearing date, asserting that the denial of the Motion to Dismiss was erroneous and that the Nevada Supreme Court should order that the applications be denied and/or the September 2018 hearing should be delayed until the Nevada Supreme Court can consider the Writ and underlying motion to dismiss.  The Company filed its objection on June 27, 2018, and on August 30, 2018, the Nevada Supreme Court denied the Writ, permitting the September 2018 hearing before the Nevada State Engineer to proceed. 

On the second day of the September hearing, all protest issues raised by Eureka County and the Diamond Natural Resources Protections & Conservation Association (“DNR”) concerning the Mt. Hope water rights applications were resolved through a Stipulation, Settlement Agreement and Withdrawal of Protest (“Settlement”).  After Eureka County and DNR were

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excused, the hearing continued with evidence addressing concerns raised by another protestant representing a Kobeh Valley ranching family and cattle company that refused to participate in the Settlement. At the public hearing, the Company presented expert testimony in support of its augmentation and monitoring plan to the Nevada State Engineer, which will protect senior water rights in the Kobeh Valley basin when the Company commences construction and operation of its proposed Mt. Hope molybdenum project near the town of Eureka, Nevada.  The hearing concluded on September 21, 2018. 

Effective April 30, 2019,  the Company, through its wholly owned subsidiary Kobeh Valley Ranch LLC (“KVR”) and the entered into a settlement agreement with a Kobeh Valley, Nevada ranching family (“Ranchers”), resolving the last set of protests pending before the Nevada State Engineer pertaining to the Mt. Hope Project’s water rights applications.

On June 6, 2019, the Nevada State Engineer issued Ruling 6464 granting the Company’s water rights applications for mining purposes.  The water right permits for the Mt. Hope Project were issued on July 24, 2019.  With receipt of and in compliance with the terms of the water permits, the water is available for consumptive use at the Mt. Hope Project.

Key Terms of Settlements

Eureka County and the DNR

Under the terms of the Settlement with Eureka County and the DNR, the Company and the LLC agreed to convey all related water rights for Mt. Hope Project at the future cessation of all mining activity to assist Eureka County and the DNR’s efforts to mitigate the pre-existing effects of agricultural groundwater pumping in Diamond Valley. Furthermore, upon construction of certain power infrastructure and grants of right of way by the LLC at the Mt. Hope Project, the Company and the LLC will work cooperatively with Eureka County to allow use of and access to such infrastructure to lessen the pre-existing effects of Diamond Valley groundwater pumping. Eureka County, and the Company and the LLC, also agreed to work cooperatively to seek opportunities to improve and implement groundwater monitoring efforts.

In addition, the Company withdrew its protests to Eureka County’s pending applications with the Nevada State Engineer to appropriate water from the Kobeh Valley basin, and at the request of DNR, the Company also agreed to publicly support the proposed Diamond Valley Ground Water Management Plan currently pending before the Nevada State Engineer.

With receipt of the water permits, the LLC increased its financial contributions to the existing Agricultural Sustainability Trust Agreement, discussed above, with the Eureka Producers’ Cooperative (“EPC”) in Diamond Valley with an additional $50,000 to EPC.  Initially, upon execution of the Settlement, the LLC made a payment of $50,000. 

The LLC will make additional contributions of $750,000 each after the commencement of molybdenum production at the Mt. Hope Project and on the one year anniversary of production, for a total contribution obligation to the Sustainability Trust of $5.6 million, an increase of $1.6 million related to the terms of the Settlement. The amount has been accrued under mining properties, land, and water rights in the Company’s financial statements in addition to the previously accrued $4.0 million resulting in a total accrual of $5.6 million.  The LLC has contributed $0.1 million into the Trust as of September 30, 2019.

The Sustainability Trust is tasked with developing and implementing programs that will serve to slow groundwater drawdown and thereby improve the sustainability of the agricultural economy in the Diamond Valley Hydrographic Basin.  

Kobeh Valley Ranching Family

At the execution of the settlement agreement, the LLC funded an initial payment of $1 million into a trust account; distribution to the Ranchers occurred when the water permits were issued on July 24, 2019.  Upon receipt of the initial $1,000,000 into the trust account, the Ranchers withdrew their protests and forfeited any judicial review of Ruling 6464 and the water applications and issuance of the water permits issued on July 24, 2019 by the Nevada State Engineer.

When conditions exist for the LLC to secure project financing additional consideration representing less than 1.5 % of the remaining project capital budget will be payable to the Ranchers.  If the LLC has not secured Mt. Hope Project financing within 12 months of the executed settlement agreement, the LLC will make monthly payments of $10,000 to the Ranchers until financing is achieved and the remaining consideration will be paid to the Ranchers.

Funding for the $1 million was advanced to the LLC by the Company, to preserve the joint venture’s existing reserve account.  General Moly sourced $500,000 from its available cash, and received the remaining $500,000 from closing a sale of Series A Convertible Preferred Shares in a private placement with Mount Hope Mines Inc. (“MHMI”) discussed in Notes 1 and 7

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above, the Mt. Hope Project’s claim/land lessor.

In exchange for General Moly advancing the $1,000,000 initial settlement funding, the LLC members have agreed to repay the $1 million advance from the proceeds of ongoing sales of non-critical LLC assets and lands.  On September 27, 2019, the Company and POS-Minerals entered into a Consent Agreement for a reimbursement schedule concerning the approximately $700,000 owed to the Company by the LLC in return for its advance of funding to settle protests related to the water right applications for the Mt. Hope Project.  Under the Consent Agreement, $200,000 was reimbursed from the Reserve Account to the Company on September 30, 2019 and an additional $200,000 was reimbursed in early November.  The remaining approximately $300,000 will be reimbursed in December, provided that the LLC has sold a minimum of $400,000 in non-critical Mt. Hope Project related equipment. 

ITEM 1A.RISK FACTORS.

Our Annual Report on Form 10-K for the year ended December 31, 2018, 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-K 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 Project 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-K for the year ended December 31, 2018, and this report, and include, among other things:

· our investors may lose their entire investment in our securities;

· our permits may be subject to further judicial appeals, which may further delay the development of the Mt. Hope Project;

· we may be unable to redeem the Senior Convertible and non-convertible Senior Promissory Notes in December 2019 without sufficient additional liquidity;

· our profitability depends largely on the success of the Mt. Hope Project, the failure of which would have a material adverse effect on our financial condition;

· we have not obtained, and may not obtain, alternative project financing, which could cause additional delays or expenses in developing the Mt. Hope Project;

· AMER has defaulted with respect to its obligations to fund Tranche 3 under the AMER Investment Agreement even though all conditions to closing have been satisfied, further delaying our ability to begin construction of the Mt. Hope Project;

· the impact of asset impairment charges if required as a result of our inability to obtain additional funding;

· substantial additional financing may be required in order to fund the operations of the Company and the LLC and if we are successful in raising additional capital, it may have dilutive and other adverse effects on our stockholders;

· POS-Minerals’ right under the LLC Agreement to approve certain major decisions regarding the Mt. Hope Project could impair our ability to quickly adapt to changing market conditions;

· POS-Minerals’ right under the LLC Agreement to approve the conduct of business other than the development, construction, operations and financing of the Mt. Hope molybdenum project, including the potential Cu-Ag target and zinc mineralization;

· risks related to the failure of POS-Minerals to make ongoing cash contributions to the LLC pursuant to the LLC Agreement;

· maintaining effectiveness of current molybdenum supply agreements;

· fluctuations in the market price of, and demand for, molybdenum, copper and other metals;

· counter party risks;

49

· 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;

· the estimation and realization of mineral reserves and production estimates, if any;

· inherent operating hazards of mining;

· title disputes or claims;

· climate change and climate change legislation for planned future operations;

· our ability to renegotiate, restructure, suspend, cancel or extend payment terms of contracts as necessary or appropriate in order to conserve cash;

· government regulation of mining operations, environmental conditions and risks, reclamation and rehabilitation expenses;

· compliance/non-compliance with the Mt. Hope Lease Agreement;

· losing key personnel and contractors or the inability to attract and retain additional personnel;

· reliance on independent contractors, experts, technical and operational service providers over whom we have limited control;

· increased costs can affect our profitability;

· shortages of critical parts, equipment, and skilled labor may adversely affect our development costs;

· limitations of and access to certain insurance coverage;

· legislation may make it difficult to retain or attract officers and directors and can increase costs of doing business; and

· provisions of Delaware law and our charter and bylaws may delay or prevent transactions that would benefit stockholders.

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.MINE SAFETY DISCLOSURES

None.

ITEM 5.OTHER INFORMATION

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ITEM 6.EXHIBITS

Exhibit Number	Description of Exhibit
3.1	Certificate of Incorporation, as amended (Filed as Exhibit 3.1 to our Quarterly Report on Form 10-Q filed on November 4, 2015.)
3.2	Certificate of Designation of Series A Junior Participating Preferred Stock (Filed as Exhibit 3.1 to our Current Report on Form 8-K filed on March 5, 2010.)
3.3	Certificate of Designations of Series A Preferred Stock. (Filed as Exhibit 3.1 to our Current Report on Form 8-K filed on March 28, 2019.)
3.4	Certificate of Designation of Series B Preferred Stock (Filed as Exhibit 3.1 to our Current Report on Form 8-K filed on August 7, 2019.)
10.1	Securities Purchase Agreement dated effective August 7, 2019, by and among General Moly, Inc. and each of the persons whose names are set forth on the Schedule of Investors attached thereto as Exhibit A (Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on August 7, 2019.)
10.2	Interest Deferral and Forbearance Agreement dated September 25, 2019, by and between General Moly, Inc. and the Holders of Notes party thereto (Filed as Exhibit 10.1 to our Current Report on Form 8-K filed on September 30, 2019.)
31.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith)
32.1	Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith)
101	The following XBRL (Extensible Business Reporting Language) materials are filed herewith: (i) XBRL Instance; (ii) XBRL Taxonomy Extension Schema; (iii) XBRL Taxonomy Extension Calculation; (iv) Taxonomy Extension Labels, (v) XBRL Taxonomy Extension Presentation, and (vi) XBRL Taxonomy Extension Definition.

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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: November 19, 2019

GENERAL MOLY, INC.
By:	/s/ Amanda J. Corrion
	Amanda Corrion
	Principal Accounting Officer and Duly Authorized Officer

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruce D. Hansen, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of General Moly, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a—15(f) and 15d—15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 19, 2019

By:	/s/ Bruce D. Hansen
Name:	Bruce D. Hansen
Title:	Chief Executive Officer and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Bruce D. Hansen, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report on Form 10-Q of General Moly, Inc. for the quarter ended September 30, 2019 fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and that information contained in such Quarterly Report on Form 10-Q fairly presents in all material respects the financial condition and results of operations of General Moly, Inc.

Dated:  November 19, 2019

By:	/s/ Bruce D. Hansen
Name:	Bruce D. Hansen
Title:	Chief Executive Officer and Chief Financial Officer
(Principal Executive Officer)

XML

INCOME TAXES (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Components of deferred tax asset
Expected federal income tax rate (as a percent)	21.00%	21.00%
Significant Components of Deferred Tax Assets
Operating loss carry forward	$ 282,600	$ 275,700
Change in deferred tax asset valuation allowance	3,900
Unrecognized tax benefits	$ 0	$ 0

XML

COMMITMENTS AND CONTINGENCIES - Loss Contingencies (Details)			1 Months Ended			9 Months Ended
	Sep. 30, 2019 USD ($) item	Dec. 28, 2016 item	Dec. 31, 2019 USD ($)	Nov. 30, 2019 USD ($)	Sep. 30, 2019 USD ($) item	Sep. 30, 2019 USD ($) item	Sep. 27, 2019 USD ($)	Jun. 30, 2019 USD ($)	Apr. 30, 2019 USD ($)	Dec. 31, 2018 USD ($)	Sep. 20, 2018 USD ($)	Dec. 21, 2015 USD ($)	Aug. 19, 2010 USD ($)
Loss Contingencies
Provision for post closure reclamation and remediation costs	$ 1,885,000				$ 1,885,000	$ 1,885,000				$ 1,769,000
Permitting Considerations
Loss Contingencies
Number of SEIS process publications in the Federal Register | item		3
Provision for post closure reclamation and remediation costs	$ 3,100,000				$ 3,100,000	$ 3,100,000						$ 2,800,000
Environmental analysis, process term						3 years
Additional cash deposit									$ 300,000
Payment to trust						$ 300,000
Water Rights Considerations
Loss Contingencies
The number of additional parties in suit | item						2
Number of water rights holders in Diamond Valley | item	2				2	2
Mt. Hope Project
Loss Contingencies
Additional cash deposit										$ 400,000
Eureka Moly LLC
Loss Contingencies
Sustainability Trust fund asset amount													$ 5,600,000
Paid into trust								$ 100,000
Eureka Moly LLC | Eureka County and the DNR
Loss Contingencies
Amount paid upon execution of the settlement						$ 50,000
Second payment payable after receipt of the water permits	$ 50,000				$ 50,000	50,000
Additional contributions will be made after the commencement of production	750,000				750,000	750,000
Sustainability Trust fund asset amount	5,600,000				5,600,000	5,600,000					$ 4,000,000
Amount of increase in Sustainability Trust fund asset amount	1,600,000				1,600,000	1,600,000
Paid into trust	100,000				100,000	100,000
Eureka Moly LLC | Ranchers
Loss Contingencies
Payment to trust						$ 1,000,000
Threshold period to secure project financing						12 months
Monthly payments until financing is achieved						$ 10,000
Source from available cash						500,000
Proceeds from private placement used						500,000
Advance from proceeds of ongoing sales of non-critical EMLLC assets and lands	1,000,000				1,000,000	$ 1,000,000
Eureka Moly LLC | Ranchers | Maximum
Loss Contingencies
Remaining project capital budget (as a percent)						1.50%
Land and Water Rights | Eureka Moly LLC
Loss Contingencies
Amount owed to the company							$ 700,000
Land and Water Rights | LLC Agreement
Loss Contingencies
Reimbursement of debt	$ 200,000			$ 200,000	$ 200,000
Subsequent event | Land and Water Rights | LLC Agreement
Loss Contingencies
Reimbursement of debt			$ 300,000	200,000
Subsequent event | Equipment | Eureka Moly LLC | Minimum
Loss Contingencies
Sale of equipment				$ 400,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting Method

Accounting Method

Our financial statements are prepared using the accrual basis of accounting in accordance with GAAP.  With the exception of the LLC, all of our subsidiaries are wholly owned.  In February 2008, we entered into the LLC Agreement, which established our ownership interest in the LLC at 80%.  The consolidated financial statements include all of our wholly owned subsidiaries and the LLC.  The POS-Minerals contributions attributable to their 20% interest are shown as Contingently Redeemable Noncontrolling Interest on the Consolidated Balance Sheet.  The net loss attributable to contingently redeemable noncontrolling interest is reflected separately on the Consolidated Statement of Operations and reduces the Contingently Redeemable Noncontrolling Interest on the Consolidated Balance Sheet.  Net losses of the LLC are attributable to the members of the LLC based on their respective ownership percentages in the LLC.  During the three and nine months ended September 30, 2019, the LLC had a $27,000 and $81,000 loss, respectively, primarily associated with accretion of its reclamation obligations, of which $5,000 and $16,000, was attributed to the Contingently Redeemable Noncontrolling Interest.

Contingently Redeemable Noncontrolling Interest ("CRNCI")

Contingently Redeemable Noncontrolling Interest (“CRNCI”)

Under GAAP, certain noncontrolling interests in consolidated entities meet the definition of mandatorily redeemable financial instruments if the ability to redeem the interest is outside of the control of the consolidating entity.  As described in Note 1 — “Description of Business”, the LLC Agreement permits POS-Minerals the option to put its interest in the LLC to Nevada Moly upon a change of control, as defined in the LLC Agreement, followed by a failure by us to use standard mining industry practice in connection with the development and operation of the Mt. Hope Project as contemplated by the parties for a period of 12 consecutive months.  As such, the CRNCI has continued to be shown as a separate caption between liabilities and equity based on accounting standards which require equity instruments with redemption features that are not solely within the control of the issuer to be classified outside of permanent equity (referred to as mezzanine equity).  The carrying value of the CRNCI has historically included the Return of Contributions, now $33.6 million, that will be returned to POS-Minerals in 2020, unless further extended by the members of the LLC as discussed above.  The expected Return of Contributions to POS-Minerals was carried at redemption value as we believed redemption of this amount was probable.  Effective January 1, 2015, Nevada Moly and POS-Minerals agreed that the Return of Contributions will be due to POS-Minerals on December 31, 2020, unless further extended by the members of the LLC as discussed above.  As a result, we have reclassified the Return of Contributions payable to POS-Minerals from CRNCI to a non-current liability at redemption value, and subsequently reduced it by $2.4 million, consisting of 20% of an $8.4 million principal payment made on milling equipment in March 2015, a $2.2 million principal payment made on electrical transformers in April 2015, and a $1.2 million principal payment made on milling equipment in April 2016, such that the remaining amount due to POS-Minerals is $33.6 million.

The remaining carrying value of the CRNCI has not been adjusted to its redemption value as the contingencies that may allow POS-Minerals to require redemption of its noncontrolling interest are not probable of occurring.  Under GAAP, until such time as that contingency has been eliminated and redemption is no longer contingent upon anything other than the passage of time, no adjustment to the CRNCI balance should be made.  Future changes in the redemption value will be recognized immediately as they occur and the Company will adjust the carrying amount of the CRNCI to equal the redemption value at the end of each reporting period.

Estimates

Estimates

The process of preparing consolidated financial statements 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.

Asset Impairments

Asset Impairments

We evaluate the carrying value of long-lived assets to be held and used, using a fair-value based approach when events and circumstances indicate that the related carrying amount of our assets may not be recoverable.  Significant declines in the overall economic environment, molybdenum and copper prices may be considered as impairment indicators for the purposes of these impairment assessments.  Additionally, failure to secure our mining permits, including our water rights, or revocation of our permits, may be considered as impairment indicators for the purposes of these impairment assessments.  In accordance with U.S. GAAP, the carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flows from such asset is less than its carrying value.  In that event, an impairment charge will be recorded in our Consolidated Statement of Operations and Comprehensive Loss based on the difference between book value and the estimated fair value of the asset computed using discounted future cash flows, or the application of an expected fair value technique in the absence of an observable market price.  Future cash flows include estimates of recoverable quantities to be produced from estimated proven and probable mineral reserves, commodity prices (considering current and historical prices, price trends and related factors), production quantities and capital expenditures, all based on life-of-mine plans and projections.  In estimating future cash flows, assets are grouped at the lowest level for which identifiable cash flows exist that are largely independent of cash flows from other asset groups.  Generally, in estimating future cash flows, all assets are grouped at a particular mine for which there are identifiable cash flows.  Management has evaluated the circumstances of the July 30, 2019 AMER default and has concluded the default is a third quarter triggering event in which we updated cash flow forecasts.  We evaluated and determined the carrying value of the asset groups were recoverable as the probability-weighted undiscounted cash flows exceeded the carrying values for each of our asset groups.  While at September 30, 2019, we have not identified any impairment of our long-lived assets, there can be no assurance that there will not be asset impairments if commodity prices experience a sustained decline and/or if there are significant downward adjustments to estimates of recoverable quantities to be produced from proven and probable mineral reserves or production quantities, and/or upward adjustments to estimated operating costs and capital expenditures, all based on life-of-mine plans and projections.  Additionally, should we be unable to secure alternative financing following the default of AMER to fund Tranche 3 under the AMER Investment Agreement, we may be required to modify our cash flow projections which could result in a significant reduction in the valuation of our assets thereby causing an impairment to our assets at that time.

Cash and Cash Equivalents and Restricted Cash

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash equivalent instruments are classified within Level 1 of the fair value hierarchy established by FASB guidance for Fair Value Measurements because they are valued based on quoted market prices in active markets.

We consider all restricted cash, inclusive of the reserve account discussed above and reclamation surety bonds, to be long-term. 

	September 30, 2019	December 31, 2018
	(in thousands)
Cash and cash equivalents	1,100	2,016
Restricted cash held at EMLLC	4,118	6,167
Restricted cash and investments held for reclamation bonds	—	434
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	5,218	8,617

As of September 30, 2019, the LLC had $0.3 million in cash deposits associated with reclamation bonds, which are accounted for as restricted cash.  Another $0.1 million in cash collateral is associated with surety bonds at the Liberty Project.  These amounts are considered investments and are not included in cash and cash equivalents for purposes of the Statement of Cash Flows.  As of December 31, 2018, the LLC had an additional $0.4 million in a long-term funding mechanism, which was accounted for as restricted cash.  The $0.4 million held in a long-term funding mechanism was redeemed and is included in cash and cash equivalents as of September 30, 2019.

Basic and Diluted Net Loss Per Share

Basic and Diluted Net Loss Per Share

Net loss per share was computed by dividing the net loss attributable to the Company 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 awards as of September 30, 2019 and December 31, 2018, respectively, were as follows:

	September 30, 2019	December 31, 2018
Warrants	97,991,800	98,686,000
Shares Issued upon conversion of Senior Notes	5,910,000	5,910,000
Unvested Stock Awards	2,001,268	2,401,268
Stock Appreciation Rights	938,667	938,667

These awards were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2019 and December 31, 2018, respectively, because to do so would have been anti-dilutive.  Therefore, basic loss per share is the same as diluted loss per share.

Mineral Exploration and Development Costs

Mineral Exploration and Development Costs

All exploration expenditures are expensed as incurred.  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

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.

The Company has capitalized royalty payments made to Mt. Hope Mines, Inc. (“MHMI”) (discussed in Note 11 below) during the development stage.  The amounts will be applied to production royalties owed upon the commencement of production.

Depreciation and Amortization

Depreciation and Amortization

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Property and equipment are depreciated using the following estimated useful lives:

Field equipment	Four to ten years
Office furniture, fixtures, and equipment	Five to seven years
Vehicles	Three to five years
Leasehold improvements	Three  years or the term of the lease, whichever is shorter
Residential trailers	Ten to twenty years
Buildings and improvements	Ten to twenty seven and one-half years

Senior Convertible Promissory Notes and other Long-Term Debt

Senior Convertible Promissory Notes and other Long-Term Debt

In December 2014, the Company sold and issued $8.5 million in units consisting of convertible promissory notes (the “Convertible Notes”) and warrants to purchase shares of our common stock (the “Notes Warrants”) to accredited investors, including several directors and officers of the Company, pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 thereunder. The Notes are unsecured obligations and are senior to any of the Company’s future secured obligations to the extent of the value of the collateral securing such obligations.

The Convertible Notes bear interest at a rate of 10.0% per annum, payable in cash quarterly in arrears on each March 31, June 30, September 30, and December 31. The Convertible Notes are convertible at any time in an amount equal to 80% of the greater of (i) the average volume weighted average price (“VWAP”) for the 30 Business Day period ending on the Business Day prior to the date of the conversion, or (ii) the average VWAP for the 30 Business Day period ending on the original issuance date of the Convertible Notes.  Each Note will convert into a maximum of 100 shares per note, resulting in the issuance of up to 8,535,000 shares. General Moly’s named executive officers and board of directors who participated in the offering are restricted from converting at a price less than $0.32, the most recent closing price at the time that the Convertible Notes were issued. The Convertible Notes are mandatorily redeemable at par plus the present value of remaining coupons upon (i) the availability of cash from a financing for the Mt. Hope Project or (ii) any other debt financing by the Company. In addition, 50% of any proceeds from the sale of assets cumulatively exceeding $250,000 will be used to prepay the Convertible Notes at par plus the present value of remaining coupons. The Company has the right to redeem the Convertible Notes at any time at par plus the present value of remaining coupons. The Private Placement was negotiated by independent members of General Moly’s board of directors, none of whom participated in the transaction.  As of September 30, 2019, an aggregate of $2.6 million of Convertible Notes had been converted into 2,625,000 shares of common stock and $1.3 million of non-convertible Senior Promissory Notes, resulting in a $0.2 million annual reduction in interest payments made by the Company in the servicing of the Convertible Notes, as further discussed in Note 6 below.

The Company evaluates its contracts for potential derivatives.  See Note 5 for a description of the Company’s accounting for embedded derivatives and the Convertible Notes.

Debt issuance costs are costs incurred in connection with the Company’s debt financings that have been capitalized and are being amortized over the stated maturity period or estimated life of the related debt, using the effective interest method.

Provision for Taxes

Provision for Taxes

Income taxes are provided based upon the asset and liability method of accounting.  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.  In accordance with authoritative guidance under Accounting Standards Codification (“ASC”) 740, Income Taxes, 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 to allow recognition of such an asset.

Reclamation and Remediation

Reclamation and Remediation

Expenditures for ongoing compliance with environmental regulations that relate to current operations are expensed or capitalized as appropriate.  Future obligations to retire an asset, including reclamation, site closure, dismantling, remediation and ongoing treatment and monitoring, are recorded as a liability at fair value at the time of construction or development.  The fair value determination is based on estimated future cash flows, the current credit-adjusted risk-free discount rate and an estimated inflation factor.  The value of asset retirement obligations is evaluated on a quarterly basis or as new information becomes available on the expected amounts and timing of cash flows required to discharge the liability.  The fair value of the liability is added to the carrying amount of the associated asset andthis additional carrying amount will be depreciated or amortized over the estimated life of the asset upon the commencement of commercial production.  An accretion cost, representing the increase over time in the present value of the liability, will also be recorded each period as accretion expense.  As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced.  Certain collateral amounts associated with our reclamation obligations are held in investment accounts, for which the fair value is estimated based on Level 1 inputs.

Stock-based Compensation

Stock-based Compensation

Stock-based compensation represents the fair value related to stock-based awards granted to members of the Board, officers and employees.  The Company uses the Black-Scholes model to determine the fair value of stock-based awards under authoritative guidance for Stock-Based Compensation.  For stock-based compensation that is earned upon the satisfaction of a service condition, the cost is recognized on a straight-line basis (net of estimated forfeitures) over the requisite vesting period (up to three years).  Awards expire five years from the date of vesting.

Further information regarding stock-based compensation can be found in Note 8 — “Equity Incentives.”

Warrants

Warrants

The Company has issued warrants in connection with several financing transactions and uses the Black-Scholes model or a lattice to determine the fair value of these transactions based on the features included in each.

Leases

Leases

The Company adopted Accounting Standards Codification (“ASC”) 842, Leases, on January 1, 2019. Changes to the Company’s accounting policy as a result of adoption are discussed below.

The Company determines if a contractual arrangement represents or contains a lease at inception. Operating leases are included in Deposits, prepaids and other Current Assets and Otheraccrued liabilities in the Consolidated Balance Sheets. No finance leases have been identified to date.

Operating and finance lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The ROU asset includes any lease payments made and lease incentives received prior to the commencement date. Operating lease ROU assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. 

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Leases (Topic 842)

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).  The update provides a comprehensive update to the lease accounting topic in the Codification intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The amendments in ASU 2016-02 include a revised definition of a lease as well as certain scope exceptions.  The changes primarily impact lessee accounting, while lessor accounting is largely unchanged from previous GAAP.  The amendments in ASU 2016-02 are effective for public entities for annual reporting periods beginning after December 15, 2018, and for interim periods within that reporting period.   

The Company adopted this standard as of January 1, 2019 using the modified retrospective approach with a cumulative effect adjustment on January 1, 2019.  The adoption had no effect on the opening balance of retained earnings at January 1, 2019.  The comparative information has not been adjusted and continues to be reported under the accounting standard in effect for those periods.

The new standard offers a number of optional practical expedients of which the Company elected the following:

Transition elections:  The Company elected a package of practical expedients, applied consistently to all leases that commenced prior to January 1, 2019, that allowed the Company (i) to not reassess whether a contract is or contains a lease, (ii) to not reassess the lease classification of the lease, and (iii) to not reassess initial direct costs for the lease.  The Company elected the land easements practical expedient whereby existing land easements were not reassessed under the new standard.

Ongoing accounting policy elections: The Company elected the short-term lease recognition exemption whereby ROU assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year. The Company elected the practical expedient to not separate lease and non-lease components for all of its underlying asset classes.

Based on leases outstanding at January 1, 2019 and March 31, 2019, the adoption of the new standard resulted in the recognition of operating lease ROU assets and lease liabilities of $0.2 million and $0.2 million, respectively.  Certain of our leases include payments that vary based on the Company’s level of usage and operations.  These variable payments are not included within ROU assets and lease liabilities and are recognized as expense when incurred.  For the three months ended March 31, 2019, operating lease costs were $20K and variable lease costs were $1K.  Cash paid for amounts in the measurement of lease liabilities which are reflected in operating cash flows relating to operating leases for the three months ended March 31, 2019 were $20K. The weighted average life remaining for the operating leases is 1.8 years and the weighted average discount rate is 10%.  Adoption of this standard did not have a material impact to the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows.

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CURRENT DEBT

9 Months Ended

Sep. 30, 2019

CURRENT DEBT

CURRENT DEBT

NOTE 5 — CURRENT DEBT

In December 2014, the Company sold and issued 85,350 Units of Convertible Notes (the “Notes”) with warrants (the “Notes Warrants”) to qualified buyers pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, of which 23,750 Units were sold and issued to related parties, including several directors and each of our named executive officers. The Convertible Notes are unsecured obligations and are senior to any of the Company’s future secured obligations to the extent of the value of the collateral securing such obligations.

The transaction value of $8.5 million was allocated between debt for the Convertible Notes and equity for the Notes Warrants based on the relative fair value of the two instruments.   This resulted in recording $0.8 million in Additional Paid In Capital for the relative fair value of the Warrants and $7.7 million as Convertible Notes.  The Company received net proceeds from the sale of the Convertible Notes of approximately $8.0 million, after deducting offering expenses of approximately $0.5 million, which was allocated between debt and equity. As a result, the Company recognized $0.4 million as Debt Issuance Costs to be amortized over the expected redemption period, and $0.1 million recognized as a reduction to Additional Paid in Capital. Net proceeds from the sale are being used to fund ongoing operations until the Company’s portion of project financing is obtained.

The Convertible Notes bear interest at a rate of 10.0% per annum, payable in cash quarterly in arrears on each March 31, June 30, September 30, and December 31. The Convertible Notes mature on December 26, 2019 unless earlier redeemed, repurchased or converted. The Company may redeem the Convertible Notes for cash, either in whole or in part, at any time, in exchange for the sum of (i) a cash payment equal to the unpaid principal plus all accrued but unpaid interest through the date of redemption and (ii) the present value of the remaining scheduled interest payments discounted to the maturity date at the annual percentage yield on U.S. Treasury securities with maturity similar to the notes plus 25 basis points (the “Optional Redemption”). The Convertible Notes are mandatorily redeemable at par plus the present value of remaining coupons upon (i) the availability of cash from a financing for Mt. Hope and (ii) any other debt financing by the Company. In addition, 50% of any proceeds from the sale of assets cumulatively exceeding $250,000 will be used to prepay the Convertible Notes at par plus the present value of remaining coupons (the “Mandatory Redemption”).

The Convertible Notes are convertible at any time in an amount equal to 80% of the greater of (i) the average VWAP for the 30 Business Day period ending on the Business Day prior to the date of the conversion, or (ii) the average VWAP for the 30 Business Day period ending on the original issuance date of the note.  Each Convertible Note will convert into a maximum of 100 shares per note, resulting in the issuance of 8,535,000 shares, or 9.3% of shares outstanding as of December 31, 2014 (the “Conversion Option”). General Moly’s executive management team and board of directors who participate in the offering will be restricted from converting at a price less than $0.32, the most recent closing price at the time that the Notes were issued.

If the Company undergoes a “fundamental change”, the Convertible Notes will be redeemed for cash at a repurchase price equal to 100% of the principal amount of the Convertible Notes to be repurchased plus accrued and unpaid interest, including contingent interest and additional amounts, if any. Examples of a “fundamental change” include the reclassification of the common stock, consolidation or merger of the Company with another entity or sale of all or substantially all of the Company’s assets.

During the year ended December 31, 2015, certain holders of the Convertible Notes, including both directors and named executive officers of the Company, elected to convert notes totaling $2.6 million, reducing the principal balance of the Convertible Notes to $5.9 million. Upon conversion, the Convertible Notes holders received 2,625,000 shares of common stock, at conversion prices ranging from $0.3462 to $0.5485, and were issued non-convertible Senior Promissory Notes (“Promissory Notes”) of $1.3 million, pursuant to the terms of the share maximum provision of the Conversion Option.  The Promissory Notes have identical terms to the Convertible Notes, with the exception that the holder no longer has a Conversion Option. Accordingly, the Promissory Notes bear interest equal to 10.0% per annum, payable in cash quarterly in arrears on each March 31, June 30, September 30, and December 31 and mature on December 26, 2019.  The conversions resulted in a $0.2 million annual reduction in interest payments made by the Company in the servicing of the Notes. 

On September 26, 2019, the Company entered into a 90 day deferral and forbearance agreement with the primary holder of the Convertible Notes, along with certain of the Company’s members of management and directors who participated in the 2014 debt offering.  As a result, the Company deferred approximately $162,000 of interest payments that were due at the end of the third quarter 2019.

The Company has reached an agreement in principle (“AiP”) with the holder of $5 million of the Company’s Senior Convertible Promissory Notes and certain other holders of Senior Convertible Notes and Senior Promissory Notes (collectively, the “Senior Notes”) to exchange the Senior Notes for new units consisting of new senior non-convertible promissory notes in the same original principal amount bearing an interest rate between 12-14% and otherwise providing for similar terms (the “Exchange Notes”) and a three-year warrant to purchase Company common stock at $0.35 share (each a “Unit”).  The Exchange Notes will extend the maturity date until December 2022.

In addition to the exchange of Senior Notes, the largest holder of the Senior Notes, as well as the Company’s CEO, Bruce Hansen, have agreed, subject to execution of definitive documentation, to purchase new 13% Senior Promissory Notes due 2022 in the principal amount of $610,000 (representing 10% of the original principal amount of the Senior Notes to be exchanged) providing additional capital to the Company.  At this date, the total principal amount of Senior Notes contemplated to be extended by the AiP is $6.37 million out of the $7.25 million Senior Notes outstanding.  The maturity date for the outstanding Senior Notes is December 26, 2019.

Based on the redemption and conversion features discussed above, the Company determined that there were embedded derivatives that require bifurcation from the debt instrument and should be accounted for under ASC 815. Embedded derivatives are separated from the host contract, the Convertible Notes, and carried at fair value when: (a) the embedded derivative possesses economic characteristics that are not clearly and closely related to the economic characteristics of the host contract; and (b) a separate, stand-alone instrument with the same terms would qualify as a derivative instrument. The Company has concluded that the Mandatory Redemption and Conversion Option features embedded within the Convertible Notes meet these criteria and, as such, must be valued separate and apart from the Convertible Notes as one embedded derivative and recorded at fair value each reporting period (the “Embedded Derivatives”).

A probability-weighted calculation was utilized to estimate the fair value of the Mandatory Redemption. 

The Company used a binomial lattice model in order to estimate the fair value of the Conversion Option in the Convertible Notes. A binomial lattice model generates two probable outcomes, arising at each point in time, starting from the date of valuation until the maturity date. A lattice was initially used to determine if the Convertible Notes would be converted or held at each decision point. Within the lattice model, the Company assumes that the Convertible Notes will be converted early if the conversion value is greater than the holding value.

As of September 30, 2019 and December 31, 2018, respectively, the carrying value of the Convertible Notes, absent the embedded derivatives, was $5.9 million and $5.8 million inclusive of an unamortized debt discount of nil and $0.1 million, all of which is considered current debt. The fair value of the Convertible Notes was $3.8 million and $4.0 million at September 30, 2019 and December 31, 2018, respectively.

As of September 30, 2019 and December 31, 2018, the carrying value of the Promissory Notes was $1.3 million. The fair value of the Promissory Notes was $0.9 million at September 30, 2019 and December 31, 2018.

The embedded derivatives recorded in Convertible Notes at fair value were ($30,000) and ($14,000) at September 30, 2019 and December 31, 2018, respectively. The changes in the estimated fair value of the embedded derivatives during the nine months ended September 30, 2019 resulted in a net loss of approximately $15,000.  Gain or loss on embedded derivatives is recognized as Interest Expense in the Statement of Operations.

The Company has estimated the fair value of the Convertible Notes and embedded derivatives based on Level 3 inputs. Changes in certain inputs into the binomial lattice valuation models can have a significant impact on changes in the estimated fair value. For example, the estimated fair value of the embedded derivatives will generally decrease with: (1) a decline in the stock price; (2) increases in the estimated stock volatility; and (3) an increase in the estimated credit spread.

The following inputs were utilized to measure the fair value of the Notes and embedded derivatives: (i) price of the Company’s common stock; (ii) Conversion Rate (as defined in the Convertible Note); (iii) Conversion Price (as defined in the Convertible Notes); (iv) maturity date; (v) risk-free interest rate; (vi) estimated stock volatility; (vii) estimated credit spread for the Company; (viii) default intensity; and (ix) recovery rate.

The following tables set forth the inputs to the models that were used to value the embedded derivatives:

	September 30, 2019		December 31, 2018
Stock Price	$	0.26	$	0.22
Maturity Date		December 31, 2019		December 31, 2019
Risk-Free Interest Rate		1.88%		2.63%
Estimated Stock Volatility		40.00%		40.00%
Default Intensity		2.00%		2.00%
Recovery Rate		30.00%		30.00%

Type of Event	Expected Date	Probability of Event
Mandatory Redemption	October 17, 2019	80%
Conversion Option	February 21, 2019	0%
Note Reaches Maturity	December 31, 2019	20%

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CHANGES IN CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

9 Months Ended

Sep. 30, 2019

CHANGES IN CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

CHANGES IN CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

NOTE 9 — CHANGES IN CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

	Activity for
	Nine Months Ended
	September 30,		September 30,
Changes CRNCI (Dollars in thousands)	2019		2018
Total CRNCI December 31, 2018 and 2017, respectively	$	172,261	$	172,633
Net Loss Attributable to CRNCI		(16)		(367)
Total CRNCI September 30, 2019 and 2018, respectively	$	172,245	$	172,266

	Activity for
	Nine Months Ended
	September 30,		September 30,
Changes Redeemable Preferred Stock (Dollars in thousands)	2019		2018
Total Redeemable Preferred Stock  December 31, 2018 and 2017, respectively	$	—	$	—
Redeemable Preferred Stock Issued		1,800		—
Total Redeemable Preferred Stock  September 30, 2019 and 2018, respectively	$	1,800	$	—

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	1 Months Ended	9 Months Ended	12 Months Ended
	Jan. 31, 2015	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Cash and cash equivalents		$ 1,100	$ 2,016
Restricted cash held at EMLLC		4,118	6,167
Restricted cash and investments held for reclamation bonds			434
Total cash, cash equivalents and restricted cash shown in the statement of cash flows		5,218	8,617	$ 10,654	$ 18,374
Cash deposits		416	834
POS-Minerals Corporation
Contributions made by EMLLC to its members	$ 700
Mt. Hope Project
Restricted cash held at EMLLC		4,100	6,200
Restricted cash and investments held for reclamation bonds		400
Additional in long term funding mechanism			400
Cash deposits		600
Initial Fund From Members Reserve Account Balance		4,100	$ 6,200
Liberty Project
Cash deposits		100
Eureka Moly LLC
Cash deposits		$ 300
Nevada Moly LLC
Contributions made by EMLLC to its members	$ 2,700

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DESCRIPTION OF BUSINESS - Cash Commitments (Details) $ in Millions	Sep. 30, 2019 USD ($)
Cash commitments under equipment contracts
2020	$ 0.6
Total	$ 0.6
Purchase Commitment | Mining and milling equipment | POS-Minerals Corporation
Cash commitments under equipment contracts
Percentage of commitments funded	20.00%
Purchase Commitment | Mining and milling equipment | Nevada Moly LLC
Cash commitments under equipment contracts
Percentage of commitments funded	80.00%

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ASSET RETIREMENT OBLIGATIONS (Tables)

9 Months Ended

Sep. 30, 2019

Mt. Hope Project and within the boundaries of the Plan of Operations ("PoO")

Property, plant and equipment

Asset retirement obligations for future mine closure and reclamation costs

	(in thousands)
At January 1, 2018	$	1,568
Accretion Expense		103
Adjustments*		(38)
At December 31, 2018	$	1,633
Accretion Expense		81
Adjustments*		34
At September 30, 2019	$	1,748

*Includes additions, annual changes to the escalation rate, the market-risk premium rate, or reclamation time periods.

Liberty Project

Property, plant and equipment

Asset retirement obligations for future mine closure and reclamation costs

	Mt. Hope Project
	outside PoO
	boundary		Liberty
	(in thousands)
At January 1, 2018	$	15	$	121
Adjustments *		—		—
At December 31, 2018	$	15	$	121
Adjustments *		—		—
At September 30, 2019	$	15	$	121

*Includes reduced / reclaimed disturbance

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DESCRIPTION OF BUSINESS - Related Parties (Details) $ in Millions		1 Months Ended				9 Months Ended	12 Months Ended
	Jan. 01, 2015 USD ($)	Apr. 30, 2016 USD ($)	Apr. 30, 2015 USD ($)	Mar. 31, 2015 USD ($)	Jan. 31, 2015 USD ($)	Sep. 30, 2019 USD ($) factor	Dec. 31, 2018 USD ($)	Dec. 31, 2012 USD ($)	Dec. 31, 2008 USD ($)	Feb. 29, 2008	Dec. 31, 2007
Description of business
Additional ownership granted if General Moly fails to return capital to POS Corp (as a percent)						5.00%
Eureka Moly LLC
Description of business
Ownership interest (as a percent)										20.00%
Ownership interest (as a percent)										80.00%
Mt. Hope Project
Description of business
Ownership interest in project (as a percent)											100.00%
Balance of reserve account						$ 4.1	$ 6.2
POS-Minerals Corporation
Description of business
Contributions made by EMLLC to its members					$ 0.7
Milling equipment
Description of business
Principal payment made for equipment			$ 1.2
Eureka Moly LLC
Description of business
Dilution formula factor | factor						1.5
Deemed capital contributions of both parties						$ 1,090.3
Eureka Moly LLC | Eureka Moly LLC
Description of business
Ownership interest (as a percent)						80.00%
Eureka Moly LLC | POS-Minerals Corporation
Description of business
Contributions made by POS-Minerals to the LLC								$ 100.7	$ 100.0
Return of contributions to POS Minerals which the LLC is required to make due to not achieving production						$ 36.0
Capital contributions reduction limit						33.6
Nevada Moly LLC
Description of business
Contributions made by EMLLC to its members					$ 2.7
Nevada Moly LLC | POS-Minerals Corporation
Description of business
Remaining amount of capital contribution due to POS Minerals	$ 33.6					$ 33.6
Reduction in obligation				$ 2.4
Failure to use standard mining industry practice triggers put of ownership interest						12 months
Percentage of POS Mineral Cash Contributions puttable to Nevada Moly if specified conditions occur (as a percent)						120.00%
Interest per annum on total contributions which Nevada Moly is required to pay (as a percent)						10.00%
Obligation to fund return of capital by Nevada Moly to POS-Minerals	$ 36.0
Nevada Moly LLC | POS-Minerals Corporation | LIBOR
Description of business
Unpaid amount interest rate						LIBOR
Unpaid amount Libor floor (as a percent)						5.00%
Nevada Moly LLC | Milling equipment | POS-Minerals Corporation
Description of business
Reduction in obligation						$ 2.4
Percentage of reduction on principal payments				20.00%
Principal payment made for equipment		$ 1.2		$ 8.4
Nevada Moly LLC | Electrical transformer | POS-Minerals Corporation
Description of business
Principal payment made for equipment			$ 2.2

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CONSOLIDATED STATEMENTS OF EQUITY - USD ($) $ in Thousands	Series A Private Placement Preferred Shares	Series B Private Placement Preferred Shares	ATM Common Shares	ATM Additional Paid-In Capital	ATM	Common Shares	Preferred Shares	Additional Paid-In Capital	Accumulated Deficit	Total
Balance at Dec. 31, 2017						$ 126		$ 288,041	$ (180,382)	$ 107,785
Balance (in shares) at Dec. 31, 2017						125,802,023
Issuance of Units of Common Stock:
Issued pursuant to stock awards (in shares)						195,000
Stock-based compensation								494		494
Restricted stock net share settlement						$ 1		(173)		(172)
Restricted stock net share settlement (in shares)						798,481
Stock issued during period			$ 1	$ 495	$ 496
Stock issued during period (in shares)			1,168,300
Net loss									(5,540)	(5,540)
Balance at Jun. 30, 2018						$ 128		288,857	(185,922)	103,063
Balance (in shares) at Jun. 30, 2018						127,963,804
Balance at Dec. 31, 2017						$ 126		288,041	(180,382)	107,785
Balance (in shares) at Dec. 31, 2017						125,802,023
Issuance of Units of Common Stock:
Net loss										(8,599)
Balance at Sep. 30, 2018						$ 128		289,063	(188,981)	100,210
Balance (in shares) at Sep. 30, 2018						127,963,804
Balance at Jun. 30, 2018						$ 128		288,857	(185,922)	103,063
Balance (in shares) at Jun. 30, 2018						127,963,804
Issuance of Units of Common Stock:
Stock-based compensation								206		206
Net loss										(3,033)
Net loss									(3,059)	(3,059)
Balance at Sep. 30, 2018						$ 128		289,063	(188,981)	100,210
Balance (in shares) at Sep. 30, 2018						127,963,804
Balance at Dec. 31, 2018						$ 137		291,266	(191,126)	$ 100,277
Balance (in shares) at Dec. 31, 2018						137,114,804				137,114,804
Issuance of Units of Common Stock:
Issued pursuant to stock awards (in shares)						135,000
Stock-based compensation								46		$ 46
Restricted stock net share settlement								(1)		(1)
Restricted stock net share settlement (in shares)						276,328
Stock issued during period	$ 1,400
Warrant Exercise						$ 1		247		248
Warrant Exercise (in shares)						694,200
Net loss									(3,897)	(3,897)
Balance at Jun. 30, 2019						$ 138	$ 1,400	291,558	(195,023)	96,673
Balance (in shares) at Jun. 30, 2019						138,220,332
Balance at Dec. 31, 2018						$ 137		291,266	(191,126)	$ 100,277
Balance (in shares) at Dec. 31, 2018						137,114,804				137,114,804
Issuance of Units of Common Stock:
Net loss										$ (6,873)
Balance at Sep. 30, 2019						$ 138	1,800	291,584	(197,999)	$ 93,723
Balance (in shares) at Sep. 30, 2019						138,220,332				138,220,332
Balance at Jun. 30, 2019						$ 138	1,400	291,558	(195,023)	$ 96,673
Balance (in shares) at Jun. 30, 2019						138,220,332
Issuance of Units of Common Stock:
Stock-based compensation								26		26
Stock issued during period		$ 400
Net loss									(2,976)	(2,976)
Balance at Sep. 30, 2019						$ 138	$ 1,800	$ 291,584	$ (197,999)	$ 93,723
Balance (in shares) at Sep. 30, 2019						138,220,332				138,220,332

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 15, 2019
Document and Entity Information
Document Type	10-Q
Document Period End Date	Sep. 30, 2019
Entity Registrant Name	General Moly, Inc.
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		138,359,220
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Central Index Key	0001275229
Amendment Flag	false

XML

CURRENT DEBT - Embedded Derivatives (Details)	9 Months Ended	12 Months Ended
	Sep. 30, 2019 USD ($) item $ / shares	Dec. 31, 2018 USD ($) item $ / shares	Oct. 17, 2018 $ / shares
Embedded derivatives
Stock price (in dollars per share) | $ / shares	$ 0.26	$ 0.22	$ 0.25
Default Intensity (as a percent)	2.00%	2.00%
Recovery Rate (as a percent)	30.00%	30.00%
Risk-Free Interest Rate
Embedded derivatives
Embedded derivative measurement input | item	1.88	2.63
Estimated Stock Volatility
Embedded derivatives
Embedded derivative measurement input | item	40.00	40.00
Embedded derivatives
Embedded derivatives
Mandatory Redemption, Probability of Event (as a percent)	80.00%
Conversion Option, Probability of Event (as a percent)	0.00%
Note Reaches Maturity, Probability of Event (as a percent)	20.00%
Convertible Notes
Embedded derivatives
Carrying value of Notes	$ 5,900,000	$ 5,800,000
Unamortized debt discount	0	100,000
Fair value of notes payable	3,800,000	4,000,000
Convertible Notes | Embedded derivatives
Embedded derivatives
Fair value of embedded derivatives	30,000	14,000
Net gain on changes in fair value of embedded derivatives	15,000
Non-convertible Promissory Note
Embedded derivatives
Carrying value of Notes	1,300,000	1,300,000
Fair value of notes payable	$ 900,000	$ 900,000

XML

MINING PROPERTIES, LAND AND WATER RIGHTS

9 Months Ended

Sep. 30, 2019

MINING PROPERTIES, LAND AND WATER RIGHTS

MINING PROPERTIES, LAND AND WATER RIGHTS

NOTE 3 — MINING PROPERTIES, LAND AND WATER RIGHTS

We currently have interests in two mining properties that are the primary focus of our development, the Mt. Hope Project and the Liberty Project.  We also have certain other, non-core, mining properties that are being evaluated for future development or sale.

The Mt. Hope Project.  We are currently in the process of developing the Mt. Hope Project, and have recently obtained all permits required for construction. In January 2014, the Company published an updated Technical Report on the Mt. Hope Project using Canadian Instrument NI 43-101 guidelines, which provided data on the viability and expected economics of the project.  In early 2017, we re-examined the Mt. Hope proven and probable mineral reserves and updated the reserve and resource estimates using an $8.40/lb molybdenum (“Mo”) three-year backward average price.  No further adjustments have been required.

The Company has also identified a potential high-grade, copper-silver exploration target along with a significant zinc mineralized area at the Mt. Hope Project site, southeast of the Mt. Hope Project’s molybdenum deposit in central Nevada (the “Cu-Ag Target”).

A high-intensity, ground-based Induced Polarization (“IP”) survey completed in February 2018 by Quantec Geoscience indicates a fairly continuous group of high chargeability anomalies that appear aligned with the recently identified Cu-Ag Target. These anomalies lie between 100 feet and 1,000-plus feet from the surface and trend northeast for over 1,000 feet. The IP survey indicates that the anomalies could continue further to the north-northeast and to the south where they appear to dip to the east.

To date the preliminary Cu-Ag Target exploration work was undertaken solely by General Moly. The Company has presented the promising findings to its 20% joint venture partner at the Mt. Hope Project, POS-Minerals, and the parties are discussing value-sharing investment options. Any mining operation to exploit economic mineralization will require the approval of POS-Minerals.

Geological review of historic logs and core was completed by Mine Mappers, LLC of Tucson, Arizona to update the geologic interpretation of the skarn area.  Mine Mappers reviewed the geologic interpretations in conjunction with the IP results and recommended a 10-hole, 9,400 foot drilling confirmation and exploration program. 

In September 2018, the Company commenced a 9 hole drill program on the patented claims at the Mt. Hope Project.  The drilling program is focused on copper-silver-zinc mineralized skarns and designed to confirm and extend the target defined by historical drilling as well as test for extensions of zinc mineralization horizons which were historically mined.  The drill program is was completed in late 2018 and the Company is evaluating results to determine if said results warrant completion of a Preliminary Economic Assessment. 

Liberty Project.  We continue to evaluate opportunities at the Liberty Project as they arise.  The Liberty Project remains largely in care and maintenance at this time.  In July 2014, the Company published an updated NI 43-101 compliant pre-feasibility study, which more closely examined the use of existing infrastructure and the copper potential of the property.  In February 2017, Liberty Moly entered into a lease agreement with WK Mining Ltd. (“WK”) for the lease of water rights for the purpose of mining and milling.  The term of the lease is six years which WK can extend for an additional four years.  As compensation for the leased water rights, WK has issued $124,000 in common shares to Liberty Moly, consisting of $100,000 at signing of the agreement and shares equal to $12,000 in both its first and second annual installments, and is required to pay an annual fee on the anniversary date of the lease in either cash or WK common shares.

The Nevada Division of Environmental Protection (“NDEP”) has identified environmental concerns with some Liberty Project facilities acquired with the property.  NDEP’s concerns are related to aspects of previously approved closure plans required by Nevada regulation.  We have proposed options to NDEP to address these concerns.  In July 2018, we addressed one of those concerns by successfully completing a program, as approved by NDEP, to neutralize the acidic Liberty pit lake by adding hydrated lime to raise the pH.  We will continue to work with NDEP to evaluate ongoing options to address any future concerns, and additional costs may be required to meet NDEP’s closure requirements.  However, a reasonable estimate cannot be determined at this time as it is not possible to reasonably predict the outcome of our negotiations with NDEP.

Other Mining Properties.  We also have mining claims and land purchased prior to 2006 which consist in part of (a) six patented mining claims known as the Chicago-London group, located near the town of Murray in Shoshone County, Idaho, (b) 34 unpatented mining claims in Marion County, Oregon, known as the Detroit property and (c) 83 unpatented mining claims in Sanders and Madison County, Montana.  The costs associated with these claims and properties are minimal and primarily relate to claim fees and property taxes.

Summary. The following is a summary of mining properties, land and water rights at September 30, 2019 and December 31, 2018 (in thousands):

	At		At
	September 30,		December 31,
	2019		2018
Mt. Hope Project:
Development costs	$	179,328	$	176,292
Mineral, land and water rights		9,423		11,324
Advance royalties		31,800		31,800
Total Mt. Hope Project		220,551		219,416
Total Liberty Project		8,374		9,678
Other Properties		0		81
Total	$	228,925	$	229,175

Development costs of $179.3 million as of September 30, 2019 include hydrology and drilling costs, expenditures to further the permitting process, capitalized salaries, project engineering costs, and other expenditures required to fully develop the Mt. Hope Project.  Deposits on project property, plant and equipment of $88.0 million as of September 30, 2019 represent ongoing progress payments on equipment orders for the custom-built grinding and milling equipment, related electric mill drives, and other processing equipment that require the longest lead times.

XML

MINING PROPERTIES, LAND AND WATER RIGHTS (Details)		1 Months Ended			9 Months Ended
	Oct. 17, 2018 USD ($)	Aug. 31, 2018 ft	Feb. 28, 2018 ft	Feb. 28, 2017 USD ($)	Sep. 30, 2019 USD ($) item $ / item	Dec. 31, 2018 USD ($)	Dec. 31, 2005 item
Mining properties
Number of mining properties | item					2
Common shares issued	$ 1,900,000
Mining properties, land and water rights
Mining properties, land and water rights					$ 228,928,000	$ 229,175,000
Deposits on project property, plant and equipment					$ 87,972,000	88,124,000
Mt. Hope Project
Mining properties
Molybdenum price (in dollars per pound) | $ / item					8.40
Backward average price					3 years
Ownership interest (as a percent)					20.00%
Depth of the recommended 10-hold drilling for confirmation and exploration program | ft		9,400
Mt. Hope Project | Minimum
Mining properties
Depth of high chargeability anomalies | ft			100
Mt. Hope Project | Maximum
Mining properties
Depth of high chargeability anomalies | ft			1,000
Lease Agreement with WK Mining Ltd
Mining properties
Term of lease				6 years
Extended lease term				4 years
Common shares issued				$ 124,000
Initial payment fees				100,000
Annual fees of first installment				$ 12,000
Chicago London Group Property
Mining properties
Number of patented mining claims acquired | item							6
Detroit Copper Property
Mining properties
Number of unpatented mining claims acquired | item							34
Sanders and Madison Property
Mining properties
Number of unpatented mining claims acquired | item							83
Land and Water Rights
Mining properties, land and water rights
Mining properties, land and water rights					$ 228,925,000	229,175,000
Land and Water Rights | Mt. Hope Project
Mining properties
Development costs					179,328,000	176,292,000
Mineral, land and water rights					9,423,000	11,324,000
Advance Royalties					31,800,000	31,800,000
Mining properties, land and water rights
Mining properties, land and water rights					220,551,000	219,416,000
Land and Water Rights | Liberty Project
Mining properties, land and water rights
Mining properties, land and water rights					8,374,000	9,678,000
Land and Water Rights | Other Properties
Mining properties, land and water rights
Mining properties, land and water rights					0	$ 81,000
Mining properties, land and water rights. | Mt. Hope Project
Mining properties, land and water rights
Deposits on project property, plant and equipment					$ 88,000,000

XML

MINING PROPERTIES, LAND AND WATER RIGHTS (Tables)

9 Months Ended

Sep. 30, 2019

MINING PROPERTIES, LAND AND WATER RIGHTS

Summary of mining properties, land and water rights

The following is a summary of mining properties, land and water rights at September 30, 2019 and December 31, 2018 (in thousands):

	At		At
	September 30,		December 31,
	2019		2018
Mt. Hope Project:
Development costs	$	179,328	$	176,292
Mineral, land and water rights		9,423		11,324
Advance royalties		31,800		31,800
Total Mt. Hope Project		220,551		219,416
Total Liberty Project		8,374		9,678
Other Properties		0		81
Total	$	228,925	$	229,175

XML

CHANGES IN CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY (Tables)

9 Months Ended

Sep. 30, 2019

CHANGES IN CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY

Summary of changes in contingently redeemable noncontrolling interest and equity

	Activity for
	Nine Months Ended
	September 30,		September 30,
Changes CRNCI (Dollars in thousands)	2019		2018
Total CRNCI December 31, 2018 and 2017, respectively	$	172,261	$	172,633
Net Loss Attributable to CRNCI		(16)		(367)
Total CRNCI September 30, 2019 and 2018, respectively	$	172,245	$	172,266

	Activity for
	Nine Months Ended
	September 30,		September 30,
Changes Redeemable Preferred Stock (Dollars in thousands)	2019		2018
Total Redeemable Preferred Stock  December 31, 2018 and 2017, respectively	$	—	$	—
Redeemable Preferred Stock Issued		1,800		—
Total Redeemable Preferred Stock  September 30, 2019 and 2018, respectively	$	1,800	$	—

XML

COMMON STOCK UNITS, COMMON STOCK AND COMMON STOCK WARRANTS (Details)						1 Months Ended		3 Months Ended	6 Months Ended	9 Months Ended	12 Months Ended		26 Months Ended		29 Months Ended
	Oct. 17, 2018 USD ($) $ / shares shares	Apr. 12, 2017 USD ($)	Nov. 02, 2015 USD ($) $ / item $ / shares shares	Jun. 30, 2015 Vote $ / shares shares	Dec. 26, 2014 USD ($) $ / shares shares	Oct. 31, 2018 USD ($) shares	Dec. 31, 2014 shares	Sep. 30, 2019 $ / shares shares	Jun. 30, 2018 USD ($)	Sep. 30, 2019 $ / shares shares	Dec. 31, 2018 $ / shares shares	Dec. 31, 2015 shares	Jun. 30, 2019 shares	Jun. 30, 2019 USD ($)	Sep. 30, 2019 USD ($) $ / shares shares
Shares issued, stock awards (in shares)								0		411,328	993,481
Number of units issued during the period	9,151,000
Net proceeds | $	$ 1,900,000
Stock price (in dollars per share) | $ / shares	$ 0.25							$ 0.26		$ 0.26	$ 0.22				$ 0.26
Number of common stock shares offered per unit in underwritten public offering	1
Number of warrants offered per unit in underwritten public offering.	1
Number of common shares warrant holders may purchase	1
Fair value of warrants issued | $			$ 500,000
Exercise price of warrants exercised for cash (in dollars per share) | $ / shares	$ 0.35
Number of Shares Under Warrants
Warrants outstanding								97,991,800		97,991,800					97,991,800
Issuance of new warrants			80,000,000
Exercise Price
Exercise price of new warrants issued (in dollars per share) | $ / item			0.50
Shares authorized (in shares)				650,000,000				650,000,000		650,000,000	650,000,000				650,000,000
Par or stated value of common stock (in dollars per share) | $ / shares				$ 0.001				$ 0.001		$ 0.001	$ 0.001				$ 0.001
Number of votes per share | Vote				1
Ownership percentage required to control board of directors (as a percent)				50.00%
Convertible Notes
Shares issued upon conversion (in shares)										2,625,000		2,625,000
Warrants
Number of Shares Under Warrants
Exercise price per share | $ / shares								5.00		$ 5.00					5.00
Exercise Price
Expiration term										1 year
Warrants | Convertible Notes
Number of warrants issued in private placement of its senior convertible notes					8,500,000					1,000,000
Purchase price per share acquired (in dollars per share) | $ / shares					$ 1.00
Relative fair value of Warrants | $					$ 800,000
Warrants. | Convertible Notes
Stock price (in dollars per share) | $ / shares								1.00		$ 1.00					$ 1.00
Number of warrants issued in private placement of its senior convertible notes										8,500,000
ATM
Number of units issued during the period						9,125,000
Net proceeds | $						$ 1,900,000			$ 496,000					$ 500,000	$ 500,000
Issue of shares													1,168,300		1,168,300
Period of time the ATM is suspended (in years)						2 years									2 years
AMER International Group
Shares issued upon conversion (in shares)											1,168,300
AMER International Group | Warrants
Number of warrants issued in private placement of its senior convertible notes										80,000,000
Exercise Price
Expiration term										5 years
AMER International Group | Warrants.
Class of Warrant or Right, Number of Securities Called by Warrants or Rights			80,000,000
Number of Shares Under Warrants
Exercise price per share | $ / shares			$ 0.50
Minimum
Number of Shares Under Warrants
Exercise price per share | $ / shares								0.35		$ 0.35					$ 0.35
Maximum
Number of Shares Under Warrants
Exercise price per share | $ / shares								$ 5.00		$ 5.00					$ 5.00
Maximum | Convertible Notes
Shares issued upon conversion (in shares)							8,535,000
Maximum | ATM
Net proceeds | $		$ 20,000,000
Bruce D. Hansen
Net proceeds | $	$ 500,000

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The interim consolidated financial statements (“interim statements”) of the Company are unaudited.  In the opinion of management, all adjustments and disclosures necessary for a fair statement 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 statements are not necessarily indicative of the results that may be presented for the entire year.  These interim statements should be read in conjunction with the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2018, filed with the Securities and Exchange Commission (“SEC”) on March 21, 2019.

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 (“GAAP”) 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 GAAP.  With the exception of the LLC, all of our subsidiaries are wholly owned.  In February 2008, we entered into the LLC Agreement, which established our ownership interest in the LLC at 80%.  The consolidated financial statements include all of our wholly owned subsidiaries and the LLC.  The POS-Minerals contributions attributable to their 20% interest are shown as Contingently Redeemable Noncontrolling Interest on the Consolidated Balance Sheet.  The net loss attributable to contingently redeemable noncontrolling interest is reflected separately on the Consolidated Statement of Operations and reduces the Contingently Redeemable Noncontrolling Interest on the Consolidated Balance Sheet.  Net losses of the LLC are attributable to the members of the LLC based on their respective ownership percentages in the LLC.  During the three and nine months ended September 30, 2019, the LLC had a $27,000 and $81,000 loss, respectively, primarily associated with accretion of its reclamation obligations, of which $5,000 and $16,000, was attributed to the Contingently Redeemable Noncontrolling Interest.

Contingently Redeemable Noncontrolling Interest (“CRNCI”)

Under GAAP, certain noncontrolling interests in consolidated entities meet the definition of mandatorily redeemable financial instruments if the ability to redeem the interest is outside of the control of the consolidating entity.  As described in Note 1 — “Description of Business”, the LLC Agreement permits POS-Minerals the option to put its interest in the LLC to Nevada Moly upon a change of control, as defined in the LLC Agreement, followed by a failure by us to use standard mining industry practice in connection with the development and operation of the Mt. Hope Project as contemplated by the parties for a period of 12 consecutive months.  As such, the CRNCI has continued to be shown as a separate caption between liabilities and equity based on accounting standards which require equity instruments with redemption features that are not solely within the control of the issuer to be classified outside of permanent equity (referred to as mezzanine equity).  The carrying value of the CRNCI has historically included the Return of Contributions, now $33.6 million, that will be returned to POS-Minerals in 2020, unless further extended by the members of the LLC as discussed above.  The expected Return of Contributions to POS-Minerals was carried at redemption value as we believed redemption of this amount was probable.  Effective January 1, 2015, Nevada Moly and POS-Minerals agreed that the Return of Contributions will be due to POS-Minerals on December 31, 2020, unless further extended by the members of the LLC as discussed above.  As a result, we have reclassified the Return of Contributions payable to POS-Minerals from CRNCI to a non-current liability at redemption value, and subsequently reduced it by $2.4 million, consisting of 20% of an $8.4 million principal payment made on milling equipment in March 2015, a $2.2 million principal payment made on electrical transformers in April 2015, and a $1.2 million principal payment made on milling equipment in April 2016, such that the remaining amount due to POS-Minerals is $33.6 million.

The remaining carrying value of the CRNCI has not been adjusted to its redemption value as the contingencies that may allow POS-Minerals to require redemption of its noncontrolling interest are not probable of occurring.  Under GAAP, until such time as that contingency has been eliminated and redemption is no longer contingent upon anything other than the passage of time, no adjustment to the CRNCI balance should be made.  Future changes in the redemption value will be recognized immediately as they occur and the Company will adjust the carrying amount of the CRNCI to equal the redemption value at the end of each reporting period.

Estimates

The process of preparing consolidated financial statements 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.

Asset Impairments

We evaluate the carrying value of long-lived assets to be held and used, using a fair-value based approach when events and circumstances indicate that the related carrying amount of our assets may not be recoverable.  Significant declines in the overall economic environment, molybdenum and copper prices may be considered as impairment indicators for the purposes of these impairment assessments.  Additionally, failure to secure our mining permits, including our water rights, or revocation of our permits, may be considered as impairment indicators for the purposes of these impairment assessments.  In accordance with U.S. GAAP, the carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flows from such asset is less than its carrying value.  In that event, an impairment charge will be recorded in our Consolidated Statement of Operations and Comprehensive Loss based on the difference between book value and the estimated fair value of the asset computed using discounted future cash flows, or the application of an expected fair value technique in the absence of an observable market price.  Future cash flows include estimates of recoverable quantities to be produced from estimated proven and probable mineral reserves, commodity prices (considering current and historical prices, price trends and related factors), production quantities and capital expenditures, all based on life-of-mine plans and projections.  In estimating future cash flows, assets are grouped at the lowest level for which identifiable cash flows exist that are largely independent of cash flows from other asset groups.  Generally, in estimating future cash flows, all assets are grouped at a particular mine for which there are identifiable cash flows.  Management has evaluated the circumstances of the July 30, 2019 AMER default and has concluded the default is a third quarter triggering event in which we updated cash flow forecasts.  We evaluated and determined the carrying value of the asset groups were recoverable as the probability-weighted undiscounted cash flows exceeded the carrying values for each of our asset groups.  While at September 30, 2019, we have not identified any impairment of our long-lived assets, there can be no assurance that there will not be asset impairments if commodity prices experience a sustained decline and/or if there are significant downward adjustments to estimates of recoverable quantities to be produced from proven and probable mineral reserves or production quantities, and/or upward adjustments to estimated operating costs and capital expenditures, all based on life-of-mine plans and projections.  Additionally, should we be unable to secure alternative financing following the default of AMER to fund Tranche 3 under the AMER Investment Agreement, we may be required to modify our cash flow projections which could result in a significant reduction in the valuation of our assets thereby causing an impairment to our assets at that time.

Cash and Cash Equivalents and Restricted Cash

We consider all highly liquid investments with original maturities of three months or less to be cash equivalents. The Company’s cash equivalent instruments are classified within Level 1 of the fair value hierarchy established by FASB guidance for Fair Value Measurements because they are valued based on quoted market prices in active markets.

We consider all restricted cash, inclusive of the reserve account discussed above and reclamation surety bonds, to be long-term. 

	September 30, 2019	December 31, 2018
	(in thousands)
Cash and cash equivalents	1,100	2,016
Restricted cash held at EMLLC	4,118	6,167
Restricted cash and investments held for reclamation bonds	—	434
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	5,218	8,617

As of September 30, 2019, the LLC had $0.3 million in cash deposits associated with reclamation bonds, which are accounted for as restricted cash.  Another $0.1 million in cash collateral is associated with surety bonds at the Liberty Project.  These amounts are considered investments and are not included in cash and cash equivalents for purposes of the Statement of Cash Flows.  As of December 31, 2018, the LLC had an additional $0.4 million in a long-term funding mechanism, which was accounted for as restricted cash.  The $0.4 million held in a long-term funding mechanism was redeemed and is included in cash and cash equivalents as of September 30, 2019.

Basic and Diluted Net Loss Per Share

Net loss per share was computed by dividing the net loss attributable to the Company 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 awards as of September 30, 2019 and December 31, 2018, respectively, were as follows:

	September 30, 2019	December 31, 2018
Warrants	97,991,800	98,686,000
Shares Issued upon conversion of Senior Notes	5,910,000	5,910,000
Unvested Stock Awards	2,001,268	2,401,268
Stock Appreciation Rights	938,667	938,667

These awards were not included in the computation of diluted loss per share for the three and nine months ended September 30, 2019 and December 31, 2018, respectively, because to do so would have been anti-dilutive.  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.  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.

The Company has capitalized royalty payments made to Mt. Hope Mines, Inc. (“MHMI”) (discussed in Note 11 below) during the development stage.  The amounts will be applied to production royalties owed upon the commencement of production.

Depreciation and Amortization

Property and equipment are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Property and equipment are depreciated using the following estimated useful lives:

Field equipment	Four to ten years
Office furniture, fixtures, and equipment	Five to seven years
Vehicles	Three to five years
Leasehold improvements	Three  years or the term of the lease, whichever is shorter
Residential trailers	Ten to twenty years
Buildings and improvements	Ten to twenty seven and one-half years

Senior Convertible Promissory Notes and other Long-Term Debt

In December 2014, the Company sold and issued $8.5 million in units consisting of convertible promissory notes (the “Convertible Notes”) and warrants to purchase shares of our common stock (the “Notes Warrants”) to accredited investors, including several directors and officers of the Company, pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, and Rule 506 thereunder. The Notes are unsecured obligations and are senior to any of the Company’s future secured obligations to the extent of the value of the collateral securing such obligations.

The Convertible Notes bear interest at a rate of 10.0% per annum, payable in cash quarterly in arrears on each March 31, June 30, September 30, and December 31. The Convertible Notes are convertible at any time in an amount equal to 80% of the greater of (i) the average volume weighted average price (“VWAP”) for the 30 Business Day period ending on the Business Day prior to the date of the conversion, or (ii) the average VWAP for the 30 Business Day period ending on the original issuance date of the Convertible Notes.  Each Note will convert into a maximum of 100 shares per note, resulting in the issuance of up to 8,535,000 shares. General Moly’s named executive officers and board of directors who participated in the offering are restricted from converting at a price less than $0.32, the most recent closing price at the time that the Convertible Notes were issued. The Convertible Notes are mandatorily redeemable at par plus the present value of remaining coupons upon (i) the availability of cash from a financing for the Mt. Hope Project or (ii) any other debt financing by the Company. In addition, 50% of any proceeds from the sale of assets cumulatively exceeding $250,000 will be used to prepay the Convertible Notes at par plus the present value of remaining coupons. The Company has the right to redeem the Convertible Notes at any time at par plus the present value of remaining coupons. The Private Placement was negotiated by independent members of General Moly’s board of directors, none of whom participated in the transaction.  As of September 30, 2019, an aggregate of $2.6 million of Convertible Notes had been converted into 2,625,000 shares of common stock and $1.3 million of non-convertible Senior Promissory Notes, resulting in a $0.2 million annual reduction in interest payments made by the Company in the servicing of the Convertible Notes, as further discussed in Note 6 below.

The Company evaluates its contracts for potential derivatives.  See Note 5 for a description of the Company’s accounting for embedded derivatives and the Convertible Notes.

Debt issuance costs are costs incurred in connection with the Company’s debt financings that have been capitalized and are being amortized over the stated maturity period or estimated life of the related debt, using the effective interest method.

Provision for Taxes

Income taxes are provided based upon the asset and liability method of accounting.  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.  In accordance with authoritative guidance under Accounting Standards Codification (“ASC”) 740, Income Taxes, 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 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.  Future obligations to retire an asset, including reclamation, site closure, dismantling, remediation and ongoing treatment and monitoring, are recorded as a liability at fair value at the time of construction or development.  The fair value determination is based on estimated future cash flows, the current credit-adjusted risk-free discount rate and an estimated inflation factor.  The value of asset retirement obligations is evaluated on a quarterly basis or as new information becomes available on the expected amounts and timing of cash flows required to discharge the liability.  The fair value of the liability is added to the carrying amount of the associated asset andthis additional carrying amount will be depreciated or amortized over the estimated life of the asset upon the commencement of commercial production.  An accretion cost, representing the increase over time in the present value of the liability, will also be recorded each period as accretion expense.  As reclamation work is performed or liabilities are otherwise settled, the recorded amount of the liability is reduced.  Certain collateral amounts associated with our reclamation obligations are held in investment accounts, for which the fair value is estimated based on Level 1 inputs.

Stock-based Compensation

Stock-based compensation represents the fair value related to stock-based awards granted to members of the Board, officers and employees.  The Company uses the Black-Scholes model to determine the fair value of stock-based awards under authoritative guidance for Stock-Based Compensation.  For stock-based compensation that is earned upon the satisfaction of a service condition, the cost is recognized on a straight-line basis (net of estimated forfeitures) over the requisite vesting period (up to three years).  Awards expire five years from the date of vesting.

Further information regarding stock-based compensation can be found in Note 8 — “Equity Incentives.”

Warrants

The Company has issued warrants in connection with several financing transactions and uses the Black-Scholes model or a lattice to determine the fair value of these transactions based on the features included in each. 

Leases

The Company adopted Accounting Standards Codification (“ASC”) 842, Leases, on January 1, 2019. Changes to the Company’s accounting policy as a result of adoption are discussed below.

The Company determines if a contractual arrangement represents or contains a lease at inception. Operating leases are included in Deposits, prepaids and other Current Assets and Otheraccrued liabilities in the Consolidated Balance Sheets. No finance leases have been identified to date.

Operating and finance lease right-of-use ("ROU") assets and lease liabilities are recognized at the commencement date based on the present value of the future lease payments over the lease term. When the rate implicit to the lease cannot be readily determined, the Company utilizes its incremental borrowing rate in determining the present value of the future lease payments. The incremental borrowing rate is derived from information available at the lease commencement date and represents the rate of interest that the Company would have to pay to borrow on a collateralized basis over a similar term and amount equal to the lease payments in a similar economic environment. The ROU asset includes any lease payments made and lease incentives received prior to the commencement date. Operating lease ROU assets also include any cumulative prepaid or accrued rent when the lease payments are uneven throughout the lease term. The ROU assets and lease liabilities may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. 

Recently Adopted Accounting Pronouncements

Leases (Topic 842)

In February 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842).  The update provides a comprehensive update to the lease accounting topic in the Codification intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.  The amendments in ASU 2016-02 include a revised definition of a lease as well as certain scope exceptions.  The changes primarily impact lessee accounting, while lessor accounting is largely unchanged from previous GAAP.  The amendments in ASU 2016-02 are effective for public entities for annual reporting periods beginning after December 15, 2018, and for interim periods within that reporting period.   

The Company adopted this standard as of January 1, 2019 using the modified retrospective approach with a cumulative effect adjustment on January 1, 2019.  The adoption had no effect on the opening balance of retained earnings at January 1, 2019.  The comparative information has not been adjusted and continues to be reported under the accounting standard in effect for those periods.

The new standard offers a number of optional practical expedients of which the Company elected the following:

Transition elections:  The Company elected a package of practical expedients, applied consistently to all leases that commenced prior to January 1, 2019, that allowed the Company (i) to not reassess whether a contract is or contains a lease, (ii) to not reassess the lease classification of the lease, and (iii) to not reassess initial direct costs for the lease.  The Company elected the land easements practical expedient whereby existing land easements were not reassessed under the new standard.

Ongoing accounting policy elections: The Company elected the short-term lease recognition exemption whereby ROU assets and lease liabilities will not be recognized for leasing arrangements with terms less than one year. The Company elected the practical expedient to not separate lease and non-lease components for all of its underlying asset classes.

Based on leases outstanding at January 1, 2019 and March 31, 2019, the adoption of the new standard resulted in the recognition of operating lease ROU assets and lease liabilities of $0.2 million and $0.2 million, respectively.  Certain of our leases include payments that vary based on the Company’s level of usage and operations.  These variable payments are not included within ROU assets and lease liabilities and are recognized as expense when incurred.  For the three months ended March 31, 2019, operating lease costs were $20K and variable lease costs were $1K.  Cash paid for amounts in the measurement of lease liabilities which are reflected in operating cash flows relating to operating leases for the three months ended March 31, 2019 were $20K. The weighted average life remaining for the operating leases is 1.8 years and the weighted average discount rate is 10%.  Adoption of this standard did not have a material impact to the Consolidated Statements of Operations or the Consolidated Statements of Cash Flows.   

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ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2017
Asset retirement obligations disclosures
Cash deposits	$ 416	$ 834
Mt. Hope Project
Asset retirement obligations disclosures
Cash deposits	600
Additional in long term funding mechanism		400
Mt. Hope Project and within the boundaries of the Plan of Operations ("PoO")
Asset retirement obligations disclosures
Asset retirement obligations	1,748	1,633	$ 1,568
Accretion Expense	81	103
Adjustments	(34)	38
Total inflated and undiscounted reclamation costs	5,800
Mitigation of sage grouse habitat	2,600
Mt. Hope Project outside PoO boundary
Asset retirement obligations disclosures
Asset retirement obligations	15	15	15
Total inflated and undiscounted reclamation costs	100
Liberty Project
Asset retirement obligations disclosures
Asset retirement obligations	121	$ 121	$ 121
Cash deposits	$ 100
Mining properties, land and water rights. | Mt. Hope Project
Asset retirement obligations disclosures
Future reclamation costs discount rate (as a percent)	8.00%
Mining properties, land and water rights. | Mt. Hope Project | Financial guarantee
Asset retirement obligations disclosures
Update to reclamation bond calculation (in years)	3 years
Reclamation financial guarantees	$ 2,800
Cash deposits	300
Additional in long term funding mechanism	$ 300

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CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
OPERATING EXPENSES:
Exploration and evaluation	$ 196	$ 379	$ 401	$ 685
General and administrative expense	1,024	2,473	2,964	7,707
Loss on Sale of non-core properties	1,565		2,885
TOTAL OPERATING EXPENSES	2,785	2,852	6,250	8,392
(LOSS) FROM OPERATIONS	(2,785)	(2,852)	(6,250)	(8,392)
OTHER INCOME/(EXPENSE):
Interest expense	(196)	(186)	(639)	(574)
TOTAL OTHER (EXPENSE)/INCOME, NET	(196)	(186)	(639)	(574)
(LOSS) BEFORE INCOME TAXES	(2,981)	(3,038)	(6,889)	(8,966)
CONSOLIDATED NET (LOSS)	(2,981)	(3,038)	(6,889)	(8,966)
Less: Net loss attributable to CRNCI	5	5	16	367
NET LOSS ATTRIBUTABLE TO GMI	$ (2,976)	$ (3,033)	$ (6,873)	$ (8,599)
Basic and diluted net loss attributable to GMI per share of common stock (in dollars per share)	$ (0.02)	$ (0.02)	$ (0.05)	$ (0.07)
Weighted average number of shares outstanding - basic and diluted (in shares)	138,220	127,964	138,197	127,566
COMPREHENSIVE (LOSS)	$ (2,976)	$ (3,033)	$ (6,873)	$ (8,599)

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CHANGES IN CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST AND EQUITY) - Changes CRNCI (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Changes in CRNCI
Total CRNCI, Beginning balance			$ 172,261	$ 172,633
Less: Net Loss Attributable to CRNCI	$ (5)	$ (5)	(16)	(367)
Total CRNCI, Ending balance	172,245	$ 172,266	172,245	$ 172,266
Changes Redeemable Preferred Stock
Redeemable Preferred Stock Issued			1,800
Total Redeemable Preferred Stock, Ending balance	$ 1,800		$ 1,800

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COMMITMENTS AND CONTINGENCIES - Obligations Under Operating Leases (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Aug. 19, 2010
Operating lease obligations
Total expected payments for operating lease for the next three years	$ 300
Lease term	4 years
Expected payments for operating lease, current fiscal year	$ 100
Expected payments for operating lease, 12 to 24 months	100
Expected payments for operating lease, 24 to 36 months	100
Expected payments for operating lease, 36 to 48 months	0
Eureka Moly LLC
Operating lease obligations
Sustainability Trust fund asset amount			$ 5,600
Paid into trust		$ 100
Accrual for trust to be established upon certain achievements of milestones	$ 5,500
Eureka Moly LLC | Mt. Hope Project
Operating lease obligations
Lease term	30 years

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ASSET RETIREMENT OBLIGATIONS

9 Months Ended

Sep. 30, 2019

ASSET RETIREMENT OBLIGATIONS

ASSET RETIREMENT OBLIGATIONS

NOTE 4 — ASSET RETIREMENT OBLIGATIONS

Asset retirement obligations (“ARO”) arise from the acquisition, development, construction and normal operation of mining property, plant and equipment due to government controls that protect the environment, and are primarily related to closure and reclamation of mining properties.  The exact nature of environmental issues and costs, if any, which the Company or the LLC may encounter in the future are subject to change, primarily because of the changing character of environmental requirements that may be enacted by governmental authorities.

The following table shows asset retirement obligations for future mine closure and reclamation costs in connection with the Mt. Hope Project and within the boundaries of the Plan of Operations (“PoO”):

	(in thousands)
At January 1, 2018	$	1,568
Accretion Expense		103
Adjustments*		(38)
At December 31, 2018	$	1,633
Accretion Expense		81
Adjustments*		34
At September 30, 2019	$	1,748

*Includes additions, annual changes to the escalation rate, the market-risk premium rate, or reclamation time periods.

The estimated future reclamation costs for the Mt. Hope Project have been discounted using a rate of 8%,  which is the rate that existed at the time the liability was originally measured.  The total inflated and undiscounted estimated reclamation costs associated with current disturbance under the PoO at the Mt. Hope Project were $5.8 million at September 30, 2019, inclusive of $2.6 million for mitigation of sage grouse habitat that would be affected by development of the Mt. Hope Project.  Increases in ARO liabilities resulting from the passage of time are recognized as accretion expense.

As of September 30, 2019, the LLC had provided the appropriate regulatory authorities with $2.8 million in reclamation financial guarantees through the posting of surety bonds for reclamation of the Mt. Hope and had $0.3 million in cash deposits associated with these bonds which are specific to the PoO disturbance and accounted for as restricted cash and are unrelated to the inflated and undiscounted liability referenced above.  The LLC posted an additional $0.3 million as a cash bond with the BLM in April 2019 as a result of a required three-year update to the reclamation bond calculation.

The LLC has a smaller liability at the Mt. Hope Project for disturbance associated with exploration drilling which occurred outside the PoO boundaries.  The LLC has not discounted this reclamation liability as the total amount is less than $0.1 million.

Total restricted cash for surety bond collateral requirements and other long-term reclamation obligations at the Mt. Hope Project equal $0.6 million.  Another $0.1 million in cash collateral is associated with surety bonds at the Liberty Project.

The Company’s Liberty Project is currently in the exploration stage. As the Company is not currently performing any exploration activity at the Liberty Project, the reclamation liability incurred for historical operations and exploration of approximately $0.1 million has not been discounted as shown in the table below.

	Mt. Hope Project
	outside PoO
	boundary		Liberty
	(in thousands)
At January 1, 2018	$	15	$	121
Adjustments *		—		—
At December 31, 2018	$	15	$	121
Adjustments *		—		—
At September 30, 2019	$	15	$	121

*Includes reduced / reclaimed disturbance

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EQUITY INCENTIVES

9 Months Ended

Sep. 30, 2019

EQUITY INCENTIVES

EQUITY INCENTIVES

NOTE 8 — EQUITY INCENTIVES

In 2006, the Board and shareholders of the Company approved the 2006 Equity Incentive Plan (“2006 Plan”), and in May 2010, our shareholders approved an amendment and restatement of the 2006 Plan increasing the number of shares that may be issued under the plan by 4,500,000 shares to 9,600,000 shares and extend the expiration date of the 2006 Plan to May 2020, as well as making other technical changes related to tax law and accounting rule changes, and to make administrative clarifying changes.  In June 2016, our shareholders approved an additional amendment to the 2006 Plan increasing the number of shares that may be issued under the plan by 5,000,000 shares to 14,600,000 shares.  In June 2019, our shareholders approved an amendment and restatement of the 2006 Plan increasing the number of shares that may be issued under the plan by 6,500,000 shares to 21,100,000 shares.  The 2006 Plan authorizes the Board, or a committee of the Board, to issue or transfer up to an aggregate of 14,600,000 shares of common stock, of which 3,449,058 remain available for issuance as of September 30, 2019.  Awards under the 2006 Plan may include incentive stock options, non-statutory stock options, restricted stock units, restricted stock awards, and stock appreciation rights (“SARs”).  At the option of the Board, SARs may be settled with cash, shares, or a combination of cash and shares.  The Company settles the exercise of other stock-based compensation with newly issued common shares.

Stock-based compensation cost is estimated at the grant date based on the award’s fair value as calculated by the Black-Scholes option pricing model and is recognized as compensation ratably on a straight-line basis over the requisite vesting/service period.  As of September 30, 2019, there was $0.3 million of total unrecognized compensation cost related to share-based compensation arrangements, which is expected to be recognized over a weighted-average period of 2.1 years.

Stock Options and Stock Appreciation Rights

All stock options and SARs are approved by the Board prior to or on the date of grant.  Stock options and SARs are granted at an exercise price equal to or greater than the Company’s closing stock price on the date of grant.  Both award types vest over a period of zero to three years with a contractual term of five years after vesting.  The Company estimates the fair value of stock options and SARs using the Black-Scholes valuation model.  Key inputs and assumptions used to estimate the fair value of stock options and SARs include the grant price of the award, expected option term, volatility of the Company’s stock, the risk-free rate and the Company’s dividend yield.

At September 30, 2019, the outstanding and exercisable (fully vested) SARs had an aggregate intrinsic value of nil and had a weighted-average remaining contractual term of 1.1 years.  No SARs were exercised during the three and nine months ended September 30, 2019.

Restricted Stock Units and Stock Awards

Grants of restricted stock units and stock awards (“Stock Awards”) have been granted as performance based awards, earned over a required service period, or to Board members and the Company Secretary without any service requirement.  Performance based grants are recognized as compensation based on the probable outcome of achieving the performance condition.  Stock Awards issued to members of the Board of Directors and the Company Secretary that are fully vested at the time of issuance are recognized as compensation upon grant of the award.

The compensation expense recognized by the Company for Stock Awards is based on the closing market price of the Company’s common stock on the date of grant.  For the three and nine months ended September 30, 2019, the weighted-average grant date fair value for Stock Awards was $0.24.  The total fair value of stock awards vested during the three and nine months ended September 30, 2019 is $0.1 million.

Summary of Equity Incentive Awards

The following table summarizes activity under the Plans during the nine months ended September 30, 2019:

	SARs			Stock Awards
	Weighted		Number	Weighted
	Average		of Shares	Average
	Strike		Under	Grant		Number of
	Price		Option	Price		Shares
Balance at January 1, 2019	$	3.19	938,667	$	1.18	2,401,268
Awards Granted		—	—		0.24	135,000
Awards Exercised or Earned		—	—		0.63	(535,000)
Awards Forfeited		—	—		—	—
Awards Expired		—	—		—	—
Balance at September 30, 2019	$	3.19	938,667	$	1.34	2,001,268
Exercisable at September 30, 2019	$	2.14	56,523

A summary of the status of the non-vested awards as of September 30, 2019 and changes during the nine months there ended is presented below:

	SARs			Stock Awards
	Weighted		Number	Weighted
	Average		of Shares	Average
	Fair		Under	Fair		Number of
	Value		Option	Value		Shares
Balance at January 1, 2019	$	3.26	882,144	$	1.18	2,401,268
Awards Granted		—	—		0.24	135,000
Awards Vested or Earned		—	—		0.63	(535,000)
Awards Forfeited		—	—		—	—
Balance at September 30, 2019	$	3.26	882,144	$	1.34	2,001,268

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SUBSEQUENT EVENTS

9 Months Ended

Sep. 30, 2019

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS

NOTE 12 — SUBSEQUENT EVENTS

On October 14, 2019, the Company announced that it had entered into an agreement with AMER to extend the dispute negotiation period (“Extension Agreement”).  Under the terms of the Extension Agreement, the Company received $300,000 from AMER in exchange for an extension of the negotiation period to November 15, 2019, on which date the Company’s CEO Bruce Hansen and AMER Chairman Wang Wenyin met to discuss settlement options.  With the payment, AMER shall have the right, at its option, to credit the Extension Fee among the following: (1) credit against a final negotiated settlement; (2) credit against any AMER payment obligation to the Company, pursuant to an arbitration award; or (3) apply the Extension Fee as consideration for the purchase of the Company’s common stock, priced at the 30-day volume weighted average price, as of the date immediately prior to the date that AMER demands delivery of such shares.  As announced on November 19, 2019, the Company and AMER are continuing negotiations and hope to reach a mutually beneficial resolution within the next two weeks.

The Company has reached an agreement in principle (“AiP”) with the holder of $5 million of the Company’s Senior Convertible Promissory Notes and certain other holders of Senior Convertible Notes and Senior Promissory Notes (collectively, the “Senior Notes”) to exchange the Senior Notes for new units consisting of new senior non-convertible promissory notes in the same original principal amount bearing an interest rate between 12-14% and otherwise providing for similar terms (the “Exchange Notes”) and a three-year warrant to purchase Company common stock at $0.35 share (each a “Unit”).  The Exchange Notes will extend the maturity date until December 2022.

In addition to the exchange of Senior Notes, the largest holder of the Senior Notes, as well as the Company’s CEO, Bruce Hansen, have agreed, subject to execution of definitive documentation, to purchase new 13% Senior Promissory Notes due 2022 in the principal amount of $610,000 (representing 10% of the original principal amount of the Senior Notes to be exchanged) providing additional capital to the Company.  At this date, the total principal amount of Senior Notes contemplated to be extended by the AiP is $6.37 million out of the $7.25 million Senior Notes outstanding.  The maturity date for the outstanding Senior Notes is December 26, 2019.

On November 5, 2019, we announced that a Complaint was filed against the U.S. Department of Interior and the BLM in the U.S. District Court in Nevada, challenging the re-issuance of the ROD. We are reviewing the Complaint filed by Great Basin Resource Watch and the Western Shoshone Defense Project, and may seek permission from the Court to intervene on behalf of the Mt. Hope Project.

Unless discussed elsewhere in this document, no other subsequent events exist.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Basic and Diluted Net Loss Per Share (Details) - shares	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Warrants
Basic and Diluted Net Loss Per Share
Shares not included in computation of diluted loss per share because they are anti-dilutive	97,991,800	98,686,000
Shares Issued upon conversion of Senior Notes
Basic and Diluted Net Loss Per Share
Shares not included in computation of diluted loss per share because they are anti-dilutive	5,910,000	5,910,000
Unvested Stock Awards
Basic and Diluted Net Loss Per Share
Shares not included in computation of diluted loss per share because they are anti-dilutive	2,001,268	2,401,268
Stock Appreciation Rights
Basic and Diluted Net Loss Per Share
Shares not included in computation of diluted loss per share because they are anti-dilutive	938,667	938,667

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DESCRIPTION OF BUSINESS - Purchase Commitment excluding Long-term Commitment (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2019	Dec. 31, 2018	Apr. 17, 2015	Dec. 31, 2014
Cash commitments
Face amount				$ 8,500
Amount committed to be purchased	$ 600
Restricted cash held at EMLLC	4,118	$ 6,167
Purchase Commitment | Mining and milling equipment | Eureka Moly LLC
Cash commitments
Aggregate amount of equipment orders	88,000
Amount of equipment orders relate to fully fabricated items	71,700
Amount of equipment orders relate to partially fabricated milling equipment, and non-refundable deposits on mining equipment	16,300
Mt. Hope Project
Cash commitments
Balance of reserve account	4,100	6,200
Restricted cash held at EMLLC	4,100	$ 6,200
Mt. Hope Project | Eureka Moly LLC
Cash commitments
Aggregate amount of equipment orders	88,000
Senior secured term loan | Mt. Hope Project | AMER International Group
Cash commitments
Face amount	$ 700,000		$ 700,000

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DESCRIPTION OF BUSINESS - Private Placement (Details)				1 Months Ended	9 Months Ended	12 Months Ended
	Sep. 26, 2019	Mar. 21, 2019 USD ($) tranche $ / shares	Oct. 17, 2018 USD ($) $ / shares	Dec. 31, 2014 USD ($) shares	Sep. 30, 2019 USD ($) $ / shares shares	Dec. 31, 2015 shares	Aug. 05, 2019 USD ($) $ / shares	May 02, 2019 USD ($)	Dec. 31, 2018 $ / shares
Private Placement
Convertible share value					$ 1,800,000
Deferral and forbearance agreement days	90 days
Deferred interest payment					$ 162,000
Stock price (in dollars per share) | $ / shares			$ 0.25		$ 0.26				$ 0.22
Convertible notes issued				$ 8,500,000
Net proceeds			$ 1,900,000
Convertible Notes
Private Placement
Convertible share value							$ 400,000
Convertible share par value (in dollars per share) | $ / shares							$ 0.001
Shares issued upon conversion (in shares) | shares					2,625,000	2,625,000
Debt instrument interest rate (as a percent)				10.00%
Convertible notes issued					$ 7,200,000
Maximum | Convertible Notes
Private Placement
Shares issued upon conversion (in shares) | shares				8,535,000
Private Placement
Private Placement
Convertible share value		$ 900,000
Convertible share par value (in dollars per share) | $ / shares		$ 0.001
Number of tranche investment | tranche		3
Maximum value issuable per closing		$ 300,000
Debt instrument interest rate (as a percent)					5.00%
Private Placement | Series A Preferred Stock
Private Placement
Number of shares converted | shares					1
Stock price (in dollars per share) | $ / shares					$ 100.00
Preferred share conversion (in dollars per share) | $ / shares					$ 0.27
Shares issued upon conversion (in shares) | shares					370.37
Mt. Hope Project | Private Placement
Private Placement
Convertible share value								$ 500,000

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DESCRIPTION OF BUSINESS (Tables)

9 Months Ended

Sep. 30, 2019

DESCRIPTION OF BUSINESS

Schedule of cash commitments under milling equipment contracts

The following table sets forth the LLC’s remaining cash commitments under these equipment contracts (collectively, “Purchase Contracts”) at September 30, 2019 (in millions):

	As of
	September 30,
Year	2019 *
2019	$	—
2020		0.6
Total	$	0.6

*All amounts are commitments of the LLC, and as a result of the agreement between Nevada Moly and POS-Minerals are to be funded by the reserve account, now $4.1 million as discussed above in Note 1, until such time that the Company obtains financing for its portion of construction costs at the Mt. Hope Project or until the reserve account balance is exhausted, and thereafter are to be funded 80% by Nevada Moly and 20% by POS-Minerals.  POS-Minerals remains obligated to make capital contributions for its 20% portion of equipment payments required by approved budgets of the LLC, and such amounts contributed by the reserve account on behalf of POS-Minerals will reduce, dollar for dollar, the amount of capital contributions that the LLC is required to return to POS-Minerals, described under Note 1 above.

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CURRENT DEBT (Tables)

9 Months Ended

Sep. 30, 2019

CURRENT DEBT

Schedule of the inputs to the models that were used to value the embedded derivatives

	September 30, 2019		December 31, 2018
Stock Price	$	0.26	$	0.22
Maturity Date		December 31, 2019		December 31, 2019
Risk-Free Interest Rate		1.88%		2.63%
Estimated Stock Volatility		40.00%		40.00%
Default Intensity		2.00%		2.00%
Recovery Rate		30.00%		30.00%

Type of Event	Expected Date	Probability of Event
Mandatory Redemption	October 17, 2019	80%
Conversion Option	February 21, 2019	0%
Note Reaches Maturity	December 31, 2019	20%

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CURRENT DEBT - Agreement in principle (Details) - USD ($)	Oct. 14, 2019	Sep. 30, 2019	Dec. 31, 2014
Debt Instrument
Face amount			$ 8,500,000
Maximum
Debt Instrument
Exercise price per warrant (in dollars per share)		$ 5.00
Minimum
Debt Instrument
Exercise price per warrant (in dollars per share)		$ 0.35
Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Exercise price per warrant (in dollars per share)	$ 0.35
Senior Notes | Subsequent event
Debt Instrument
Face amount	$ 5,000,000
Long-term debt	$ 6,370,000
Senior Notes | Warrants | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Original principal amount exchanged (as a percent)	10.00%
Senior Notes | Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Original principal amount exchanged (as a percent)	10.00%
Long-term debt	$ 610,000
Non-Convertible Senior Promissory Notes | Subsequent event
Debt Instrument
Long-term debt	$ 7,250,000
Non-Convertible Senior Promissory Notes | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Debt instrument interest rate (as a percent)	13.00%
Non-Convertible Senior Promissory Notes | Subsequent event | Maximum
Debt Instrument
Debt instrument interest rate (as a percent)	14.00%
Non-Convertible Senior Promissory Notes | Subsequent event | Minimum
Debt Instrument
Debt instrument interest rate (as a percent)	12.00%
Non-Convertible Senior Promissory Notes | Warrants | Subsequent event
Debt Instrument
Warrants and rights outstanding term	3 years
Non-Convertible Senior Promissory Notes | Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Face amount	$ 610,000
Debt instrument interest rate (as a percent)	13.00%
Exercise price per warrant (in dollars per share)	$ 0.35

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Leases (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2019	Sep. 30, 2019	Jan. 01, 2019
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Lease, Practical Expedients, Package [true false]		true
Operating lease ROU assets	$ 200		$ 200
Operating lease liability	200		$ 200
Operating lease costs	20
Variable lease costs	1
Cash paid for amounts in the measurement of lease liabilities	$ 20
Weighted average life remaining for operating leases		1 year 9 months 18 days
Operating lease, weighted average discount rate (as a percent)		10.00%

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EQUITY INCENTIVES - Stock Options and Stock Appreciation Rights (Details) - USD ($) $ in Thousands	1 Months Ended			3 Months Ended	9 Months Ended
	Jun. 30, 2019	Jun. 30, 2016	May 31, 2010	Sep. 30, 2019	Sep. 30, 2019
Equity incentives
Increase in number of shares authorized	6,500,000	5,000,000	4,500,000
Authorized shares	21,100,000	14,600,000	9,600,000
Shares available for issuance				3,449,058	3,449,058
Total unrecognized compensation cost related to share-based compensation arrangements				$ 300	$ 300
Expected weighted-average recognition period in years					2 years 1 month 6 days
Contractual term					5 years
Maximum
Equity incentives
Vesting period					3 years
Stock Options and Stock Appreciation Rights
Equity incentives
Contractual term					5 years
Aggregate intrinsic value of outstanding and exercisable				$ 0	$ 0
Weighted average remaining contractual term of outstanding and exercisable					1 year 1 month 6 days
Number of options or SARs exercised (in shares)				0	0
Stock Options and Stock Appreciation Rights | Minimum
Equity incentives
Vesting period					0 years
Stock Options and Stock Appreciation Rights | Maximum
Equity incentives
Vesting period					3 years

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net loss	$ (6,889)	$ (8,966)
Adjustments to reconcile net loss to net cash used by operating activities:
Depreciation and amortization	94	1,839
Non-cash interest expense	89	46
Income realized on lease of water rights	(13)	(13)
Stock-based compensation for employees and directors	70	598
Decrease (increase) in deposits, prepaid expenses and other	(143)	89
Decrease in accounts payable and accrued liabilities	935	498
(Decrease) increase in post closure reclamation and remediation costs	35	(38)
Net cash used by operating activities	(5,822)	(5,947)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase and development of mining properties, land and water rights	244	(1,980)
Deposits on property, plant and equipment		(116)
Decrease in restricted cash	(16)
Deposits on property, plant and equipment	152
Net cash used by investing activities	380	(2,096)
CASH FLOWS FROM FINANCING ACTIVITIES:
Stock proceeds, net of issuance costs	2,043	323
Net cash provided/(used) by financing activities:	2,043	323
Net (decrease) in cash, cash equivalents and restricted cash	(3,399)	(7,720)
Cash, cash equivalents and restricted cash, beginning of period	8,617	18,374
Cash, cash equivalents and restricted cash, end of period	5,218	10,654
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for interest, net of capitalized	550	550
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Equity compensation capitalized as development	$ 6	103
Change in accrued payments to Agricultural Sustainability Trust		1,550
Noncash change in deposits on property, plant and equipment		$ 103

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2019	Dec. 31, 2018
CURRENT ASSETS
Cash and cash equivalents	$ 1,100	$ 2,016
Deposits, prepaid expenses and other current assets	205	62
Total Current Assets	1,305	2,078
Mining properties, land and water rights	228,928	229,175
Deposits on project property, plant and equipment	87,972	88,124
Restricted cash held at EMLLC	4,118	6,167
Restricted cash and investments held for reclamation bonds	416	834
Non-mining property and equipment, net	36	40
Other assets	3,122	3,076
TOTAL ASSETS	325,897	329,494
CURRENT LIABILITIES
Accounts payable and accrued liabilities	1,313	574
Promissory Notes	1,340	1,340
Senior Convertible Promissory Notes	5,896	5,807
Accrued advance royalties	500	500
Total Current Liabilities	9,049	8,221
Provision for post closure reclamation and remediation costs	1,885	1,769
Accrued advance royalties	5,700	5,700
Accrued payments to Agricultural Sustainability Trust	5,500	5,500
Return of Contributions Payable to POS-Minerals	33,641	33,641
Other accrued liabilities	2,354	2,125
Total Liabilities	58,129	56,956
COMMITMENTS AND CONTINGENCIES - NOTE 12
CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST ("CRNCI")	172,245	172,261
CONVERTIBLE PREFERRED SHARES	1,800
TOTAL CONTINGENTLY REDEEMABLE NONCONTROLLING INTEREST ("CRNCI")	174,045	172,261
EQUITY
Common stock, $0.001 par value; 650,000,000 and 650,000,000 shares authorized, respectively, 138,220,332 and 137,114,804 shares issued and outstanding, respectively	138	137
Additional paid-in capital	291,584	291,266
Accumulated deficit during exploration and development stage	(197,999)	(191,126)
Total Equity	93,723	100,277
TOTAL LIABILITIES, CRNCI, AND EQUITY	$ 325,897	$ 329,494

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SUBSEQUENT EVENTS (Details) - Subsequent event - AMER Extension Agreement - Settled litigation - USD ($)	Nov. 19, 2019	Oct. 14, 2019
Subsequent Events
Proceeds from legal settlements		$ 300,000
Period considered for calculating weighted average share price		30 days
Period expected to reach a mutually beneficial resolution	14 days

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EQUITY INCENTIVES - Summary of Equity Incentive Awards Activity (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares shares
Stock Appreciation Rights
Awards - SARs and Stock Awards - Weighted Average Strike or Grant Price
Beginning balance (in dollars per share) | $ / shares	$ 3.19
Ending balance (in dollars per share) | $ / shares	3.19
Weighted Average Price, Exercisable (in dollars per share) | $ / shares	$ 2.14
Awards - SARs and Stock Awards - Number of Shares Under Option or Number of Shares
Beginning Balance (in shares) | shares	938,667
Ending Balance (in shares) | shares	938,667
Exercisable (in shares) | shares	56,523
Unvested Stock Awards
Equity incentives
Fair value of Stock Awards vested | $	$ 0.1
Awards - SARs and Stock Awards - Weighted Average Strike or Grant Price
Beginning balance (in dollars per share) | $ / shares	$ 1.18
Granted (in dollars per share) | $ / shares	0.24
Exercised or Earned (in dollars per share) | $ / shares	0.63
Ending balance (in dollars per share) | $ / shares	$ 1.34
Awards - SARs and Stock Awards - Number of Shares Under Option or Number of Shares
Beginning Balance (in shares) | shares	2,401,268
Granted (in shares) | shares	135,000
Exercised or Earned (in shares) | shares	(535,000)
Ending Balance (in shares) | shares	2,001,268

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COMMITMENTS AND CONTINGENCIES - Mt Hope (Details)		9 Months Ended
	Feb. 28, 2018 USD ($) $ / lb	Sep. 30, 2019 USD ($) installment $ / item	Dec. 31, 2018 USD ($)
Lessee, Lease, Description
Lease term		4 years
Accrued, estimated advance royalty		$ 5,700,000	$ 5,700,000
Mt. Hope Project
Lessee, Lease, Description
Payment of royalty installment		$ 500,000
Molybdenum price (in dollars per pound) | $ / item		8.40
Eureka Moly LLC | Exxon Corporation
Lessee, Lease, Description
Production royalty, as percentage of net returns	1.00%
Percentage of cash payment of total gross payments received from the purchaser of ores mined/removed/sold from property net of certain deductions	1.00%
Eureka Moly LLC | Mt. Hope Project
Lessee, Lease, Description
Lease term		30 years
Lease period for written notice of termination		30 days
Maximum period for receipt of notice of default		90 days
Maximum period for receipt of notice of default in non-payment obligation		10 days
Royalty advance percentage required by long-term lease		3.00%
Cumulative amount paid for construction royalty fee		$ 25,600,000
Accrued, estimated advance royalty		4,200,000
Annual advance royalty payment		500,000
Accrued annual advance royalty		$ 2,000,000
Number of installments | installment		4
Royalty advance percentage of production royalties		5.00%
Molybdenum price (in dollars per pound) | $ / item		12
Period of commercial production		5 years
Eureka Moly LLC | Mt. Hope Project | Other non-moly minerals
Lessee, Lease, Description
Production royalty, as percentage of net returns	4.00%
Annual advance royalty payment	$ 3,000,000
Annual advance royalty period	3 years
Threshold limit for production royalty	$ 10,000,000
Eureka Moly LLC | Mt. Hope Project | Average gross value less than or equal to $2.00 per pound | Zinc
Lessee, Lease, Description
Production royalty, as percentage of net returns	4.00%
Average Gross Value Per Pound | $ / lb	2.00
Eureka Moly LLC | Mt. Hope Project | Average gross value between $2.01 and $2.49 per pound | Zinc
Lessee, Lease, Description
Production royalty, as percentage of net returns	4.50%
Eureka Moly LLC | Mt. Hope Project | Average gross value greater than $2.50 per pound | Zinc
Lessee, Lease, Description
Production royalty, as percentage of net returns	5.00%
Average Gross Value Per Pound | $ / lb	2.50
Eureka Moly LLC | Mt. Hope Project | Minimum | Average gross value between $2.01 and $2.49 per pound | Zinc
Lessee, Lease, Description
Average Gross Value Per Pound | $ / lb	2.01
Eureka Moly LLC | Mt. Hope Project | Maximum
Lessee, Lease, Description
Period of commercial production		24 months
Eureka Moly LLC | Mt. Hope Project | Maximum | Average gross value between $2.01 and $2.49 per pound | Zinc
Lessee, Lease, Description
Average Gross Value Per Pound | $ / lb	2.49

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contingently Redeemable Noncontrolling Interest ("CRNCI") (Details) - USD ($) $ in Millions		1 Months Ended			9 Months Ended
	Jan. 01, 2015	Apr. 30, 2016	Apr. 30, 2015	Mar. 31, 2015	Sep. 30, 2019
Milling equipment
Principal payment made for equipment			$ 1.2
Nevada Moly LLC | POS-Minerals Corporation
Consecutive months failure to follow standard mining practices					12 months
Remaining amount of capital contribution due to POS Minerals	$ 33.6				$ 33.6
Reduction in obligation				$ 2.4
Nevada Moly LLC | POS-Minerals Corporation | Milling equipment
Reduction in obligation					$ 2.4
Percentage of reduction on principal payments				20.00%
Principal payment made for equipment		$ 1.2		$ 8.4
Nevada Moly LLC | POS-Minerals Corporation | Electrical transformer
Principal payment made for equipment			$ 2.2

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DESCRIPTION OF BUSINESS - Agreement in Principle (Details) - USD ($)	Oct. 14, 2019	Sep. 30, 2019	Dec. 31, 2014
Debt Instrument
Face amount			$ 8,500,000
Maximum
Debt Instrument
Exercise price per warrant (in dollars per share)		$ 5.00
Minimum
Debt Instrument
Exercise price per warrant (in dollars per share)		$ 0.35
Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Exercise price per warrant (in dollars per share)	$ 0.35
Senior Notes | Subsequent event
Debt Instrument
Face amount	$ 5,000,000
Long-term debt	$ 6,370,000
Senior Notes | Warrants | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Original principal amount exchanged (as a percent)	10.00%
Senior Notes | Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Original principal amount exchanged (as a percent)	10.00%
Long-term debt	$ 610,000
Non-Convertible Senior Promissory Notes | Subsequent event
Debt Instrument
Long-term debt	$ 7,250,000
Non-Convertible Senior Promissory Notes | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Debt instrument interest rate (as a percent)	13.00%
Non-Convertible Senior Promissory Notes | Maximum | Subsequent event
Debt Instrument
Debt instrument interest rate (as a percent)	14.00%
Non-Convertible Senior Promissory Notes | Minimum | Subsequent event
Debt Instrument
Debt instrument interest rate (as a percent)	12.00%
Non-Convertible Senior Promissory Notes | Warrants | Subsequent event
Debt Instrument
Warrants and rights outstanding term	3 years
Non-Convertible Senior Promissory Notes | Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Face amount	$ 610,000
Debt instrument interest rate (as a percent)	13.00%
Exercise price per warrant (in dollars per share)	$ 0.35

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Senior Convertible Promissory Notes and other Long-Term Debt (Details)	1 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2014 USD ($) item $ / shares shares	Sep. 30, 2019 USD ($) shares	Dec. 31, 2015 USD ($) $ / shares shares
Convertible Debt
Convertible notes issued	$ 8,500,000
Percentage of proceeds from the sale of assets held for repay debt	50.00%
Convertible Notes
Convertible Debt
Convertible notes issued		$ 7,200,000
Debt instrument interest rate (as a percent)	10.00%
Percentage of convertible debt average VWAP	80.00%
Number of business days considered for calculating average VWAP | item	30
Shares issued upon conversion (in shares) | shares		2,625,000	2,625,000
Convertible share price (in dollars per share) | $ / shares	$ 0.32
Percentage of proceeds from the sale of assets held for repay debt	50.00%
Amount held for repay debt	$ 250,000
Aggregate principal amount		$ 2,600,000	$ 2,600,000
Annual reduction in interest payments		200,000	$ 200,000
Non-convertible Promissory Note
Convertible Debt
Debt instrument interest rate (as a percent)			10.00%
Senior Promissory Notes issued		$ 1,300,000	$ 1,300,000
Minimum | Convertible Notes
Convertible Debt
Convertible share price (in dollars per share) | $ / shares			$ 0.3462
Maximum | Convertible Notes
Convertible Debt
Conversion ratio (in shares)	100
Shares issued upon conversion (in shares) | shares	8,535,000
Convertible share price (in dollars per share) | $ / shares	$ 0.32		$ 0.5485

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COMMON STOCK UNITS, COMMON STOCK AND COMMON STOCK WARRANTS

9 Months Ended

Sep. 30, 2019

COMMON STOCK UNITS, COMMON STOCK AND COMMON STOCK WARRANTS

COMMON STOCK UNITS, COMMON STOCK AND COMMON STOCK WARRANTS

NOTE 6 — COMMON STOCK UNITS, COMMON STOCK AND COMMON STOCK WARRANTS

During the nine months ended September 30, 2019, we issued 411,328 shares of common stock pursuant to stock awards under the 2006 Equity Incentive Plan.  No shares were issued under the 2006 Equity Incentive Plan during the three months then ended.

During the year ended December 31, 2018, 993,481 shares of common stock were issued pursuant to stock awards under the 2006 Equity Incentive Plan and 1,168,300 shares under the Company’s at-the-market offering facility.

We currently have 97,991,800 warrants outstanding at an exercise price between $0.35 and $5.00 per share. 

On December 26, 2014, the Company issued 8.5 million Notes Warrants in connection with the private placement of its Convertible Notes at a price of $1.00 per share and having a relative fair value of $0.8 million.  In addition, the $0.8 million value placed on the Notes Warrants was considered a debt discount and is being amortized over the expected redemption period.

On November 2, 2015, the Company issued a warrant for 80.0 million common shares to AMER in connection with the closing of tranche 1 of the amended AMER Investment Agreement at a price of $0.50 per share and a relative fair value of $0.5 million, resulting in an entry to additional paid-in capital. 

On April 12, 2017, the Company filed a prospectus supplement in both Canada and the United States to its U.S. base shelf prospectus and U.S. registration statement on Form S-3 which enabled the Company, at its discretion from time to time, to sell up to $20 million worth of common shares by way of an at-the-market offering.  Since the effectiveness of the prospectus supplement by the SEC on April 26, 2017 to September 30, 2019, a total of 1,168,300 common shares have been sold under the ATM, for net proceeds to the Company of $0.5 million.  In conjunction with the public offering discussed below, the Company agreed to suspend the ATM facility for a period of 2 years. 

On October 17, 2018, the Company announced an underwritten public offering of 9,151,000 units at a price of $0.25 per share, with each unit consisting of one share of common stock accompanied by one warrant exercisable for one share of common stock immediately upon closing at a price of $0.35 per share.  The offering provided net proceeds of approximately $1.9 million after underwriting commissions and expenses.  Mr. Bruce Hansen, Chief Executive Officer of the Company and a related party, participated in the offering for a total of $0.5 million.  The Company used the proceeds for general corporate purposes, including the ongoing preliminary drilling program for the exploration of zinc, copper and silver mineralization at the southeast area of the Mt. Hope Project.

Of the warrants outstanding at September 30, 2019, 8.5 million are exercisable at $1.00 per share at any time from June 26, 2015 through their expiration on December 26, 2019, 1.0 million are exercisable at $5.00 per share once General Moly has received financing necessary for the commencement of commercial production at the Mt. Hope Project and will expire one year thereafter, and the 80.0 million shares of the amended AMER Warrant will become exercisable upon availability of the Bank Loan, should such availability occur prior to the third anniversary of the issuance of the ROD for the Mt. Hope Project, discussed below in Note 11, and will expire five years thereafter.  The remaining warrants are exercisable at $0.35 per share with an expiration of October 2023.

Pursuant to our amended Certificate of Incorporation, approved by the stockholders at the general meeting of June 30, 2015, we are authorized to issue 650.0 million shares of $0.001 par value common stock.  All shares have equal voting rights, are non-assessable and have one vote per share.  Voting rights are not cumulative and therefore, the holders of more than 50% of the common stock could, if they choose to do so, elect all of the directors of the Company. 

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INCOME TAXES

9 Months Ended

Sep. 30, 2019

INCOME TAXES

INCOME TAXES

NOTE 10 — INCOME TAXES

At September 30, 2019 and December 31, 2018, we had deferred tax assets principally arising from the net operating loss carry-forwards for income tax purposes multiplied by an expected rate of 21%. As management of the Company 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 net deferred tax asset has been established at September 30, 2019 and December 31, 2018. 

At September 30, 2019 and December 31, 2018, we had net operating loss carry-forwards of approximately $282.6 million and $275.7 million, respectively, which expire in the years 2021 through 2038.  The change in the allowance account from December 31, 2018 to September 30, 2019 was an increase of $3.9 million.

As of September 30, 2019 and December 31, 2018, the Company had no unrecognized tax benefits.  There was no change in the amount of unrecognized tax benefits as a result of tax positions taken during the year or in prior periods or due to settlements with taxing authorities or lapses of applicable statues of limitations. 

The Company and/or its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various state jurisdictions.  Without exception, the Company is no longer subject to U.S. federal, state and local income tax examinations by tax authorities for years before 2015.  The Company is open to federal and state tax audits until the applicable statutes of limitations expire.

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EQUITY INCENTIVES - Restricted Stock Units and Stock Awards Activity, Non-vested Awards (Details)	9 Months Ended
	Sep. 30, 2019 $ / shares shares
Stock Appreciation Rights
Non-vested Awards - Options - Weighted Average Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 3.26
Non-vested Awards - SARs and Stock Awards - Weighted Average Fair Value
Ending balance (in dollars per share) | $ / shares	$ 3.26
Non-vested Awards - SARs and Stock Awards - Number of Shares Under Option or Number of Shares
Beginning Balance (in shares) | shares	882,144
Ending Balance (in shares) | shares	882,144
Unvested Stock Awards
Non-vested Awards - SARs and Stock Awards - Weighted Average Fair Value
Beginning balance (in dollars per share) | $ / shares	$ 1.18
Granted (in dollars per share) | $ / shares	0.24
Vested or Earned (in dollars per share) | $ / shares	0.63
Ending balance (in dollars per share) | $ / shares	$ 1.34
Non-vested Awards - SARs and Stock Awards - Number of Shares Under Option or Number of Shares
Beginning Balance (in shares) | shares	2,401,268
Granted (in shares) | shares	135,000
Vested or Earned (in shares) | shares	(535,000)
Ending Balance (in shares) | shares	2,001,268

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COMMITMENTS AND CONTINGENCIES - Equipment and Supply Procurement (Details) $ in Millions			12 Months Ended
	Jul. 11, 2012 USD ($)	Jun. 30, 2012 item	Dec. 31, 2012 USD ($) item	Sep. 30, 2019 USD ($) instrument
Equipment and Supply Procurement
Number of primary transformers | instrument				2
Number of ball mills | instrument				2
Amount committed to be purchased				$ 0.6
Eureka Moly LLC | Mt. Hope Project
Equipment and Supply Procurement
Aggregate amount of equipment orders				88.0
Development costs				208.9
Total amount spent for Mt. Hope project inception-to-date				$ 299.4
Purchase Commitment | Eureka Moly LLC | Haul trucks
Equipment and Supply Procurement
Number ordered | item			18
Nonrefundable down payment			$ 1.2
Purchase Commitment | Eureka Moly LLC | Mine production drills
Equipment and Supply Procurement
Number ordered | item			4
Nonrefundable down payment			$ 0.4
Purchase Commitment | Eureka Moly LLC | Electric shovels
Equipment and Supply Procurement
Number ordered | item		2
Nonrefundable down payment	$ 3.4

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SUBSEQUENT EVENTS - Agreement in principle (Details) - USD ($)	Oct. 14, 2019	Sep. 30, 2019	Dec. 31, 2014
Debt Instrument
Face amount			$ 8,500,000
Maximum
Debt Instrument
Exercise price per warrant (in dollars per share)		$ 5.00
Minimum
Debt Instrument
Exercise price per warrant (in dollars per share)		$ 0.35
Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Exercise price per warrant (in dollars per share)	$ 0.35
Senior Notes | Subsequent event
Debt Instrument
Face amount	$ 5,000,000
Long-term debt	$ 6,370,000
Senior Notes | Warrants | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Original principal amount exchanged (as a percent)	10.00%
Senior Notes | Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Original principal amount exchanged (as a percent)	10.00%
Long-term debt	$ 610,000
Non-Convertible Senior Promissory Notes | Subsequent event
Debt Instrument
Long-term debt	$ 7,250,000
Non-Convertible Senior Promissory Notes | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Debt instrument interest rate (as a percent)	13.00%
Non-Convertible Senior Promissory Notes | Maximum | Subsequent event
Debt Instrument
Debt instrument interest rate (as a percent)	14.00%
Non-Convertible Senior Promissory Notes | Minimum | Subsequent event
Debt Instrument
Debt instrument interest rate (as a percent)	12.00%
Non-Convertible Senior Promissory Notes | Warrants | Subsequent event
Debt Instrument
Warrants and rights outstanding term	3 years
Non-Convertible Senior Promissory Notes | Warrants | Subsequent event | Majority debt holders of senior notes and CEO Bruce Hansen
Debt Instrument
Face amount	$ 610,000
Debt instrument interest rate (as a percent)	13.00%
Exercise price per warrant (in dollars per share)	$ 0.35

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Depreciation and Amortization (Details)	9 Months Ended
	Sep. 30, 2019
Field equipment | Minimum
Depreciation and Amortization
Estimated useful lives of the assets	4 years
Field equipment | Maximum
Depreciation and Amortization
Estimated useful lives of the assets	10 years
Office furniture, fixtures and equipment | Minimum
Depreciation and Amortization
Estimated useful lives of the assets	5 years
Office furniture, fixtures and equipment | Maximum
Depreciation and Amortization
Estimated useful lives of the assets	7 years
Vehicles | Minimum
Depreciation and Amortization
Estimated useful lives of the assets	3 years
Vehicles | Maximum
Depreciation and Amortization
Estimated useful lives of the assets	5 years
Leasehold improvements | Maximum
Depreciation and Amortization
Estimated useful lives of the assets	3 years
Residential trailers | Minimum
Depreciation and Amortization
Estimated useful lives of the assets	10 years
Residential trailers | Maximum
Depreciation and Amortization
Estimated useful lives of the assets	20 years
Buildings and improvements | Minimum
Depreciation and Amortization
Estimated useful lives of the assets	10 years
Buildings and improvements | Maximum
Depreciation and Amortization
Estimated useful lives of the assets	27 years 6 months

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounting Method (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018	Feb. 29, 2008
Significant Accounting Policy disclosures
Noncontrolling ownership net loss	$ 5	$ 5	$ 16	$ 367
Eureka Moly LLC
Significant Accounting Policy disclosures
Ownership interest (as a percent)					80.00%
Noncontrolling ownership interest (as a percent)					20.00%
Noncontrolling ownership net loss	27,000		81,000
Gain (loss) on contract termination attributable to CRNCI	$ 5,000		$ 16,000

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DESCRIPTION OF BUSINESS - Capital Requirements and Restructuring (Details)									9 Months Ended
	Nov. 19, 2019	Oct. 14, 2019 USD ($)	Aug. 28, 2019	Jul. 29, 2019 USD ($)	Mar. 21, 2019 tranche	Oct. 16, 2017 USD ($) tranche $ / shares shares	Nov. 02, 2015 USD ($) tranche $ / shares shares	Apr. 17, 2015 USD ($) $ / shares shares	Sep. 30, 2019 USD ($) shares	Dec. 31, 2018 shares	Dec. 31, 2014 USD ($)
CAPITAL REQUIREMENTS AND RESTRUCTURING
Common stock issued | shares									138,220,332	137,114,804
Face amount											$ 8,500,000
Amount committed to be purchased									$ 600,000
Number of days in which the transaction must be closed				2 days
AMER International Group
CAPITAL REQUIREMENTS AND RESTRUCTURING
Number of tranche investment | tranche							3
Class II director term on Board of Directors							3 years
Expense reimbursement from reserve for potential opportunities									2,500,000
Private Placement
CAPITAL REQUIREMENTS AND RESTRUCTURING
Number of tranche investment | tranche					3
Private Placement | AMER International Group
CAPITAL REQUIREMENTS AND RESTRUCTURING
Shares agreed to purchase as per agreement | shares								40,000,000
Warrants to purchase common shares | shares								80,000,000
Number of days considered for VWAP								90 days
Volume weighted average price per share | $ / shares								$ 0.50
First Tranche | AMER International Group
CAPITAL REQUIREMENTS AND RESTRUCTURING
Private Placement							$ 4,000,000
Common stock issued | shares							13,300,000
Purchase price per share acquired (in dollars per share) | $ / shares							$ 0.30
Second Tranche | AMER International Group
CAPITAL REQUIREMENTS AND RESTRUCTURING
Shares agreed to purchase as per agreement | shares						14,600,000
Number of days considered for VWAP						30 days
Number of tranche investment | tranche						3
Private Placement						$ 6,000,000
Purchase price per share acquired (in dollars per share) | $ / shares						$ 0.41
Funds allocated from private placement of shares for general corporate purposes						$ 5,500,000
Funds allocated from private placement for expense reimbursement						$ 500,000
Third Tranche | AMER International Group
CAPITAL REQUIREMENTS AND RESTRUCTURING
Private Placement				$ 10,000,000			$ 10,000,000		5,000,000
Common stock issued | shares							20,000,000
Purchase price per share acquired (in dollars per share) | $ / shares							$ 0.50
Shares involved in closing of joint business | shares							10,000,000
Mt. Hope Project | Senior secured term loan | AMER International Group
CAPITAL REQUIREMENTS AND RESTRUCTURING
Face amount								$ 700,000,000	$ 700,000,000
Investment Securities Purchase Agreement
CAPITAL REQUIREMENTS AND RESTRUCTURING
Dispute resolution period			10 days
AMER Extension Agreement | Settled litigation | Subsequent event
CAPITAL REQUIREMENTS AND RESTRUCTURING
Proceeds from legal settlements		$ 300,000
Period considered for calculating weighted average share price		30 days
Period expected to reach a mutually beneficial resolution	14 days

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REDEEMABLE PREFERRED STOCK

9 Months Ended

Sep. 30, 2019

REDEEMABLE PREFERRED STOCK

REDEEMABLE PREFERRED STOCK

NOTE 7 — REDEEMABLE PREFERRED STOCK

Pursuant to our Certificate of Incorporation we are authorized to issue 10,000,000 shares of $0.001 per share par value preferred stock, of which 55,000 shares are designated as Series A Preferred Stock Shares and 5,000 are designated as Series B Preferred Stock Shares as of September 30, 2019.  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 the Board.  The Board has the authority to determine the preferences, limitations and relative rights of each series of preferred stock. 

During the nine months ended September 30, 2019, the Company issued 14,000 shares of Series A Preferred in a series of private placement agreements.  The Series A Preferred Shares were priced at $100.00/ share and are convertible at any time at the holder’s discretion into common shares whereby one preferred share converts at a price of $0.27/common share to 370.37 common shares. The conversion price was set at the closing price of the Company’s common stock on March 12, 2019, which was the day before announcement of the private placement. Upon maturity or full repayment of the Senior Convertible Notes and Promissory Notes currently outstanding, there will be mandatory redemption of the preferred shares in exchange for equivalent cash for the principal invested, plus any accrued and unpaid dividends.  The holders of the Series A Preferred Shares are entitled to receive, when and if declared by the Board of Directors and in preference to the common stock, cumulative cash or in-kind dividends at a rate per annum of 5% of the original issue price.   In the event of a liquidation, dissolution, or winding up of the Company, the proceeds would be distributed first to the holders of Series A Preferred Shares prior to any distributions to holders of other stock in an amount per share equal to the original issue price plus any declared but unpaid dividends.  The holders of Series A Preferred Shares are entitled to vote, together with the holders of common stock, as if the Series A Preferred Shares had been converted to common stock on all matters submitted to stockholders for vote.  In addition, the Series A Preferred Shares contains certain protective rights that require the vote or consent of the holders of at least a majority of the shares of Series A Preferred Shares. 

Of the 14,000 shares issued during the nine months ended September 30, 2019, 5,000 shares were issued to MHMI.  On May 29, 2019, MHMI assigned their interest in 4,500 of the shares to various investors in their entity.  MHMI retained 500 shares.  In addition to the Series A Convertible Preferred Shares terms described in Note 1 above, MHMI and their investors have a one-time right to require the Company to redeem all or a portion of the Series A Convertible Preferred Shares upon the receipt of a minimum of $5,000,000 from the close of Tranche 3 of the amended AMER Investment Agreement.

As the Series A Preferred Shares are redeemable upon maturity or full repayment of the Senior Convertible Notes and Promissory Notes, it has been classified as mezzanine equity in our Consolidated Balance Sheets.  The Company recognizes change in the redemption value as they occur by adjusting the carrying amount of the mezzanine equity at each reporting date.  The change in the redemption value of the Series A due to accrued and unpaid dividends since its issuance is insignificant.

On August 2, 2019, the Company filed a Certificate of Designation of Series B Preferred Stock with the Delaware Secretary of State, designating 5,000 shares of preferred stock the Series B Convertible Preferred Shares.  On August 5, 2019, the Company executed the Series B Purchase Agreement with the Investors.  Pursuant to the Series B Purchase Agreement, the Investors agreed to purchase up to $400,000 of Series B Convertible Preferred Shares.  This transaction closed on August 7, 2019. 

The Series B Convertible Preferred Shares were issued at a price of $100.00 per share, and each Series B Convertible Preferred Share will be convertible at any time at the holder’s discretion into 500 shares of common stock of the Company.  The Series B Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares of Series B Convertible Preferred Shares or a combination thereof.  The Series B Convertible Preferred Shares, like the Series A Convertible Preferred Shares, are mandatorily redeemable at such time that the Company’s $7.2 million Convertible Note debt currently outstanding become due and payable in accordance with their terms, as such terms may be modified from time to time.

Prior to the issuance of the Series A and Series B Convertible Preferred Shares, no shares of preferred stock were issued or outstanding.

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COMMITMENTS AND CONTINGENCIES

9 Months Ended

Sep. 30, 2019

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

NOTE 11 — COMMITMENTS AND CONTINGENCIES

Mt. Hope Project

The Mt. Hope Project is owned/leased and will be operated by the LLC under the LLC Agreement.  The LLC currently has a lease (“Mt. Hope Lease”) with Mount Hope Mines, Inc. (“MHMI”) for a period of 30 years from October 19, 2005 and for so long thereafter as operations are being conducted on the property.  The lease may be terminated earlier at the election of the LLC, or upon a material breach of the agreement and failure to cure such breach.  If the LLC 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.  If MHMI terminates the lease, termination is effective upon receipt of a notice of termination due to a material breach, representation, warranty, covenant or term contained in the Mt. Hope Lease and followed by failure to cure such breach within 90 days of receipt of a notice of default.  MHMI may also elect to terminate the Mt. Hope Lease if the LLC has not cured the non-payment of obligations under the lease within 10 days of receipt of a notice of default.  In order to maintain the Lease Agreement, the LLC must pay certain minimum advance royalties as discussed below.

The Mt. Hope Lease requires a royalty advance (“Construction Royalty Advance”) of 3% of certain construction capital costs, as defined in the Mt. Hope Lease.  The LLC is obligated to pay a portion of the Construction Royalty Advance each time capital is raised for the Mt. Hope Project based on 3% of the expected capital to be used for those certain construction capital costs defined in the Mt. Hope Lease.  Through September 30, 2019, we have paid $25.6 million of the total royalty advance.  Based on our Mt. Hope Project capital budget we estimate that a final reconciliation payment on the Capital Construction Cost Estimate (the “Estimate”) will be due following the commencement of commercial production, after as-built costs are definitively determined.  The Company estimates, based on the revised capital estimate discussed above and the current timeline for the commencement of commercial production, that an additional $4.2 million will be due approximately 24 months after the commencement of construction.  This amount has been accrued for all periods presented as accrued advance royalties.  The capital estimates may be subject to escalation in the event the Company experiences continued delays in achieving full financing for the Mt. Hope Project.

The LLC is also obligated to make a minimum annual advance royalty payment (“Annual Advance Royalty”) of $0.5 million each October 19 for any year wherein commercial production has not been achieved or the MHMI Production Royalty (as hereinafter defined) is less than $0.5 million.  As commercial production is not anticipated to commence before early-2022, the Company has accrued $2.0 million in Annual Advance Royalty payments which will be due in four $0.5 million installments in October 2019, 2020, 2021, and 2022, respectively.  The 2019 payment was remitted on October 18, 2019.  The Estimate and the Annual Advance Royalty are collectively referred to as the “Advance Royalties.”  All Advance Royalties are credited against the MHMI Production Royalties once the mine has achieved commercial production.  After the mine begins production, the LLC estimates that the MHMI Production Royalties will be in excess of the Annual Advance Royalties for the life of the Mt. Hope Project.  Until the advance royalties are fully credited, the LLC will pay one half of the calculated Production Royalty annually.  Assuming a $12 molybdenum price, the Annual Advance Royalties will be consumed within the first five years of commercial production.

On February 28, 2018, the LLC) and MHMI entered into a Second Amendment dated effective January 15, 2018 (the “Lease Amendment”), to the Mt. Hope Lease.  The Lease Amendment provides that following commencement of commercial production of any non- molybdenum minerals at the Mt. Hope Project, the LLC will pay a production royalty to MHMI as follows:

· For zinc, the production royalty shall be equal to (i) 4.0% of net returns when the average gross value for the calendar quarter is less than or equal to $2.00 per pound; (ii) 4.5% of net returns when the average gross value is between $2.01 and $2.49 per pound; and (iii) 5.0% of net returns when the average gross value is $2.50 per pound or greater; and

· For all other non-moly minerals, the production royalty shall be equal to 4.0% of net returns.

If commercial production of non-moly minerals commences before commercial production of molybdenum, the Lease Amendment provides that the LLC’s obligation to pay the annual advance royalty under the Mt. Hope Lease will continue until the LLC has paid MHMI an aggregate of $3 million in non-moly production royalties in a three-year period.  After this threshold is met, then payment of the advance royalty may be deferred in whole or in part if the non-moly production royalty exceeds specified levels.  After non-moly production royalties have exceeded $10,000,000, future payments may be credited against future production royalties under certain circumstances.

Additionally, Exxon Corporation will receive a perpetual 1% royalty interest in and to all ores, metals, minerals and metallic substances mineable or recoverable from the Mt. Hope Project in kind at the mine or may elect to receive cash payment equal to 1% of the total amount of gross payments received from the purchaser of ores mined/removed/sold from property net of certain deductions.

The Liberty Project

The Nevada Division of Environmental Protection (“NDEP”) has identified environmental concerns with some Liberty Project facilities acquired with the property.  NDEP’s concerns are related to aspects of previously approved closure plans required by Nevada regulation.  We have proposed options to NDEP to address these concerns.  In July 2018, we addressed one of those concerns by successfully completing a program, as approved by NDEP, to neutralize the acidic Liberty pit lake by adding hydrated lime to raise the pH.  2018 costs were consistent with budgeted spend.  We will continue to work with NDEP to evaluate ongoing options to address any future concerns, and additional costs may be required to meet NDEP’s closure requirements.  However, a reasonable estimate cannot be determined at this time as it is not possible to reasonably predict the outcome of our negotiations with NDEP.

Deposits on project property, plant and equipment

As discussed in Note 1, the LLC has active orders with varying stages of fabrication on milling process equipment comprised of two 230kV primary transformers and substation, a primary crusher, a semi-autogenous mill, two ball mills, and various motors for the mills with remaining cash commitments of $0.6 million due on these orders. 

Equipment and Supply Procurement

Through September 30, 2019, the LLC has made deposits and/or final payments of $88.0 million on equipment orders and has spent approximately $208.9 million for the development of the Mt. Hope Project, for a total Mt. Hope Project inception-to-date spend of $299.4 million.

In 2012, the LLC issued a firm purchase order for eighteen haul trucks.  The order provides for delivery of those haul trucks required to perform initial mine development, which will begin several months prior to commercial production.  Non-refundable down-payments of $1.2 million were made in 2012, with pricing subject to escalation as the trucks were not delivered prior to December 31, 2013.  Since that time, the LLC has renegotiated the timelines for truck delivery and delayed deliveries into December 2019.  The contract is cancellable with no further liability to the LLC.

Also in 2012, the LLC issued a firm purchase order for four mine production drills with a non-refundable down-payment of $0.4 million, and pricing was subject to escalation if the drills were not delivered by the end of 2013.  Since that time, the LLC accepted a change order which delayed delivery into December 2019.  The contract remains cancellable with no further liability to the LLC.

On June 30, 2012, the LLC’s contract to purchase two electric shovels expired.  On July 11, 2012, we signed a letter of intent with the same vendor providing for the opportunity to purchase the electric shovels at prices consistent with the expired contract, less a special discount in the amount of $3.4 million to provide credit to the LLC for amounts paid as deposits under the expired contract.  The letter of intent provides that equipment pricing will remain subject to inflation indexes and guarantees production slots to ensure that the equipment is available when required by the LLC.  Since that time, the parties agreed to extend the letter of intent through December 31, 2019.

Obligations under capital and operating leases

We have contractual operating leases that will require a total of $0.3 million in payments over the next four years.  Operating leases consist primarily of rents on office facilities and office equipment.  Our expected payments are $0.1 million, $0.1 million, $0.1 million, and nil for the years ended December 31, 2019, 2020, 2021, and 2022, respectively.

Creation of Agricultural Sustainability Trust

On August 19, 2010, the LLC entered into an agreement with the Eureka Producers’ Cooperative (“EPC”), which was amended on October 15, 2018, whereby the LLC will fund a $5.6 million Sustainability Trust (“Trust”) in exchange for the cooperation of the EPC with respect to the LLC’s water rights and permitting of the Mt. Hope Project.  The Trust will be tasked with developing and implementing programs that will serve to enhance the sustainability and well-being of the agricultural economy in the Diamond Valley Hydrographic Basin through reduced water consumption.

The LLC has contributed $0.1 million into the Trust as of September 30, 2019.  The remaining contributions to the Trust may be funded by the LLC over several years based on the achievement of certain milestones, which are considered probable, and as such $5.5 million has been accrued in the Company’s financial statements and is included in mining properties, land, and water rights.  Additionally, as a result of a settlement of protests to the Mt. Hope project water applications, additional contributions will be made to the Trust, as discussed below under Key Terms of Settlements - Eureka County and the DNR.

Permitting Considerations

In the ordinary course of business, mining companies are required to seek governmental permits for expansion of existing operations or for the commencement of new operations. The LLC is required to obtain approval, in the form of a Record of Decision (“ROD”), from the BLM to implement the Mt. Hope Project Plan of Operations (“PoO”).  The LLC is also required to obtain various state and federal permits including, but not limited to, water protection, air quality, water rights and reclamation.  In addition to requiring permits for the development of the Mt. Hope Project, we will need to obtain and modify various mining and environmental permits during the life of the Mt. Hope Project.  Maintaining, modifying, and renewing the necessary governmental permits is a complex and time-consuming process involving numerous jurisdictions and often involving public hearings and substantial expenditures.  The duration and success of the LLC’s efforts to obtain, modify or renew permits will be contingent upon many variables, some of which are not within the LLC’s control.  Increased costs or delays could occur, depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority.  All necessary permits may not be obtained and, if obtained, may not be renewed, or the costs involved in each case may exceed those that we previously estimated.  In addition, it is possible that compliance with such permits may result in additional costs and delays.

History of Record of Decision (ROD)

On November 16, 2012, the BLM issued its initial ROD authorizing development of the Mt. Hope Project.  The ROD was subsequently vacated by the U.S. Court of Appeals for the Ninth Circuit in December 2016, discussed below.  Also, on April 23, 2015, the BLM issued a Finding of No Significant Impact (“FONSI”) supporting their Decision to approve an amendment to the PoO.  The initial ROD and FONSI/Decision approved the PoO and amended PoO, respectively, for construction and operation of the mining and processing facilities and also granted the Right-of-Way, and amended Right-of-Way, respectively, for a 230kV power transmission line, discussed below.  Monitoring and mitigation measures identified in the initial ROD and FONSI, developed in collaboration with the regulatory agencies involved throughout the permitting process, will avoid, minimize, and mitigate environmental impacts, and reflect the Company’s commitment to be good stewards of the environment.  Ongoing changes to permits and the PoO during the life of mining operations are typical as design evolves and operations are optimized.

On February 15, 2013, Great Basin Resource Watch and the Western Shoshone Defense Project (“Plaintiffs”) filed a Complaint against the U.S. Department of the Interior and the BLM (“Defendants”) in the U.S. District Court, District of Nevada (“District Court”), seeking relief under the National Environmental Policy Act (“NEPA”) and other federal laws challenging the BLM’s issuance of the initial ROD for the Mt. Hope Project, and on February 20, 2013 filed a Motion for Preliminary Injunction.  The District Court allowed the LLC to intervene in the matter.

On August 22, 2013, the District Court denied, without prejudice, Plaintiffs’ Motion for Preliminary Injunction based on a Joint Stipulation to Continue Preliminary Injunction Oral Argument, which advised the District Court that as a result of economic conditions, including the Company’s ongoing financing efforts, all major ground disturbing activities had ceased at the Mt. Hope Project.

On July 23, 2014, the District Court denied Plaintiffs’ motion for summary judgment in its entirety and on August 1, 2014 the Court entered judgment in favor of the Defendants and the LLC, and against Plaintiffs regarding all claims raised in the Complaint. 

Thereafter, on September 22, 2014, the Plaintiffs filed their notice of appeal to the U.S. Court of Appeals for the Ninth Circuit (“Ninth Circuit”) of the District Court’s dismissal.  Oral argument of the parties before the Ninth Circuit was completed on October 18, 2016.  On December 28, 2016, the Ninth Circuit issued its Opinion rejecting many of the arguments raised by the Plaintiffs challenging the Environmental Impact Statement ("EIS") completed for the Mt. Hope Project, but issued a narrow reversal of the BLM's findings related to air quality analysis and information related to potential public water resources. Because of this technical deficiency, the Court vacated the initial ROD.

Re-Issuance of Record of Decision Approving Supplemental Environmental Impact Statement (“SEIS”)

On remand to the BLM, the agency conducted additional evaluation of air quality impacts and resulting cumulative impact analysis under NEPA in preparation of a Supplemental Environmental Impact Statement (“SEIS”).  The SEIS disclosed additional information to the public related to the selection of appropriate background concentrations to use for dispersion modeling of air pollutants and information related to potential public water reserves.  Because the SEIS must be prepared in accordance with NEPA guidelines, the SEIS included three publications in the Federal Register, the first was the Notice of Intent (“NOI”) which was published on July 19, 2017, the second, the Notice of Availability (“NOA”) of the Draft SEIS (“DSEIS”) was published on March 6, 2019, and on September 27, 2019, the third NOA was published announcing that the BLM had re-issued the ROD marking completion of the NEPA process and approval of the SEIS.  On November 5, 2019, we announced that a Complaint was filed against the U.S. Department of Interior and the BLM in the U.S. District Court in Nevada, challenging the re-issuance of the ROD. We are reviewing the Complaint filed by Great Basin Resource Watch and the Western Shoshone Defense Project, and may seek permission from the Court to intervene on behalf of the Mt. Hope Project.

Reclamation Considerations

Environmental regulations related to reclamation require that the cost for a third party contractor to perform reclamation activities on the minesite be estimated.  In October 2015, we submitted a request to the BLM to reduce our reclamation liability to current surface disturbance.  Simultaneously, we submitted an application to NDEP-BMRR to modify the Reclamation Permit to reflect this reduced reclamation liability. On October 26, 2015, NDEP-BMRR approved the proposed permit modification, including the reduced reclamation liability amount.   On December 21, 2015, BLM approved the updated reclamation liability estimate, reducing of the reclamation liability to approximately $2.8 million.  In early 2019, the Company submitted, and BLM approved a required 3-year update to the reclamation liability estimate, resulting in an increased liability of approximately $3.1 million.  We worked with the LLC’s reclamation surety underwriters to satisfy the $2.8 million financial guarantee requirements under the approved amended PoO for the Mt. Hope Project and funded the $0.3 million increase in cash directly with the BLM in April 2019.  As of September 30, 2019, the surety bond program was funded with a cash collateral payment of $0.3 million.

Water Rights Considerations

History of Mt. Hope Water Permits

In July 2011, the Nevada State Engineer (“State Engineer”) initially approved our applications for new appropriation of water for mining and milling use, and applications to change existing water from agricultural use to mining and milling use for the Mt. Hope Project.  Subsequently, the State Engineer granted water permits associated with the approved applications and approved a Monitoring, Management and Mitigation Plan (“3M Plan”) for the Mt. Hope Project.  Eureka County, Nevada and two other parties comprised of water rights holders in Diamond Valley and Kobeh Valley appealed the State Engineer’s decision approving the applications and granting the water permits to the Nevada State District Court (“District Court”) and then filed a further appeal to the Nevada Supreme Court challenging the District Court’s decision affirming the State Engineer’s decision to approve the applications and grant the water permits.  In June 2013, the appeal was consolidated by the Nevada Supreme Court with an appeal of the State Engineer’s approval of the 3M Plan filed by two water rights holders.  The District Court previously upheld the State Engineer’s approval of the 3M Plan and the two parties subsequently appealed the District Court’s decision to the Nevada Supreme Court. 

On September 18, 2015, the Nevada Supreme Court issued an Order that reversed and remanded the cases to the District Court for further proceedings consistent with the Order.  On October 29, 2015, the Nevada Supreme Court issued the Order as a published Opinion.  The Nevada Supreme Court ruled that the State Engineer did not have sufficient evidence in the record at the time he approved the applications and granted the water permits to demonstrate that successful mitigation may be undertaken so as to dispel the threat to existing water rights holders.

On September 27, 2017, the Nevada Supreme Court affirmed a March 4, 2016 District Court Order vacating the 3M Plan, denying the water applications and vacating the permits issued by the State Engineer in July 2011 and June 2012.  This decision of the Nevada Supreme Court was final, and not subject to further appeal.

New Change Applications for Water Use at Mt. Hope Project

After the Company received the September 2017 decision from the Nevada Supreme Court, it proceeded with new applications to change existing agricultural irrigation and mining/milling water rights owned by the Company to use at the Mt. Hope Project.  These new change applications had been filed with the State Engineer in 2015 and 2016 while the above described appeals were pending before the Nevada Supreme Court.  Originally, these applications and other new appropriation applications were to be addressed at a pre-hearing conference scheduled on August 25, 2016 before the State Engineer.  These applications were the subject of a Writ of Prohibition or Mandamus (“Writ”) filed by Eureka County on August 23, 2016 to the Nevada Supreme Court seeking the Supreme Court’s intervention to stop further action by the State Engineer while the appeals discussed above were pending.  On December 22, 2017 the Nevada Supreme Court denied Eureka County’s Writ Petition.  As a result, the State Engineer allowed a pre-hearing conference held on January 24, 2018.  At the pre-hearing conference the State Engineer and his hearing officer scheduled review of the new change applications for a September 11, 2018 hearing in Carson City, Nevada. 

On January 2, 2018, Eureka County, and later joined by the other two protestants representing a rancher in Kobeh Valley and a ranching group in Diamond Valley, filed a motion to dismiss with the State Engineer asserting that our applications were precluded from review and approval asserting that they were repetitive of the applications denied previously by the Nevada Supreme Court in its September 2017 decision.  On March 26, 2018, the State Engineer issued a non-final order denying the motion to dismiss finding that the applications to be reviewed at the upcoming hearing were not identical issues and that further consideration of the motion could be taken at the hearing.  On May 14, 2018, Eureka County, joined by the other protestants filed a Writ to the Nevada Supreme Court and later a Motion to Stay the September hearing date, asserting that the denial of the Motion to Dismiss was erroneous and that the Nevada Supreme Court should order that the applications be denied and/or the September 2018 hearing should be delayed until the Nevada Supreme Court can consider the Writ and underlying motion to dismiss.  The Company filed its objection on June 27, 2018, and on August 30, 2018, the Nevada Supreme Court denied the Writ, permitting the September 2018 hearing before the Nevada State Engineer to proceed. 

On the second day of the September hearing, all protest issues raised by Eureka County and the Diamond Natural Resources Protections & Conservation Association (“DNR”) concerning the Mt. Hope water rights applications were resolved through a Stipulation, Settlement Agreement and Withdrawal of Protest (“Settlement”).  After Eureka County and DNR were excused, the hearing continued with evidence addressing concerns raised by another protestant representing a Kobeh Valley ranching family and cattle company that refused to participate in the Settlement. At the public hearing, the Company presented expert testimony in support of its augmentation and monitoring plan to the Nevada State Engineer, which will protect senior water rights in the Kobeh Valley basin when the Company commences construction and operation of its proposed Mt. Hope molybdenum project near the town of Eureka, Nevada.  The hearing concluded on September 21, 2018. 

Effective April 30, 2019,  the Company, through its wholly owned subsidiary Kobeh Valley Ranch LLC (“KVR”) and the entered into a settlement agreement with a Kobeh Valley, Nevada ranching family (“Ranchers”), resolving the last set of protests pending before the Nevada State Engineer pertaining to the Mt. Hope Project’s water rights applications.

On June 6, 2019, the Nevada State Engineer issued Ruling 6464 granting the Company’s water rights applications for mining purposes.  The water right permits for the Mt. Hope Project were issued on July 24, 2019.  With receipt of and in compliance with the terms of the water permits, the water is available for consumptive use at the Mt. Hope Project.

Key Terms of Settlements

Eureka County and the DNR

Under the terms of the Settlement with Eureka County and the DNR, the Company and the LLC agreed to convey all related water rights for Mt. Hope Project at the future cessation of all mining activity to assist Eureka County and the DNR’s efforts to mitigate the pre-existing effects of agricultural groundwater pumping in Diamond Valley. Furthermore, upon construction of certain power infrastructure and grants of right of way by the LLC at the Mt. Hope Project, the Company and the LLC will work cooperatively with Eureka County to allow use of and access to such infrastructure to lessen the pre-existing effects of Diamond Valley groundwater pumping. Eureka County, and the Company and the LLC, also agreed to work cooperatively to seek opportunities to improve and implement groundwater monitoring efforts.

In addition, the Company withdrew its protests to Eureka County’s pending applications with the Nevada State Engineer to appropriate water from the Kobeh Valley basin, and at the request of DNR, the Company also agreed to publicly support the proposed Diamond Valley Ground Water Management Plan currently pending before the Nevada State Engineer.

With receipt of the water permits, the LLC increased its financial contributions to the existing Agricultural Sustainability Trust Agreement, discussed above, with the Eureka Producers’ Cooperative (“EPC”) in Diamond Valley with an additional $50,000 to EPC.  Initially, upon execution of the Settlement, the LLC made a payment of $50,000. 

The LLC will make additional contributions of $750,000 each after the commencement of molybdenum production at the Mt. Hope Project and on the one year anniversary of production, for a total contribution obligation to the Sustainability Trust of $5.6 million, an increase of $1.6 million related to the terms of the Settlement. The amount has been accrued under mining properties, land, and water rights in the Company’s financial statements in addition to the previously accrued $4.0 million resulting in a total accrual of $5.6 million.  The LLC has contributed $0.1 million into the Trust as of September 30, 2019.

The Sustainability Trust is tasked with developing and implementing programs that will serve to slow groundwater drawdown and thereby improve the sustainability of the agricultural economy in the Diamond Valley Hydrographic Basin.  

Kobeh Valley Ranching Family

At the execution of the settlement agreement, the LLC funded an initial payment of $1 million into a trust account; distribution to the Ranchers occurred when the water permits were issued on July 24, 2019.  Upon receipt of the initial $1,000,000 into the trust account, the Ranchers withdrew their protests and forfeited any judicial review of Ruling 6464 and the water applications and issuance of the water permits issued on July 24, 2019 by the Nevada State Engineer.

When conditions exist for the LLC to secure project financing additional consideration representing less than 1.5 % of the remaining project capital budget will be payable to the Ranchers.  If the LLC has not secured Mt. Hope Project financing within 12 months of the executed settlement agreement, the LLC will make monthly payments of $10,000 to the Ranchers until financing is achieved and the remaining consideration will be paid to the Ranchers.

Funding for the $1 million was advanced to the LLC by the Company, to preserve the joint venture’s existing reserve account.  General Moly sourced $500,000 from its available cash, and received the remaining $500,000 from closing a sale of Series A Convertible Preferred Shares in a private placement with Mount Hope Mines Inc. (“MHMI”) discussed in Notes 1 and 7 above, the Mt. Hope Project’s claim/land lessor.

In exchange for General Moly advancing the $1,000,000 initial settlement funding, the LLC members have agreed to repay the $1 million advance from the proceeds of ongoing sales of non-critical LLC assets and lands.  On September 27, 2019, the Company and POS-Minerals entered into a Consent Agreement for a reimbursement schedule concerning the approximately $700,000 owed to the Company by the LLC in return for its advance of funding to settle protests related to the water right applications for the Mt. Hope Project.  Under the Consent Agreement, $200,000 was reimbursed from the Reserve Account to the Company on September 30, 2019 and an additional $200,000 was reimbursed in early November.  The remaining approximately $300,000 will be reimbursed in December, provided that the LLC has sold a minimum of $400,000 in non-critical Mt. Hope Project related equipment. 

Environmental Considerations

Our mineral property holdings in Shoshone County, Idaho include lands contained in mining districts that have been designated as a “Superfund Site” pursuant to the Comprehensive Environmental Response, Compensation, and Liability Act.  This “Superfund Site” was established to investigate and remediate primarily the Bunker Hill properties of Smelterville, Idaho, a small portion of Shoshone County where a large smelter was located.  However, because of the extent of environmental impact caused by the historical mining in the mining district, the Superfund Site covers the majority of Shoshone County including our Chicago-London and Little Pine Creek properties as well as many small towns located in Northern Idaho.  We have conducted a property environmental investigation of these properties, which revealed no evidence of material adverse environmental effects at either property.  We are unaware of any pending action or proceeding relating to any regulatory matters that would affect our financial position due to these inactive mining claims in Shoshone County.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2019

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Schedule of cash and cash equivalents and restricted cash

	September 30, 2019	December 31, 2018
	(in thousands)
Cash and cash equivalents	1,100	2,016
Restricted cash held at EMLLC	4,118	6,167
Restricted cash and investments held for reclamation bonds	—	434
Total cash, cash equivalents and restricted cash shown in the statement of cash flows	5,218	8,617

Schedule of shares not included in computation of diluted loss per share because they are anti-dilutive

	September 30, 2019	December 31, 2018
Warrants	97,991,800	98,686,000
Shares Issued upon conversion of Senior Notes	5,910,000	5,910,000
Unvested Stock Awards	2,001,268	2,401,268
Stock Appreciation Rights	938,667	938,667

Property and equipment, depreciation, estimated useful life

Field equipment	Four to ten years
Office furniture, fixtures, and equipment	Five to seven years
Vehicles	Three to five years
Leasehold improvements	Three  years or the term of the lease, whichever is shorter
Residential trailers	Ten to twenty years
Buildings and improvements	Ten to twenty seven and one-half years

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EQUITY INCENTIVES (Tables)

9 Months Ended

Sep. 30, 2019

EQUITY INCENTIVES

Schedule Of Share Based Compensation Activity

	SARs			Stock Awards
	Weighted		Number	Weighted
	Average		of Shares	Average
	Strike		Under	Grant		Number of
	Price		Option	Price		Shares
Balance at January 1, 2019	$	3.19	938,667	$	1.18	2,401,268
Awards Granted		—	—		0.24	135,000
Awards Exercised or Earned		—	—		0.63	(535,000)
Awards Forfeited		—	—		—	—
Awards Expired		—	—		—	—
Balance at September 30, 2019	$	3.19	938,667	$	1.34	2,001,268
Exercisable at September 30, 2019	$	2.14	56,523

Schedule of Nonvested Share Activity

	SARs			Stock Awards
	Weighted		Number	Weighted
	Average		of Shares	Average
	Fair		Under	Fair		Number of
	Value		Option	Value		Shares
Balance at January 1, 2019	$	3.26	882,144	$	1.18	2,401,268
Awards Granted		—	—		0.24	135,000
Awards Vested or Earned		—	—		0.63	(535,000)
Awards Forfeited		—	—		—	—
Balance at September 30, 2019	$	3.26	882,144	$	1.34	2,001,268

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DESCRIPTION OF BUSINESS - Restructuring Costs and Reserves (Details)							1 Months Ended				6 Months Ended	9 Months Ended	26 Months Ended		29 Months Ended
	Sep. 30, 2019 USD ($)	Jul. 29, 2019 USD ($)	Oct. 17, 2018 USD ($) shares	Oct. 16, 2017 USD ($) tranche	Apr. 12, 2017 USD ($)	Nov. 02, 2015 USD ($) tranche	Dec. 31, 2019 USD ($)	Nov. 30, 2019 USD ($)	Sep. 30, 2019 USD ($)	Oct. 31, 2018 USD ($) shares	Jun. 30, 2018 USD ($)	Sep. 30, 2019 USD ($)	Jun. 30, 2019 shares	Jun. 30, 2019 USD ($)	Sep. 30, 2019 USD ($) shares	Sep. 27, 2019 USD ($)
Class of Stock [Line Items]
POS-Mineral's continued contribution to all other costs of project (as a percent)												20.00%
Net proceeds			$ 1,900,000
Number of units issued during the period | shares			9,151,000
AMER International Group
Class of Stock [Line Items]
Number of tranche investment | tranche						3
First Tranche | AMER International Group
Class of Stock [Line Items]
Private Placement						$ 4,000,000
Second Tranche | AMER International Group
Class of Stock [Line Items]
Private Placement				$ 6,000,000
Number of tranche investment | tranche				3
Third Tranche | AMER International Group
Class of Stock [Line Items]
Private Placement		$ 10,000,000				$ 10,000,000						$ 5,000,000
ATM
Class of Stock [Line Items]
Issue of shares | shares													1,168,300		1,168,300
Net proceeds										$ 1,900,000	$ 496,000			$ 500,000	$ 500,000
Number of units issued during the period | shares										9,125,000
Number of shares of common stock in each unit issued | shares										1
Number of warrants in each unit issued | shares										1
Number of shares each unit may purchase | shares										1
Period of time the ATM is suspended (in years)										2 years					2 years
ATM | Maximum
Class of Stock [Line Items]
Net proceeds					$ 20,000,000
Eureka Moly LLC | Land and Water Rights
Class of Stock [Line Items]
Amount owed to the company																$ 700,000
Eureka Moly LLC | Equipment | Minimum | Subsequent event
Class of Stock [Line Items]
Sale of equipment								$ 400,000
LLC Agreement | Land and Water Rights
Class of Stock [Line Items]
Reimbursement of debt	$ 200,000							200,000	$ 200,000
LLC Agreement | Land and Water Rights | Subsequent event
Class of Stock [Line Items]
Reimbursement of debt							$ 300,000	$ 200,000

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REDEEMABLE PREFERRED STOCK (Details) - USD ($)						1 Months Ended	9 Months Ended	12 Months Ended
	Aug. 05, 2019	Aug. 02, 2019	Jul. 29, 2019	May 29, 2019	Nov. 02, 2015	Dec. 31, 2014	Sep. 30, 2019	Dec. 31, 2018	Dec. 31, 2015	Oct. 17, 2018
Preferred Stock
Preferred shares, authorized (in shares)							10,000,000
Redeemable Preferred Stock Issued							$ 1,800,000
Share Price							$ 0.26	$ 0.22		$ 0.25
Preferred shares, par value (in dollars per share)							$ 0.001
Preferred shares, issued (in shares)								0
Preferred shares, outstanding (in shares)								0
Convertible notes issued						$ 8,500,000
Series A Preferred Stock
Preferred Stock
Preferred shares, authorized (in shares)							55,000
Cumulative cash or in-kind dividends							5.00%
Series A Preferred Stock | Private Placement
Preferred Stock
Number of shares issued							14,000
Number of shares assigned during the period				4,500
Number of shares retained during the period				500
Share Price							$ 100.00
Number of shares converted							1
Preferred share conversion (in dollars per share)							$ 0.27
Shares issued upon conversion (in shares)							370.37
Series A Preferred Stock | Mt. Hope Project | Private Placement
Preferred Stock
Number of shares issued							5,000
Series B Preferred Stock
Preferred Stock
Preferred shares, authorized (in shares)		5,000					5,000
Redeemable Preferred Stock Issued	$ 400,000
Share Price		$ 100.00
Number of common stock shares offered per convertible preferred share		500
Annual dividend (as a percent)		5.00%
AMER International Group
Preferred Stock
Shares issued upon conversion (in shares)								1,168,300
AMER International Group | Third Tranche
Preferred Stock
Private Placement			$ 10,000,000		$ 10,000,000		$ 5,000,000
Convertible Notes
Preferred Stock
Shares issued upon conversion (in shares)							2,625,000		2,625,000
Convertible notes issued							$ 7,200,000
Convertible Notes | Maximum
Preferred Stock
Shares issued upon conversion (in shares)						8,535,000

XML

DESCRIPTION OF BUSINESS

9 Months Ended

Sep. 30, 2019

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

NOTE 1 — DESCRIPTION OF BUSINESS

General Moly, Inc. (“we,” “us,” “our,” “Company,” ”GMI,” or “General Moly”) is a Delaware corporation originally incorporated as General Mines Corporation on November 23, 1925.  We have gone through several name changes and on October 5, 2007, we reincorporated in the State of Delaware (“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 United States Securities and Exchange Commission (“SEC”), General Moly is deemed a successor to Idaho General Mines, Inc.

The Company conducted exploration and evaluation activities from January 1, 2002 until October 4, 2007, when our Board of Directors (“Board”) approved the development of the Mt. Hope molybdenum property (“Mt. Hope Project”) in Eureka County, Nevada.  The Mt. Hope Project is leased and operated by Eureka Moly, LLC, an indirectly held 80% subsidiary of the Company (“EMLLC” or the “LLC”).  The Company is continuing its efforts to both obtain financing for and develop the Mt. Hope Project.  However, the combination of ongoing depressed molybdenum prices, historical challenges to our permits and current liquidity concerns have further delayed development at the Mt. Hope Project. 

Additionally, in late 2018 we completed a 9-hole drill program on the Mt. Hope property, focused on the area where previously identified copper-silver-zinc-mineralized skarns have been identified, immediately adjacent to the Mt. Hope molybdenum deposit.

We also continue to evaluate our Liberty molybdenum and copper property (“Liberty Project”) in Nye County, Nevada.

Liquidity and Management’s Plans

Our current working capital is negative and the Convertible Notes issued in 2014 will become due in December 2019.  See “NOTE 5 – CURRENT DEBT” for further information on the Convertible Notes.  Based on our current operating forecast, which takes into consideration the delays described above, and the fact that we currently do not generate any revenue, the Company does not expect to be able to fund its current operations and meet its financial obligations for a period of at least 12 months from the issuance of these financials.  These conditions raise substantial doubt about the Company’s ability to continue as a going concern.  If we are unable to meet our obligations, we would be forced to cease operations, in which event investors may lose their entire investment in our company.  In July 2019, our largest shareholder, AMER International Group Co., Ltd.  (“AMER”) failed to timely fund and close its obligation to purchase $10 million of common stock from the Company under Tranche 3 of the AMER Investment Agreement and is now in default.  See “Agreement with AMER International Group” below regarding AMER’s default to its obligation with respect to Tranche 3.  As a result of this default, the Company has inadequate cash to continue operations and will have to find funding going forward including pursuing asset sales, short term financing options and, if unsuccessful in obtaining sufficient financing, the possibility of seeking bankruptcy protection.

The Company is currently pursuing a number of options to extend its liquidity to the end of 2019 and into 2020.  Based on our current operating forecast, our current cash on hand, the convertible preferred share purchase agreements implemented in March and August 2019, discussed below, reimbursement from the LLC for the proceeds advanced to fund the water rights settlement, and renegotiation of the outstanding convertible and promissory notes, the Company expects to be able to fund its operations and meet its financial obligations through the end of 2019.  There can be no assurance that the Company will be successful in obtaining the financing required to complete the Mt. Hope Project, or in raising additional financing in the future on terms acceptable to the Company, or at all.

On March 13, 2019, the Company announced that its Board of Directors has retained XMS Capital Partners, Headwall Partners, and Odinbrook Global Advisors (collectively, the “Advisors”), as financial advisors to assist the Board and management with evaluating and recommending strategic alternatives.

The range of strategic alternatives being evaluated include sourcing of potential incremental capital financing, sale of interest(s) in the assets of the Company or the Company itself and restructuring of the Convertible and Non-Convertible Promissory Notes issued in a December 2014 private placement, which mature in December 2019.

Additional potential funding sources for the Company include public or private equity offerings, including sale of other assets wholly-owned by the Company or with EMLLC partner POS-Minerals at the Mt. Hope Project.  The Company is obligated to use a portion of the proceeds from the sales of assets owned by the Company to pre-pay the Convertible and Non-Convertible Promissory Notes. There is no assurance that the Company will be successful in securing additional funding.  This could result in further cost reductions, contract cancellations, and potential delays which ultimately may jeopardize the development of the Mt. Hope Project.

Currently the Company has no plans or intentions to enter into restructuring or liquidation. The Company has engaged the Advisors to assist in securing interim financing and negotiating with debt holders and other potential stakeholders. While the Advisors would have the capability to assist with a restructuring if needed, we do not intend to engage them (or other parties) for these services at this time.

Additional funding for the Mt. Hope Project would allow us to restart equipment procurement and agreements that were suspended or terminated would be renegotiated under current market terms and conditions, as necessary.  In the event of an extended delay related to availability of the Company’s portion of full financing for the Mt. Hope Project, the Company will continue using its best efforts to work with its EMLLC joint venture partner POS-Minerals to revise procurement and construction commitments to preserve liquidity, including Mt. Hope Project equipment deposits and pricing structures.  There can be no assurance that additional funding will be obtained.The Company is currently pursuing a number of options to extend its liquidity to the end of 2019 and into 2020.  Based on our current operating forecast, our current cash on hand, the convertible preferred share purchase agreements implemented in March and August 2019, discussed below, reimbursement from the LLC for the proceeds advanced to fund the water rights settlement, and renegotiation of the outstanding convertible and promissory notes, the Company expects to be able to fund its operations and meet its financial obligations through the end of 2019.  There can be no assurance that the Company will be successful in obtaining the financing required to complete the Mt. Hope Project, or in raising additional financing in the future on terms acceptable to the Company, or at all.

On March 13, 2019, the Company announced that its Board of Directors has retained XMS Capital Partners, Headwall Partners, and Odinbrook Global Advisors (collectively, the “Advisors”), as financial advisors to assist the Board and management with evaluating and recommending strategic alternatives.

The range of strategic alternatives being evaluated include sourcing of potential incremental capital financing, sale of interest(s) in the assets of the Company or the Company itself and restructuring of the Convertible and Non-Convertible Promissory Notes issued in a December 2014 private placement, which mature in December 2019.

Additional potential funding sources for the Company include public or private equity offerings, including sale of other assets wholly-owned by the Company or with EMLLC partner POS-Minerals at the Mt. Hope Project.  The Company is obligated to use a portion of the proceeds from the sales of assets owned by the Company to pre-pay the Convertible and Non-Convertible Promissory Notes. There is no assurance that the Company will be successful in securing additional funding.  This could result in further cost reductions, contract cancellations, and potential delays which ultimately may jeopardize the development of the Mt. Hope Project.

Currently the Company has no plans or intentions to enter into restructuring or liquidation. The Company has engaged the Advisorsto assist in securing interim financing and negotiating with debt holders and other potential stakeholders. While the Advisors would have the capability to assist with a restructuring if needed, we do not intend to engage them (or other parties) for these services at this time.

Additional funding for the Mt. Hope Project would allow us to restart equipment procurement and agreements that were suspended or terminated would be renegotiated under current market terms and conditions, as necessary.  In the event of an extended delay related to availability of the Company’s portion of full financing for the Mt. Hope Project, the Company will continue using its best efforts to work with its EMLLC joint venture partner POS-Minerals to revise procurement and construction commitments to preserve liquidity, including Mt. Hope Project equipment deposits and pricing structures.  There can be no assurance that additional funding will be obtained.

As the cash needs for the development of the Mt. Hope Project are significant, we and/or the LLC will be required to arrange for financing to be combined with funds anticipated to be received from POS-Minerals in order to retain its 20% LLC membership interest.  If we are unsuccessful in obtaining financing, we will not be able to proceed with the development of the Mt. Hope Project.

On April 12, 2017, the Company filed a prospectus supplement in both Canada and the United States which enabled the Company, at its discretion from time to time, to sell up to $20 million worth of common shares by way of an “at-the-market” offering (the “ATM”).  Since the effectiveness of the prospectus supplement by the SEC on April 26, 2017 to September 30, 2019, a total of 1,168,300 common shares have been sold under the ATM, for net proceeds to the Company of $0.5 million.  In October 2018, the Company completed a public offering of 9,125,000 units consisting of one share of common stock and one warrant to purchase one share of common stock resulting in net proceeds to the Company of $1,900,000.  In conjunction with the public offering in October 2018, the Company agreed to suspend the ATM facility for a period of 2 years.

Additionally, on March 28, 2019, the Company executed a Securities Purchase Agreement (the “Series A Purchase Agreement”) with Bruce D. Hansen, the Company’s Chief Executive Officer, and Robert I. Pennington, the Company’s Chief Operating Officer (collectively the “Investors”), effective as of March 21, 2019.  Pursuant to the Series A Purchase Agreement, the Investors agreed to purchase up to $900,000 of convertible shares of Series A Preferred Stock, par value $0.001 per share (the “Series A Convertible Preferred Shares”), of the Company.  The Company requested three separate closings of sales of Series A Convertible Preferred Shares to the Investors between the date of the Series A Purchase Agreement and June 30, 2019.  Each closing was in the amount of $300,000 of Series A Convertible Preferred Shares. 

The Series A Convertible Preferred Shares were priced at $100.00/preferred share, convertible at any time at the holder’s discretion into common shares whereby one preferred share converts at a price of $0.27/common share to 370.37 common shares. The conversion price was set as the closing price of the common stock on March 12, 2019, which was the day before announcement of the private placement. The Series A Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares or a combination thereof.  Upon maturity or full repayment of the $7.2 million Convertible Note debt, described below, currently outstanding, there will be mandatory redemption of the Series A Convertible Preferred Shares into equivalent cash for the principal invested, plus any accrued and unpaid dividends.

On May 2, 2019, the Company also executed a Securities Purchase Agreement (the “MHMI Series A Purchase Agreement”) with Mount Hope Mines, Inc. (“MHMI”), later assigned in part to members of MHMI individually.  Pursuant to the MHMI Series A Purchase Agreement, MHMI agreed to  purchase $500,000 of Series A Convertible Preferred Shares, as  described above.

Like the Investors described above, the Series A Convertible Preferred Shares were issued at a price of $100.00 per share, and each Series A Convertible Preferred Share will be convertible at any time at the holder’s discretion into 370.37 shares of common stock of the Company.  The Series A Convertible Preferred Shares carry a 5% annual dividend, which may be paid, in the Company’s sole discretion, in cash, additional shares or a combination thereof.  Upon maturity or full repayment of the $7.2 million Convertible and Non-Convertible Promissory Note debt currently outstanding, there will be mandatory redemption of the preferred shares into equivalent cash for the principal invested, plus any accrued and unpaid dividends.

On August 5, 2019, the Company executed a Securities Purchase Agreement (the “Series B Purchase Agreement”) with the Investors.  Pursuant to the Series B Purchase Agreement, the Investors agreed to purchase up to $400,000 of convertible shares of Series B Preferred Stock, par value $0.001 per share (the “Series B Convertible Preferred Shares”), of the Company.  This transaction closed on August 7, 2019. 

On September 26, 2019, the Company entered into a 90-day deferral and forbearance agreement with the primary holder of the Convertible Notes, along with certain of the Company’s members of management and directors who participated in the 2014 debt offering.  As a result, the Company deferred approximately $162,000 of interest payments that were due at the end of the third quarter 2019.

On September 27, 2019, the Company and POS-Minerals entered into a Consent Agreement for a reimbursement schedule concerning the approximately $700,000 owed to the Company by the LLC in return for the Company’s advance of funding to settle protests related to the water right applications for the Mt. Hope Project.  Under the Consent Agreement, $200,000  was reimbursed from the Reserve Account, discussed below, to the Company on September 30 and an additional $200,000 was reimbursed in early November.  The remaining amount of approximately $300k will be reimbursed in December, provided that the LLC has sold a minimum of $400,000 in non-critical Mt. Hope Project related equipment.

The Company has reached an agreement in principle (“AiP”) with the holder of $5 million of the Company’s Senior Convertible Promissory Notes and certain other holders of Senior Convertible Notes and Senior Promissory Notes (collectively, the “Senior Notes”) to exchange the Senior Notes for new units consisting of new senior non-convertible promissory notes in the same original principal amount bearing an interest rate between 12-14% and otherwise providing for similar terms (the “Exchange Notes”) and a three-year warrant to purchase Company common stock at $0.35 share (each a “Unit”).  The Exchange Notes will extend the maturity date until December 2022.

In addition to the exchange of Senior Notes, the largest holder of the Senior Notes, as well as the Company’s CEO, Bruce Hansen, have agreed, subject to execution of definitive documentation, to purchase new 13% Senior Promissory Notes due 2022 in the principal amount of $610,000 (representing 10% of the original principal amount of the Senior Notes to be exchanged) providing additional capital to the Company.  At this date, the total principal amount of Senior Notes contemplated to be extended by the AiP is $6.37 million out of the $7.25 million Senior Notes outstanding.  The maturity date for the outstanding Senior Notes is December 26, 2019.

The Company believes these transactions will assist with very near-term liquidity necessary for the Company to operate through the end of 2019 .  However, this does not alleviate the substantial doubt about our ability to continue to operate as a going concern.

We continue to work with our long-lead vendors to manage the timing of contractual payments for milling equipment.  The following table sets forth the LLC’s remaining cash commitments under these equipment contracts (collectively, “Purchase Contracts”) at September 30, 2019 (in millions):

	As of
	September 30,
Year	2019 *
2019	$	—
2020		0.6
Total	$	0.6

*All amounts are commitments of the LLC, and as a result of the agreement between Nevada Moly and POS-Minerals are to be funded by the reserve account, now $4.1 million as discussed above in Note 1, until such time that the Company obtains financing for its portion of construction costs at the Mt. Hope Project or until the reserve account balance is exhausted, and thereafter are to be funded 80% by Nevada Moly and 20% by POS-Minerals.  POS-Minerals remains obligated to make capital contributions for its 20% portion of equipment payments required by approved budgets of the LLC, and such amounts contributed by the reserve account on behalf of POS-Minerals will reduce, dollar for dollar, the amount of capital contributions that the LLC is required to return to POS-Minerals, described under Note 1 above.

If the LLC does not make the payments contractually required under these purchase contracts, it could be subject to claims for breach of contract or to cancellation of the respective purchase contract.  In addition, the LLC may proceed to selectively suspend, cancel or attempt to renegotiate additional purchase contracts, if necessary, to further conserve cash.  If the LLC cancels or breaches any contracts, the LLC will take all appropriate action to minimize any losses, but could be subject to liability under the contracts or applicable law.  The cancellation of certain key contracts could cause a delay in the commencement of operations, and could add to the cost to develop the Company’s interest in the Mt. Hope Project.

Through September 30, 2019, the LLC has made deposits and/or final payments of $88.0 million on equipment orders.  Of these deposits, $71.7 million relate to fully fabricated items, primarily milling equipment, for which the LLC has additional contractual commitments of $0.6 million noted in the table above.  The remaining $16.3 million reflects both partially fabricated milling equipment, and non-refundable deposits on mining equipment.  As discussed in Note 11, the mining equipment agreements remain cancellable with no further liability to the LLC.  The underlying value and recoverability of these deposits and our mining properties in our consolidated balance sheets are dependent on the LLC’s ability to fund development activities that would lead to profitable production and positive cash flow from operations, or proceeds from the sale of these assets. There can be no assurance that the LLC will be successful in generating future profitable operations, selling these assets or that the Company will secure additional funding in the future on terms acceptable to us or at all.  Our consolidated financial statements do not include any adjustments relating to recoverability and classification of recorded assets or liabilities.

All Mt. Hope Project related funding is payable out of the reserve account until exhausted, the balance of which was $4.1 million and $6.2 million at September 30, 2019 and December 31, 2018, respectively.  Corporate general and administrative expenses and costs associated with the maintenance of the Liberty Project are not covered by the Reserve Account.  Additional potential funding sources include public or private equity offerings or sale of other assets owned by the Company and/or the LLC, although a portion of any major asset sales may be owed to POS-Minerals and the senior 2014 note holders.  There is no assurance that the Company will be successful in securing additional funding.  This could result in further cost reductions, contract cancellations, and potential delays which ultimately may jeopardize the development of the Mt. Hope Project.

The Mt. Hope Project

From October 2005 to January 2008, we owned the rights to 100% of the Mt. Hope Project.  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, into EMLLC, and in February 2008 entered into a joint venture agreement (“LLC Agreement”) for the development and operation of the Mt. Hope Project with POS-Minerals Corporation (“POS-Minerals”).  Under the LLC Agreement, POS-Minerals owns a 20% interest in the LLC and General Moly, through Nevada Moly, LLC (“Nevada Moly”), a wholly-owned subsidiary, owns an 80% interest.  The ownership interests and/or required capital contributions under the LLC Agreement can change as discussed below.

Pursuant to the terms of the LLC Agreement, POS-Minerals made its first and second capital contributions to the LLC totaling $100.0 million during the year ended December 31, 2008 (“Initial Contributions”).  Additional amounts of $100.7 million were received from POS-Minerals in December 2012, following receipt of major operating permits for the Mt. Hope Project, including the Record of Decision (“ROD”) from the U.S. Bureau of Land Management (“BLM”).

In addition, under the terms of the LLC Agreement, since commercial production at the Mt. Hope Project was not achieved by December 31, 2011, the LLC will be required to return to POS-Minerals $36.0 million, since reduced to $33.6 million as discussed below, of its capital contributions (“Return of Contributions”), with no corresponding reduction in POS-Minerals’ ownership percentage.  Effective January 1, 2015, as part of a comprehensive agreement concerning the release of the reserve account described below, Nevada Moly and POS-Minerals agreed that the Return of Contributions will be payable to POS-Minerals on December 31, 2020; provided that, at any time on or before November 30, 2020, Nevada Moly and POS-Minerals may agree in writing to extend the due date to December 31, 2021; and if the due date has been so extended, at any time on or before November 30, 2021, Nevada Moly and POS-Minerals may agree in writing to extend the due date to December 31, 2022.  If the repayment date is extended, the unpaid amount will bear interest at a rate per annum of LIBOR plus 5%, which interest shall compound quarterly, commencing on December 31, 2020 through the date of payment in full.  Payments of accrued but unpaid interest, if any, shall be made on the repayment date.  Nevada Moly may elect, on behalf of the Company, to cause the Company to prepay, in whole or in part, the Return of Contributions at any time, without premium or penalty, along with accrued and unpaid interest, if any.

The original Return of Contributions amount due to POS-Minerals is reduced, dollar for dollar, by the amount of capital contributions for equipment payments required from POS-Minerals under approved budgets of the LLC, as discussed further below.  During the period January 1, 2015 to September 30, 2019, this amount has been reduced by $2.4 million, consisting of 20% of an $8.4 million principal payment made on milling equipment in March 2015, a $2.2 million principal payment made on electrical transformers in April 2015, and a $1.2 million principal payment made on milling equipment in April 2016, such that the remaining amount due to POS-Minerals is $33.6 million.  If Nevada Moly does not fund its additional capital contribution in order for the LLC to make the required Return of Contributions to POS-Minerals set forth above, POS-Minerals has an election to either make a secured loan to the LLC to fund the Return of Contributions, or receive an additional interest in the LLC estimated to be 5%.  In the latter case, Nevada Moly’s interest in the LLC is subject to dilution by a percentage equal to the ratio of 1.5 times the amount of the unpaid Return of Contributions over the aggregate amount of deemed capital contributions (as determined under the LLC Agreement) of both parties to the LLC (“Dilution Formula”).  At September 30, 2019, the aggregate amount of deemed capital contributions of both parties was $1,090.3 million.

Furthermore, the LLC Agreement authorizes POS-Minerals to put/sell its interest in the LLC to Nevada Moly after a change of control of Nevada Moly or the Company, as defined in the LLC Agreement, followed by a failure by us or our successor company to use standard mining industry practice in connection with the development and operation of the Mt. Hope Project as contemplated by the parties for a period of twelve (12) consecutive months.  If POS-Minerals exercises its option to put or sell its interest, Nevada Moly or its transferee or surviving entity would be required to purchase the interest for 120% of POS-Minerals’ total contributions to the LLC, which, if not paid timely, would be subject to 10% interest per annum.

Effective January 1, 2015,  Nevada Moly and POS-Minerals signed an amendment to the LLC Agreement under which a separate $36.0 million owed to Nevada Moly, held by the LLC in a reserve account established in December 2012, is being released for the mutual benefit of both members related to the jointly approved Mt. Hope Project expenses through 2021.  In January 2015, the reserve account funded a reimbursement of contributions made by the members during the fourth quarter of 2014, inclusive of $0.7 million to POS-Minerals and $2.7 million to Nevada Moly.  The remaining reserve account funds are now being used to pay ongoing jointly approved expenses of the LLC until the Company obtains full financing for its portion of the Mt. Hope Project construction cost, or until the reserve account is exhausted.  Any remaining funds after financing is obtained will be returned to the Company.  The balance of the reserve account was $4.1 million and $6.2 million at September 30, 2019 and December 31, 2018, respectively.

Agreement with AMER International Group (“AMER”) 

Private Placement

This description of the AMER Investment Agreement is provided as background to the dispute with AMER.  Subsequent to the end of the second quarter, AMER defaulted on its obligation to fund Tranche 3 under the AMER Investment Agreement described in this section.  As announced in April 2015, the Company and AMER entered into a private placement for 40.0 million shares of the Company’s common stock and warrants to purchase 80.0 million shares of the Company’s common stock, priced using the trailing 90-day volume weighted average price (“VWAP”) of $0.50 on April 17, 2015, the date the Investment and Securities Purchase Agreement (“AMER Investment Agreement”) was signed. General Moly received stockholder approval of the transaction at its 2015 Annual Meeting, and of material amendments to the transaction at a special meeting held in December 2017.

On November 2, 2015, the Company and AMER entered into an amendment to the AMER Investment Agreement, utilizing a three-tranche investment.  The first tranche of the amended AMER Investment Agreement closed on November 24, 2015 for a $4.0 million private placement representing 13.3 million shares, priced at $0.30 per share, and warrants (“the AMER Warrants”) to purchase 80.0 million shares of common stock at $0.50 per share, which will become exercisable upon availability of an approximately $700.0 million senior secured loan (“Bank Loan”). The funds received from the $4.0 million private placement were divided evenly between general corporate purposes and an expense reimbursement account available to both AMER and the Company to cover anticipated Mt. Hope financing costs and other jointly sourced business development opportunities. In addition, AMER and General Moly entered into a Stockholder Agreement allowing AMER to nominate a director to the General Moly Board of Directors and additional directors following the close of Tranche 3, discussed below, and drawdown of the Bank Loan.  The Stockholder Agreement also governs amer’s acquisition and transfer of General Moly shares.  Prior to closing the first tranche the parties agreed to eliminate certain conditions to closing.  Following the closing, AMER nominated Tong Zhang to serve as a director of the Company, and he was appointed by the Board of Directors on December 3, 2015.  Mr. Zhang was nominated by the Board of Directors to stand for election at the 2018 General Meeting of Stockholders and was elected by the stockholders to serve as a Class II director for a three (3) year term expiring in 2021, subject to re-election.  On July 29, 2019, Mr. Zhang resigned from the Board of Directors.

On October 16, 2017, the Company and AMER announced the closure of the second tranche of the parties’ three-tranche financing agreement.  At the close of the second tranche, General Moly issued 14.6 million shares to AMER, priced at the volume weighted average price (“VWAP”) for the 30-day period ending August 7, 2017 (the date of the parties’ Amendment No. 2 to the AMER Investment Agreement) of $0.41 per share for a private placement of $6.0 million by AMER.  $5.5 million of the equity sale proceeds were available for general corporate purposes, while $0.5 million was held in the expense reimbursement account established at the close of the first tranche to cover costs related to the Mt. Hope Project financing and other jointly sourced business development opportunities.

The third tranche of the amended investment agreement was to include a $10.0 million private placement representing 20.0 million shares, priced at $0.50 per share (“Tranche 3”).  Closing of Tranche 3 was conditioned upon the earlier of the reissuance of water permits for the Mt. Hope Project or completion of a joint business opportunity involving use of 10.0 million shares of General Moly stock. After closure of the third tranche of the agreement, AMER would have been allowed to nominate a second director to General Moly’s Board of Directors. 

The issuance of shares in connection with the third tranche of the AMER Investment Agreement was approved by General Moly stockholders in December 2017 at a Special Meeting of Stockholders.

The Company and AMER have jointly evaluated other potential opportunities, ranging from outright acquisitions and privatizations, or significant minority interest investments with a focus on base metal and ferro-alloy prospects, where the Company would benefit from management fees, minority equity interests, or the acquisition of both core and non-core assets.  The Company and AMER have considered but not completed any such transactions to date and we are not currently evaluating potential opportunities with AMER.  From commencement of the AMER Investment Agreement in 2015 to September 30, 2019, the Company and AMER spent approximately $2.5 million from the expense reimbursement account described above in connection with such evaluations.

AMER Default on Tranche 3 Private Placement Obligation

The last closing conditions for Tranche 3 under the AMER Investment Agreement included issuance of water permits for the Mt. Hope Project.  The water permits were issued by the Nevada State Engineer on July 24, 2019.  On July 26, 2019, the Company provided formal notice to AMER that the conditions to closing of Tranche 3 had been satisfied, and that AMER would have two business days (until the close of business on Tuesday, July 30, 2019) to close the transaction.  On July 31, 2019, the Company sent a Notice of Default, as AMER failed to fund and close Tranche 3 by the July 30, 2019 deadline.

On August 1, 2019, the Company received a letter from AMER dated July 30, 2019, purporting to terminate the AMER Investment Agreement, referencing its earlier letter received by the Company on July 18, 2019, in which AMER has alleged uncured material adverse effects and alleged breaches of the AMER Investment Agreement by the Company (which include concerns related to US/China relations, concerns regarding the delay in obtaining environmental permits and solvency concerns).  The Company believes such assertions to be inaccurate and wholly without merit under the terms of the AMER Investment Agreement.  As AMER has failed to timely fund and close Tranche 3 and is now in default, the Company believes that AMER’s attempted termination of the AMER Investment Agreement is ineffective.  With AMER’s default with respect to its obligation to fund Tranche 3, the Company will have inadequate cash to continue operations and will have to evaluate its options going forward, including pursuing asset sales, short-term financing options and, if unsuccessful in obtaining sufficient financing, the possibility of seeking bankruptcy protection.  General Moly is seeking immediate sources of liquidity and is evaluating potential strategic alternatives, including sourcing of potential incremental capital financing, sale of interest(s) in the assets of the Company or the Company, and restructuring of the convertible and non-convertible debt from the 2014 private placement, which matures in December 2019. 

On August 28, 2019, the Company engaged King & Spalding, an international arbitration and litigation firm, to represent the Company in its dispute against AMER for AMER’s default under the amended Investment Securities Purchase Agreement (“Agreement”).  The Company formally notified AMER that a dispute exists between the parties as a result of their failure to close Tranche 3.  The notification requires that one representative of each of the executive management of the parties be designated and authorized to attempt to settle the Dispute and the representatives are to meet in good faith to resolve the Dispute.  If the designated representatives do not resolve the Dispute within 10 business days after delivery of the Notice, the Dispute will be subject to resolution by binding arbitration, pursuant to the AMER Investment Agreement.  Any arbitration is to be held in Hong Kong under the rules of the International Chamber of Commerce.

On October 14, 2019, the Company announced that it had entered into an agreement with AMER to extend the dispute negotiation period (“Extension Agreement”).  Under the terms of the Extension Agreement, the Company received $300,000 from AMER in exchange for an extension of the negotiation period to November 15, 2019, on which date the Company’s CEO Bruce Hansen and AMER Chairman Wang Wenyin met to discuss settlement options.  With the payment, AMER shall have the right, at its option, to credit the Extension Fee among the following: (1) credit against a final negotiated settlement; (2) credit against any AMER payment obligation to the Company, pursuant to an arbitration award; or (3) apply the Extension Fee as consideration for the purchase of the Company’s common stock, priced at the 30-day volume weighted average price, as of the date immediately prior to the date that AMER demands delivery of such shares.  As announced on November 19, 2019, the Company and AMER are continuing negotiations and hope to reach a mutually beneficial resolution within the next two weeks.

Bank Loan

Subject to AMER’s purported termination of, and as set forth in the AMER Investment Agreement, AMER had agreed to work cooperatively with the Company upon the return of sustained improved molybdenum prices and the receipt of our water permits to procure and support a senior secured term loan (“Bank Loan”) of approximately $700 million from a major Chinese bank or banks for the development of the Mt. Hope Project, and to provide a guarantee for the Bank Loan.  As indicated above, AMER defaulted on Tranche 3 of the AMER Investment Agreement in July 2019.  Based on this default, the Company believes that it will be required to secure alternative financing for the development of the Mt. Hope Project and is currently exploring options.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2019	Dec. 31, 2018
CONSOLIDATED BALANCE SHEETS
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	650,000,000	650,000,000
Common stock, shares issued	138,220,332	137,114,804
Common stock, shares outstanding	138,220,332	137,114,804

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CURRENT DEBT - Convertible Debt (Details)	1 Months Ended	9 Months Ended	12 Months Ended
	Dec. 31, 2014 USD ($) item installment $ / shares shares	Sep. 30, 2019 USD ($) security shares	Dec. 31, 2015 USD ($) $ / shares shares
Convertible Debt
Number of units issued | shares	85,350
Convertible notes issued	$ 8,500,000
Number of instruments used as a basis for the fair value of a transaction | installment	2
Discounts and offering expenses	$ 500,000
Percentage of proceeds from the sale of assets held for repay debt	50.00%
Deferred interest payment		$ 162,000
Warrants
Convertible Debt
Additional paid in capital recorded	$ 800,000
Reduction to additional paid in capital	$ 100,000
Convertible Notes
Convertible Debt
Number of units issued to related parties | shares	23,750
Convertible notes issued		$ 7,200,000
Net proceeds from the sale of the Notes	$ 8,000,000
Discounts and offering expenses	$ 400,000
Debt instrument interest rate (as a percent)	10.00%
U.S. Treasury securities Floor (as a percent)	0.25%
Percentage of proceeds from the sale of assets held for repay debt	50.00%
Amount held for repay debt	$ 250,000
Percentage of convertible debt average VWAP	80.00%
Number of business days considered for calculating average VWAP | item	30
Shares issued upon conversion (in shares) | shares		2,625,000	2,625,000
Percentage of convertible shares on outstanding shares	9.30%
Convertible share price (in dollars per share) | $ / shares	$ 0.32
Debt instrument repurchase price percentage	100.00%
Aggregate principal amount		$ 2,600,000	$ 2,600,000
Remaining amount of notes available for conversion			5,900,000
Annual reduction in interest payments		$ 200,000	$ 200,000
Number of embedded derivatives | security		1
Convertible notes	$ 7,700,000
Convertible Notes | Maximum
Convertible Debt
Conversion ratio (in shares)	100
Shares issued upon conversion (in shares) | shares	8,535,000
Convertible share price (in dollars per share) | $ / shares	$ 0.32		$ 0.5485
Convertible Notes | Minimum
Convertible Debt
Convertible share price (in dollars per share) | $ / shares			$ 0.3462
Non-convertible Promissory Note
Convertible Debt
Debt instrument interest rate (as a percent)			10.00%
Senior Promissory Notes issued		$ 1,300,000	$ 1,300,000

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Stock-based Compensation (Details)	9 Months Ended
	Sep. 30, 2019
Stock-based Compensation
Expiration period from date of vesting	5 years
Maximum
Stock-based Compensation
Vesting period	3 years