**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

 

**FORM 10-Q**

 

| **x** | ** ** | **QUARTERLY REPORT UNDER SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|------------|--------------------------------------------------------------------------------------------------|

 

**For the quarterly period endedJune 30, 2009**

 

| **o** | ** ** | **TRANSITION REPORT UNDER SECTION 13 OR  15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |
|-------|------------|---------------------------------------------------------------------------------------------------|

 

**For the transition period from**                     to

** **

**Commission File Number: 001-32986**

** **

**GeneralMoly, Inc.**

**(Exactname 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 115Lakewood, CO 80401Telephone:  (303) 928-8599**(Addressand telephone number of principal executive offices)

** **

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 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 suchreports), and (2) has been subject to such filing requirements for atleast the past 90 days.  **YES ****x**** NO ****o**

 

Indicate by check mark whether the registrant has submittedelectronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files).  **YES ****o**** NO ****o**

 

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

 

| Large accelerated filer o              |   | Accelerated filer x         |
|---------------------------------------------|--------|----------------------------------|
|                                        |   |                             |
| Non-accelerated filer o                |   | Smaller reporting company o |
| (Do not check if smaller reporting company) |   |                             |

 

Indicate by check markwhether the registrant is a shell company (as defined in Rule 12b-2 of theExchange Act).  **YES ****o**** NO ****x**

 

The number of shares outstandingof registrant’s common stock as of July 31, 2009 was 72,376,538.

 

 

 

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**PART I - FINANCIAL INFORMATION**

** **

**ITEM 1.  FINANCIALSTATEMENTS**

 

**GENERAL MOLY, INC.(A DEVELOPMENT STAGE COMPANY)CONDENSED CONSOLIDATED BALANCE SHEETS**

**(Unaudited - Dollars in thousands except per shareamounts)**

 
| ** **                                                                                                                                 | ** ** | **June 30,  2009** | ** ** | **December 31,  2008** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------|------------|-------------------------|------------|-----------------------------|------------|
| **ASSETS**                                                                                                                                 |       |                    |       |                        |       |
| CURRENT ASSETS                                                                                                                             |       |                    |       |                        |       |
| Cash and cash equivalents                                                                                                                  |       | $                       | 69,968     |                        | $          | 78,462 |   |
| Restricted cash — Eureka Moly, LLC                                                                                                    |       | 131                     |       | 13,915                      |       |
| Deposits, prepaid expenses and other current assets                                                                                        |       | 319                     |       | 326                         |       |
| Total Current Assets                                                                                                                       |       | 70,418                  |       | 92,703                      |       |
| Mining properties, land and water rights (Note 4)                                                                                          |       | 95,894                  |       | 79,292                      |       |
| Deposits on project property, plant and equipment                                                                                          |       | 32,468                  |       | 31,499                      |       |
| Restricted cash held for electricity transmission                                                                                          |       | 12,286                  |       | 12,545                      |       |
| Restricted cash held for reclamation bonds                                                                                                 |       | 1,133                   |       | 1,133                       |       |
| Non-mining property and equipment, net                                                                                                     |       | 658                     |       | 763                         |       |
| Other assets                                                                                                                               |       | 2,994                   |       | 2,994                       |       |
| TOTAL ASSETS                                                                                                                               |       | $                       | 215,851    |                        | $          | 220,929 |   |
| ** **                                                                                                                                 |       |                    |       |                        |       |
| **LIABILITIES AND EQUITY**                                                                                                                 |       |                    |       |                        |       |
| CURRENT LIABILITIES                                                                                                                        |       |                    |       |                        |       |
| Accounts payable and accrued liabilities                                                                                                   |       | $                       | 7,038      |                        | $          | 6,692 |   |
| Current portion of long term debt                                                                                                          |       | 126                     |       | 128                         |       |
| Total Current Liabilities                                                                                                                  |       | 7,164                   |       | 6,820                       |       |
| Provision for post closure reclamation and remediation costs                                                                               |       | 586                     |       | 731                         |       |
| Deferred revenue                                                                                                                           |       | 100                     |       | —                      |       |
| Long term debt, net of current portion                                                                                                     |       | 267                     |       | 330                         |       |
| Total Liabilities                                                                                                                          |       | 8,117                   |       | 7,881                       |       |
|                                                                                                                                       |       |                    |       |                        |       |
| COMMITMENTS AND CONTINGENCIES (Note 9)                                                                                                     |       | —                  |       | —                      |       |
|                                                                                                                                       |       |                    |       |                        |       |
| EQUITY                                                                                                                                     |       |                    |       |                        |       |
| General Moly, Inc. stockholders’ equity                                                                                          |       |                    |       |                        |       |
| Preferred stock, Series A, $0.001 par value;  10,000,000 shares authorized, no shares issued and outstanding                |       | —                  |       | —                      |       |
| Common stock, $0.001 par value; 200,000,000 shares authorized,  72,376,538 and 71,852,646 shares issued and outstanding, respectively |       | 72                      |       | 72                          |       |
| Additional paid-in capital                                                                                                                 |       | 185,858                 |       | 185,179                     |       |
| Accumulated deficit before exploration stage                                                                                               |       | (213                    | )          | (213                        | )          |
| Accumulated deficit during exploration and development stage                                                                               |       | (77,744                 | )          | (71,990                     | )          |
| Total General Moly, Inc. stockholders’ equity                                                                                    |       | 107,973                 |       | 113,048                     |       |
| Noncontrolling interest                                                                                                                    |       | 99,761                  |       | 100,000                     |       |
| Total Equity (Note 7)                                                                                                                      |       | 207,734                 |       | 213,048                     |       |
| **TOTAL LIABILITIES AND EQUITY**                                                                                                           |       | $                       | 215,851    |                        | $          | 220,929 |   |

 

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

 

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**GENERAL MOLY, INC.(A DEVELOPMENT STAGE COMPANY)CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS**

**(Unaudited - In thousands, except per share amounts)**

 
| ** **                                                                         | ** ** | **Three Months Ended**  | ** ** | **Six Months Ended**    | ** ** | **January 1, 2002  (Inception of  Exploration** | ** ** |
|------------------------------------------------------------------------------------|------------|-------------------------|------------|-------------------------|------------|------------------------------------------------------|------------|
| ** **                                                                         | ** ** | **June 30,  2009** | ** ** | **June 30,  2008** | ** ** | **June 30,  2009**                              | ** ** | **June 30,  2008** | ** ** | **Stage) to June 30,  2009** | ** ** |
|                                                                               |       |                    |       |                    |       |                                                 |       |   |   |   |   |
| REVENUES                                                                           |       | $                       | —     |                    | $          | —                                               |       | $ | — |   | $ | — |   | $ | — |   |
| OPERATING  EXPENSES:                                                               |       |                    |       |                    |       |                                                 |       |   |   |   |   |
| Exploration  and evaluation                                                        |       | 166                     |       | 1,662                   |       | 364                                                  |       | 4,187 |   | 37,068 |   |
| General  and administrative expense                                                |       | 2,724                   |       | 2,690                   |       | 5,637                                                |       | 5,914 |   | 44,920 |   |
| TOTAL  OPERATING EXPENSES                                                          |       | 2,890                   |       | 4,352                   |       | 6,001                                                |       | 10,101 |   | 81,988 |   |
| LOSS  FROM OPERATIONS                                                              |       | (2,890                  | )          | (4,352                  | )          | (6,001                                               | )          | (10,101 | ) | (81,988 | ) |
| OTHER  INCOME                                                                      |       |                    |       |                    |       |                                                 |       |   |   |   |   |
| Interest  and dividend income                                                      |       | —                  |       | 503                     |       | 8                                                    |       | 1,033 |   | 3,940 |   |
| Other  income                                                                      |       | —                  |       | —                  |       | —                                               |       | — |   | 65 |   |
| TOTAL  OTHER INCOME                                                                |       | —                  |       | 503                     |       | 8                                                    |       | 1,033 |   | 4,005 |   |
| LOSS  BEFORE TAXES                                                                 |       | (2,890                  | )          | (3,849                  | )          | (5,993                                               | )          | (9,068 | ) | (77,983 | ) |
| INCOME  TAXES                                                                      |       | —                  |       | —                  |       | —                                               |       | — |   | — |   |
| CONSOLIDATEDNET LOSS                                                               |       | $                       | (2,890     | )                       | $          | (3,849                                               | )          | $ | (5,993 | ) | $ | (9,068 | ) | $ | (77,983 | ) |
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING  INTEREST                            |       | 136                     |       | —                  |       | 239                                                  |       | — |   | 239 |   |
| NET LOSS ATTRIBUTABLE TO GENERAL MOLY, INC.                                        |       | $                       | (2,754     | )                       | $          | (3,849                                               | )          | $ | (5,754 | ) | $ | (9,068 | ) | $ | (77,744 | ) |
|                                                                               |       |                    |       |                    |       |                                                 |       |   |   |   |   |
| BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO GENERAL  MOLY PER SHARE OF COMMON STOCK |       | $                       | (0.04      | )                       | $          | (0.05                                                | )          | $ | (0.08 | ) | $ | (0.13 | ) |   |   |
|                                                                               |       |                    |       |                    |       |                                                 |       |   |   |   |   |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES  OUTSTANDING — BASIC AND DILUTED     |       | 72,104                  |       | 70,957                  |       | 72,034                                               |       | 68,805 |   |   |   |

** **

Theaccompanying notes are an integral part of these condensed consolidatedfinancial statements.

 

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**GENERAL MOLY, INC.(A DEVELOPMENT STAGE COMPANY)CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(Unaudited — In thousands)**

 
| ** **                                                                                     | ** ** | ** **           | ** ** | ** **         | ** ** | **January 1,  2002** | ** ** |
|------------------------------------------------------------------------------------------------|------------|----------------------|------------|--------------------|------------|---------------------------|------------|
| ** **                                                                                     | ** ** | ** **           | ** ** | ** **         | ** ** | **(Inception of**    | ** ** |
| ** **                                                                                     | ** ** | ** **           | ** ** | ** **         | ** ** | **Exploration**           | ** ** |
| ** **                                                                                     | ** ** | **Six Months Ended** | ** ** | **Stage) to** | ** ** |
| ** **                                                                                     | ** ** | **June 30,**    | ** ** | **June 30,**  | ** ** | **June 30,**         | ** ** |
|                                                                                           |       | **2009**             |       | **2008**           |       | **2009**                  |       |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                          |       |                 |       |               |       |                      |       |
| Consolidated Net loss                                                                          |       | $                    | (5,993     | )                  | $          | (9,068                    | )          | $ | (77,983 | ) |
| Adjustments to reconcile net loss to net cash used by operating  activities:                   |       |                 |       |               |       |                      |       |
|                                                                                           |       |                 |       |               |       |                      |       |
| Services and expenses paid with common stock                                                   |       | —               |       | —             |       | 1,990                     |       |
| Writedown of deposits on property, plant and equipment                                         |       | 378                  |       | —             |       | 378                       |       |
| Depreciation and amortization                                                                  |       | 173                  |       | 149                |       | 726                       |       |
| Equity compensation for employees and directors                                                |       | 257                  |       | 1,580              |       | 12,241                    |       |
| Decrease (increase) in deposits, prepaid expenses and other                                    |       | 5                    |       | 301                |       | (229                      | )          |
| Decrease (increase) in restricted cash held for electricity  transmission                      |       | 259                  |       | —             |       | (12,286                   | )          |
| Increase in accounts payable and accrued liabilities                                           |       | 346                  |       | 3,125              |       | 7,016                     |       |
| (Decrease) increase in post closure reclamation and remediation costs                          |       | (145                 | )          | 88                 |       | 377                       |       |
| Net cash used by operating activities                                                          |       | (4,720               | )          | (3,825             | )          | (67,770                   | )          |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                          |       |                 |       |               |       |                      |       |
| Payments for the purchase of equipment                                                         |       | —               |       | (168               | )          | (1,324                    | )          |
| Purchase of securities                                                                         |       | —               |       | —             |       | (137                      | )          |
| Purchase and development of mining properties, land and water rights                           |       | (16,312              | )          | (17,461            | )          | (90,066                   | )          |
| Deposits on property, plant and equipment                                                      |       | (1,346               | )          | (19,374            | )          | (32,845                   | )          |
| Proceeds from option to purchase agreement                                                     |       | 100                  |       | —             |       | 100                       |       |
| (Increase) in restricted cash held for reclamation bonds                                       |       | —               |       | (351               | )          | (642                      | )          |
| Cash provided by sale of marketable securities                                                 |       | —               |       | —             |       | 246                       |       |
| Net cash used by investing activities                                                          |       | (17,558              | )          | (37,354            | )          | (124,668                  | )          |
|                                                                                           |       |                 |       |               |       |                      |       |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                          |       |                 |       |               |       |                      |       |
| Proceeds from issuance of stock, net of issuance costs                                         |       | 63                   |       | 20,172             |       | 165,168                   |       |
| Cash proceeds from POS-Minerals Corporation                                                    |       | —               |       | 100,000            |       | 100,000                   |       |
| Cash paid to POS-Minerals Corporation for purchase price adjustment                            |       | —               |       | —             |       | (2,994                    | )          |
| Decrease (increase) in restricted cash — Eureka Moly, LLC                                 |       | 13,784               |       | (73,621            | )          | (131                      | )          |
| Net (decrease) increase in debt                                                                |       | (63                  | )          | 2                  |       | 317                       |       |
| Net cash provided by financing activities                                                      |       | 13,784               |       | 46,553             |       | 262,360                   |       |
| Net (decrease) increase in cash and cash equivalents                                           |       | (8,494               | )          | 5,374              |       | 69,922                    |       |
| Cash and cash equivalents, beginning of period                                                 |       | 78,462               |       | 78,371             |       | 46                        |       |
| Cash and cash equivalents, end of period                                                       |       | $                    | 69,968     |               | $          | 83,745                    |       | $ | 69,968 |   |
|                                                                                           |       |                 |       |               |       |                      |       |
| NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                   |       |                 |       |               |       |                      |       |
| Equity compensation capitalized as development                                                 |       | $                    | 358        |               | $          | 1,071                     |       | $ | 4,487 |   |
| Restricted cash held for reclamation bond acquired in an acquisition                           |       | —               |       | —             |       | 491                       |       |
| Post closure reclamation and remediation costs and accounts payable  assumed in an acquisition |       | —               |       | —             |       | 263                       |       |
| **Common  stock and warrants issued for property and equipment**                               | ** ** | **—**           | ** ** | **—**         | ** ** | **1,586**                 | ** ** |

 

**Theaccompanying notes are an integral part of these consolidated condensedfinancial statements.**

 

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**GENERAL MOLY, INC.(A DEVELOPMENT STAGE COMPANY)**

** **

**NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS**

** **

**NOTE 1 — DESCRIPTION OFBUSINESS**

** **

GeneralMoly, Inc. (“we”, “us”, “our”, “the Company”, or “General Moly”) is aDelaware corporation originally incorporated as General Mines Corporation on November 23,1925.  In 1966, the Company amended itsarticles of incorporation to change its name to Idaho General Petroleum andMines Corporation, and amended its articles again in 1967 changing its name toIdaho General Mines, Inc. On October 5, 2007, we reincorporated inthe State of Delaware (the “Reincorporation”) through a merger involving IdahoGeneral Mines, Inc. and General Moly, Inc., a Delaware corporationthat was a wholly owned subsidiary of Idaho General Mines, Inc. TheReincorporation was effected by merging Idaho General Mines, Inc. with andinto General Moly, with General Moly being the surviving entity.  For purposes of the Company’s reportingstatus with the Securities and Exchange Commission, General Moly is deemed asuccessor to Idaho General Mines, Inc.

 

Wewere in the exploration stage until October 4, 2007 when our Board ofDirectors (the “Board”) approved the development of the Mt. Hope molybdenumproperty (the “Mt. Hope Project”) in Eureka County, Nevada.  The Company is now in the development stageand is currently proceeding with the development of the Mt. Hope Project.  We are also in a care and maintenance mode onour Liberty molybdenum property (the “Liberty Property”) in Nye County, Nevada. In addition, we have certain other,non-core, mineral interests in the Western United States that we are currentlyevaluating for potential development or sale.

 

Certainamounts for the period ended December 31, 2008 have been reclassified toconform to the 2009 presentation.

 

**The Mt. Hope Joint Venture.**  From October 2005to January 2008, we owned the rights to 100% of the Mt. Hope Project.  Effective as of January 1, 2008, wecontributed all of our interest in the assets related to the Mt. Hope Project, includingour lease of the Mt. Hope Project into a newly formed entity, Eureka Moly, LLC,a Delaware limited liability company (“Eureka Moly”), and in February 2008(the “Closing Date”) entered into a joint venture for the development andoperation of the Mt. Hope Project (the “Joint Venture”) with POS-MineralsCorporation (“POS-Minerals”) an affiliate of POSCO, a large Korean steelcompany.  Under the Joint Venture,POS-Minerals owns a 20% interest in Eureka Moly and General Moly, through awholly-owned subsidiary, owns an 80% interest. These ownership interests and/or required contributions under the JointVenture can change as discussed below.

 

Pursuantto the terms of the Joint Venture, POS-Minerals made its first and second cashcontributions to the Joint Venture totaling $100.0 million during the yearended December 31, 2008 (the “Initial Contributions”).  Additional amounts will be due fromPOS-Minerals within 15 days after the date (the “ROD Contribution Date”) thatspecified conditions (the “ROD Contribution Conditions”) have beensatisfied.  The ROD ContributionConditions are the receipt of major operating permits for the project, that theRecord of Decision (the “ROD”) from the United States Bureau of Land Management(“BLM”) for the project has become effective, and any administrative orjudicial appeals with respect thereto are final.  We are currently targeting the effectivenessof the ROD and the satisfaction of the ROD Contribution Conditions to occur in mid-year2010, but circumstances beyond our control, including BLM or other agencydelays or requests for additional information or studies, and requests forreview or appeals of the BLM decision, could cause the effectiveness of the RODand/or the satisfaction of the ROD Contribution Conditions to be delayed.

 

Ourcurrent forecast of the ROD Contribution Date occurring after December 31,2009 allows POS-Minerals to elect to either retain its 20% share bycontributing an additional $56.0 million plus its 20% share of all JointVenture costs incurred from the Closing Date to the ROD Contribution Date orreduce its ownership interest to 13% and fund its remaining 13% share of allJoint Venture costs incurred from the Closing Date to the ROD ContributionDate.  Such an election has not been madeby POS-Minerals, but is required to be made prior to January 31, 2010.

 

5

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Inaddition, if commercial production at the Mt. Hope Project is not achieved by December 31,2011 for reasons other than a force majeure event, Eureka Moly may be requiredto return to POS-Minerals a portion of its contributions to the Joint Venture,with no corresponding reduction in POS-Minerals’ ownership percentage, based onits election prior to January 31, 2010 as to its third contribution.  Based on our current plan and expectedtimetable, it is unlikely the Mt. Hope Project will achieve commercialproduction by December 31, 2011.  IfPOS-Minerals elects to retain its 20% interest and makes its additional $56.0million contribution, the return of contributions will be $36.0 million.  If POS-Minerals elects to retain its 20%interest but does not make its additional $56.0 million contribution, thereturn of contributions will be zero. If POS-Minerals elects to reduce itsownership interest to 13%, the return of contributions will be $33.0million.  Such return of contributions isrequired to be made on or prior to January 27, 2012.  Our subsidiary that holds our interest in theJoint Venture is obligated under the terms of the Joint Venture to make capitalcontributions to fund the return of contributions to POS-Minerals, ifrequired.  If our subsidiary does notmake these capital contributions, our interest in the Joint Venture is subjectto dilution by a percentage equal to the ratio of 1.5 times the amount of theunpaid contributions over the aggregate amount of deemed capital contributions(as determined under the Joint Venture agreement) of both parties to the JointVenture (the “Dilution Formula”).  At June 30,2009, the aggregate amount of deemed capital contributions of both parties was$950 million.

 

Of theInitial Contributions of $100.0 million that were made by POS-Minerals during2008, $0.1 million remain available to fund the Mt. Hope Project JointVenture costs.  We are required, pursuantto the terms of the Joint Venture, to advance funds required to pay costs forthe development of the Mt. Hope Project that exceed the Initial Contributionsuntil the ROD Contribution Date, at which point the contributions describedabove to be made by POS-Minerals will be applied to reimburse us forPOS-Minerals’ share of such development costs. All costs incurred after the ROD Contribution Date will be allocated andfunded pro rata based on each party’s ownership interest.  The interest of a party in the Joint Venturethat does not make its pro rata capital contributions to fund costs incurredafter the ROD Contribution Date is subject to dilution based on the DilutionFormula.

 

**NOTE 2 — LIQUIDITY,CAPITAL REQUIREMENTS AND RESTRUCTURING**

** **

Ourcash balance at June 30, 2009 was $70.0 million compared to$78.5 million at December 31, 2008. Additionally we have $0.1 million of restricted cash that represents theunspent amount of the Initial Contributions from POS-Minerals that is availablefor the continuing development of the Mt. Hope Project compared to $13.9million at December 31, 2008.

 

Thecash needs for the development of the Mt. Hope Project require that we orEureka Moly obtain project financing or other significant financing in additionto the capital contributions anticipated to be received from POS-Minerals.  The aggregate amount of additional financingrequired for the development of the Mt. Hope Project, minus the amountsanticipated to be received from POS-Minerals on the ROD Contribution Date isanticipated to range between $715 million and $850 million, depending on theelection made by POS-Minerals to either retain its current 20% interest orreduce its interest in the Joint Venture to 13%.  These amounts do not include financing costsor amounts necessary to fund operating working capital.

 

During2008, we engaged Barclays Capital and Credit Suisse Securities (USA) LLC toassist in our efforts to pursue project financing for the Mt. HopeProject.  Additionally, the Company has engagedCutfield Freeman & Co., a London-based financial advisory firm, toassist the Company in primarily seeking bi-lateral agency and off-take relatedfinancing to potentially augment the projected bank financing.  Our ability to obtain such project and / oragency financing depends on the effectiveness and the timing of the ROD, theanticipated price of molybdenum, our projected operating costs and the overallstate of the economy and the credit markets.

 

The2008 disruptions in national and international credit markets have led to veryilliquid and volatile conditions.  Thereis a scarcity of credit and lenders are imposing tighter lending standards andhigher interest costs for loans.  Ourability to obtain the necessary funding for the Mt. Hope Project as well as theterms for such funding may be adversely affected by these disruptions in thecredit markets.  We may not be able toobtain the necessary financing for the Mt. Hope Project in a timelymanner, on customary or favorable terms, or at all.

 

Giventhe continued uncertainty in the project finance market, low molybdenum pricesat the time, and a longer than expected timeframe to receive the federalpermits to begin construction at the Mt. Hope project, on March 26, 

 

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2009, we implemented a cash conservation plan toreduce expenditures and conserve cash for 2009 and 2010 in order to maximizefinancial flexibility.  With our June 30,2009 consolidated cash balance of $70.1 million, we have the capacity tocontinue our current level of permitting efforts, maintain efforts to secureproject financing, and secure and hold the most critical long lead equipmentfor the ultimate construction of the Mt. Hope project.

 

TheCompany has purchase orders for two types of equipment — milling processequipment and mining equipment.  Mostequipment orders for the custom-built grinding and other milling processequipment will be completed by the manufacturers and stored.  The grinding and milling process equipmentrequire the longest lead times and maintaining these orders is critical to theCompany’s ability to re-start the development of Mt. Hope rapidly.  With respect to the remaining milling processequipment, the manufacturers have agreed to suspend fabrication of theequipment.  The Company has negotiatedwith the manufacturers regarding equipment fabrication costs incurred to date,storage costs, and the expected timing of restarting fabrication.

 

Basedon our current plan, expected timetable, and the results of such negotiations,we expect to make additional payments of approximately $45 million undermilling process equipment orders through the end of 2010, and $6 million in2011.  As additional financing is securedand equipment procurement is restarted, agreements that were suspended will berenegotiated under new market terms and conditions.  For the gyratory crusher, SAG and ball millsand related electric mill drives, and some other long-lead equipment, we willown the equipment with final payments occurring throughout 2009 and 2010.  This strategy will allow for a rapid restartof the project development at anytime in 2010.

 

Someorders for mining equipment have been cancelled, and discussions with theremaining suppliers to either cancel or suspend existing agreements areongoing.  The lead times and costsassociated with many of these items have declined in recent months.  Once sufficient financing is secured, theCompany anticipates placing orders for this mining equipment again.  The Company will continue to evaluate alloptions to decrease Mt. Hope’s initial capital requirement and facilitate arapid re-start of the project development.

 

Thecash conservation plan will reduce our total cash utilization for generaladministration and overhead to approximately $1 million per month by the fourthquarter of this year.  Based on ourcurrent cash on hand, the Company expects it will have adequate liquidity foroperations through the end of 2010. Engineering efforts, approximately 60% complete, were suspended in thesecond quarter of 2009, pending the completion of financing.

 

Thecash conservation plan also impacted General Moly employees and contractorsupport.  In March 2009, the Companyinitiated plans to reduce administrative expenses by $5 million per year througha combination of compensation restructuring and position eliminations.  The majority of costs associated withtermination benefits were recognized in March, 2009 although additional costsof $0.1 million were recognized during the second quarter for a few affectedemployees who rendered services beyond 60 days.

 

Wealso incurred approximately $0.7 million in equipment contract cancellationcosts during the second quarter of 2009. Such costs were a combination of deposits forfeited and costs to cancelcontracts.  At June 30, 2009, themajority of equipment contracts had been settled with vendors to buyout(critical equipment), cancel or suspend. We expect that the remaining outstanding contracts that are stillpending final resolution, for both process and mining equipment, will besettled by the end of the third quarter of 2009.

 

Whilewe do not expect to achieve full project financing until credit markets and theoutlook for molybdenum prices improve, we are continuing to evaluate a numberof potential sources for capital, including the possibility of a sale ofanother minority interest in the Mt. Hope Project, additional support fromcurrent strategic partners, off-take related debt, and debt from privateinvestment groups, as well as the capital markets.

 

Oncethe ROD is effective, additional capital will be required through thecommencement of commercial production at the Mt. Hope Project.  Our ability to develop the project isdependent on, among other things, our ability to raise the necessary capital tofund the Mt. Hope Project both in sufficient amount and in a timelymanner.  Additionally, if the currentlyestimated costs of the Mt. Hope Project are exceeded we will need to raiseadditional capital to fund such overruns. The Company is currently, and will on an ongoing basis be, pursuing themost efficient sources of funding for the project including, but not limitedto, the equity markets, the bank project finance markets, bi-lateral agencyfinancing and the high yield capital debt markets.

 

7

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Wealso require additional capital to maintain our mining claims and other rightsrelated to the Liberty Property, as well as continue payment of ongoing generaland administrative costs associated with supporting our operations.

 

**NOTE 3 — SUMMARY OFSIGNIFICANT ACCOUNTING POLICIES**

** **

Theinterim Condensed Consolidated Financial Statements of the Company areunaudited.  In the opinion of management,all adjustments and disclosures necessary for a fair presentation of theseinterim statements have been included. All such adjustments are, in the opinion of management, of a normalrecurring nature except for the adoption of the new accounting standardsdiscussed below.  The Company hasevaluated all subsequent events through August 4, 2009, the filing date ofthis Form 10-Q, and the issuance of our financial statements.  The results reported in these interimCondensed Consolidated Financial Statements are not necessarily indicative ofthe results that may be reported for the entire year.  These interim Condensed ConsolidatedFinancial Statements should be read in conjunction with the ConsolidatedFinancial Statements included in our Annual Report on Form 10-K for theyear ended December 31, 2008.

 

Thissummary of significant accounting policies is presented to assist inunderstanding the financial statements. The financial statements and notes are representations of the Company’smanagement, which is responsible for their integrity and objectivity.  These accounting policies conform toaccounting principles generally accepted in the United States of America andhave been consistently applied in the preparation of the financial statements.

 

*Change in Accounting Principle*

 

Ourfinancial statements are prepared using the accrual basis of accounting inaccordance with accounting principles generally accepted in the United Statesof America.  At December 31, 2007,all of our subsidiaries were wholly owned. In February 2008, we entered into the Joint Venture which establishesour ownership interest in Eureka Moly at 80%. At June 30, 2009 and December 31, 2008, the consolidatedfinancial statements include all of our wholly owned subsidiaries and ourmajority owned Joint Venture Eureka Moly. On January 1, 2009, we adopted Statement of Financial AccountingStandards No. 160 - Noncontrolling Interests in Consolidated FinancialStatements — an amendment of ARB No. 51 (SFAS No. 160), theprovisions of which, among others, requires that minority interests be renamednoncontrolling interests and that a company present such noncontrollinginterests as equity for all periods presented. The POS-Minerals contributions attributable to their 20% interest areshown as noncontrolling interest in the condensed consolidated financial statements.   The prior periods presented have also beenreclassified to conform to the current classification required by SFAS No. 160.

 

*Estimates*

 

Theprocess of preparing consolidated financial statements requires the use ofestimates and assumptions regarding certain types of assets, liabilities,revenues, and expenses.  Such estimatesprimarily relate to unsettled transactions and events as of the date of thefinancial statements.  Accordingly, uponsettlement, actual results may differ from estimated amounts.

 

*Cash and Cash Equivalents*

 

Weconsider all highly liquid investments with original maturities of three monthsor less to be cash equivalents.  Therestricted cash of Eureka Moly represents the unspent amount of thePOS-Minerals contributions, which are available for the continuing developmentof the Mt. Hope Project.  The Company’scash equivalent instruments are classified within Level 1 of the fair valuehierarchy established by SFAS No. 157 because they are valued based onquoted market prices in active markets. These cash instruments included $60.0 million in U.S. Treasurysecurities at June 30, 2009.

 

*Exploration and Development Stage Activities*

 

We were in theexploration stage from January 2002 until October 4, 2007.  On October 4, 2007, our Board ofDirectors approved the development of the Mt. Hope Project as contemplatedin the Bankable Feasibility Study and we then entered into the DevelopmentStage.  We have not realized any revenuefrom operations.  We will be 

 

8

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primarily engaged in development of the Mt. HopeProject and exploration and evaluation of the Liberty Property until we enterthe production stage.

 

*Basic and Diluted Net Loss Per Share*

 

Netloss per share was computed by dividing the net loss attributable to GeneralMoly, Inc. by the weighted average number of shares outstanding during theperiod.  The weighted average number ofshares was calculated by taking the number of shares outstanding and weightingthem by the amount of time that they were outstanding.  Outstanding warrants to purchase 7,455,434and 7,560,434 shares of common stock, options to purchase 3,377,156 and4,267,500 shares of common stock and awards totaling 175,000 and 255,000 at June 30,2009 and 2008, respectively, were not included in the computation of dilutedearnings per share for the three and six months ended June 30, 2009 and2008 because to do so would have been antidilutive.  Therefore, basic loss per share is the sameas diluted loss per share.

 

*Mineral Exploration and Development Costs*

 

Allexploration expenditures are expensed as incurred.  Significant property acquisition payments foractive exploration properties are capitalized. If no economic ore body is discovered, previously capitalized costs areexpensed in the period the property is abandoned.  Expenditures to develop new mines, to definefurther mineralization in existing ore bodies, and to expand the capacity ofoperating mines, are capitalized and amortized on a units-of-production basis overproven and probable reserves.

 

Shoulda property be abandoned, its capitalized costs are charged to operations.  The Company charges to the consolidatedstatement of operations the allocable portion of capitalized costs attributableto properties sold.  Capitalized costsare allocated to properties sold based on the proportion of claims sold to theclaims remaining within the project area.

 

*Mining Properties, Land and Water Rights*

 

Costsof acquiring and developing mining properties, land and water rights arecapitalized 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 theexploration 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 thedevelopment stage.  When a propertyreaches the production stage, the related capitalized costs are amortized usingthe units-of-production basis over proven and probable reserves.  Mining properties, land and water rights areperiodically assessed for impairment of value, and any subsequent losses arecharged to operations at the time of impairment.  If a property is abandoned or sold, a gain orloss is recognized and included in the consolidated statement of operations.

 

*Depreciation and Amortization*

 

Property andequipment are recorded at cost and depreciated using the straight-line methodover the estimated useful lives of the assets. Property and equipment aredepreciated using the following estimated useful lives: field equipment — fiveyears; office furniture, fixtures, and equipment — five years; vehicles — threeto five years; leasehold improvements — three years; residential trailers — tento twenty years; and buildings and improvements — ten years.

 

*Provision for Taxes*

 

Incometaxes are provided based upon the liability method of accounting pursuant toStatement of Financial Accounting Standards No. 109, “Accounting for IncomeTaxes” (hereinafter “SFAS 109”). Under this approach, deferred income taxes are recorded to reflect thetax consequences in future years of differences between the tax basis of assetsand liabilities and their financial reporting amounts at each year-end.  A valuation allowance is recorded against thedeferred tax asset if management does not believe the Company has met the “morelikely than not” standard imposed by SFAS 109 to allow recognition of suchan asset.

 

9

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*Reclamation and Remediation*

 

Expendituresfor ongoing compliance with environmental regulations that relate to currentoperations are expensed or capitalized as appropriate.  Expenditures resulting from the remediationof existing conditions caused by past operations that do not contribute tofuture revenue generations are expensed. Liabilities are recognized when environmental assessments indicate thatremediation efforts are probable and the costs can be reasonablyestimated.  Estimates of such liabilitiesare based upon currently available facts, existing technology and presentlyenacted laws and regulations taking into consideration the likely effects ofinflation and other societal and economic factors, and include estimates ofassociated legal costs.  These amountsalso reflect prior experience in remediating contaminated sites, othercompanies’ clean-up experience and data released by The EnvironmentalProtection Agency or other organizations. Such estimates are by their nature imprecise and can be expected to berevised over time because of changes in government regulations, operations,technology and inflation.  Recoveries areevaluated separately from the liability and, when recovery is assured, theCompany records and reports an asset separately from the associated liability.

 

*Stock-basedCompensation*

 

Stock-based compensationrepresents the fair value related to stock-based awards granted to members ofthe board of directors, officers and employees.  The Company uses theBlack-Scholes model to determine the fair value of stock-based awards underStatement of Financial Accounting Standards (SFAS) No. 123(R), *Share-Based Payment*.  For stock-basedcompensation that is earned upon the satisfaction of a service condition, thecost is recognized on a straight-line basis (net of estimated forfeitures) overthe requisite vesting period (up to three years).  Awards expire fiveyears from the date of vesting.  Furtherinformation regarding stock-based compensation can be found in Note 6 — “EquityIncentives.”  Stock compensation costsrelated to services associated with the Mt. Hope project are capitalized asdevelopment costs.

 

*RecentlyIssued Accounting Pronouncements*

 

In April 2009, theFinancial Accounting Standards Board (FASB) issued FASB Staff Position (FSP)Financial Accounting Standard (FAS) 157-4 “Determining Fair Value When theVolume and Level of Activity for the Asset or Liability Have SignificantlyDecreased and Identifying Transactions That Are Not Orderly”. Based on theguidance, if an entity determines that the level of activity for an asset orliability has significantly decreased and that a transaction is not orderly,further analysis of transactions or quoted prices is needed, and a significantadjustment to the transaction or quoted prices may be necessary to estimatefair value in accordance with Statement of Financial Accounting Standards(SFAS) No. 157 “Fair Value Measurements”. This FSP is to be appliedprospectively and is effective for interim and annual periods ending after June 15,2009 with early adoption permitted for periods ending after March 15,2009. The company has adopted this FSP for its quarter ending June 30,2009.  The adoption of FAS 157-4 had noimpact on the Company’s consolidated financial position, results of operationsor cash flows.

 

In April 2009, the FASBissued FSP FAS 107-1 and Accounting Principles Board (APB) 28-1 “InterimDisclosures about Fair Value of Financial Instruments”. The FSP amends SFAS No. 107“Disclosures about Fair Value of Financial Instruments” to require an entity toprovide disclosures about fair value of financial instruments in interimfinancial information. This FSP is to be applied prospectively and is effectivefor interim and annual periods ending after June 15, 2009 with earlyadoption permitted for periods ending after March 15, 2009.  The Company has adopted this FSP for itsquarter ending June 30, 2009.  Theadoption of FSP FAS 107-1 and APB 28-1 had no impact on the Company’sconsolidated financial position, results of operations or cash flows.

 

In May 2009, the FASBissued SFAS No. 165, “Subsequent Events” (“SFAS 165”), which providesguidance to establish general standards of accounting for and disclosures ofevents that occur after the balance sheet date but before financial statementsare issued or are available to be issued. SFAS 165 also requires entitiesto disclose the date through which subsequent events were evaluated as well asthe rationale for why that date was selected. This disclosure should alert allusers of financial statements that an entity has not evaluated subsequentevents after that date in the set of financial statements being presented. SFAS165 is effective for interim and annual periods ending after June 15,2009.  The Company adopted the provisionsof FAS 165 for the interim period ended 

 

10

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June 30, 2009.  The adoption of FAS 165 had no impact on theCompany’s consolidated financial position, results of operations or cash flows.

 

In June 2009, the FASBapproved the “FASB Accounting Standards Codification” (the “Codification”) asthe single source of authoritative nongovernmental U.S. GAAP to be launched on July 1,2009. The Codification does not change current U.S. GAAP, but is intended tosimplify user access to all authoritative U.S. GAAP by providing all theauthoritative literature related to a particular topic in one place. Allexisting accounting standard documents will be superseded and all otheraccounting literature not included in the Codification will be considerednonauthoritative. The Codification is effective for interim and annual periodsending after September 15, 2009. The Codification is effective for theCompany in the interim period ending September 30, 2009 and the Companydoes not expect the adoption to have a material impact on its consolidatedfinancial position, results of operations or cash flows.

 

**NOTE 4 — MININGPROPERTIES, LAND AND WATER RIGHTS**

** **

We currently have interests in two mining propertiesthat are the primary focus of our operations. The Mt. Hope Project is currently in the development stage and theLiberty Property is in the exploration and evaluation stage.** **Thefollowing is a summary of mining properties, land and water rights at June 30,2009 and December 31, 2008 (in thousands):

 

**Mining Properties, Land and WaterRights**

 
| ** **                      | ** ** | **At June 30,  2009** | ** ** | **At  December 31,  2008** | ** ** |
|---------------------------------|------------|----------------------------|------------|---------------------------------|------------|
| Mt. Hope  Project:         |       |                       |       |                            |       |
| Development  costs              |       | $                          | 71,332     |                            | $          | 54,722 |   |
| Mineral,  land and water rights |       | 10,253                     |       | 10,253                          |       |
| Advance  Royalties              |       | 3,650                      |       | 3,650                           |       |
| Total  Mt. Hope Project    |       | 85,235                     |       | 68,625                          |       |
| Total  Liberty Property         |       | 9,770                      |       | 9,778                           |       |
| Other  Properties               |       | 889                        |       | 889                             |       |
| Total                           |       | $                          | 95,894     |                            | $          | 79,292 |   |

 

On June 26 2009, the Company and JosephineMining Corp. (JMC), a privately-owned Canadian company whose president is arelated party to one of the Company’s Board members, entered into an Option toPurchase Agreement for the Company’s Turner Gold property, a multi-metallicproperty located in Josephine County, Oregon. The Company acquired the property in 2004.  JMC paid $0.1 million upon entering into theagreement, which allows JMC certain exploratory rights through the optionperiod.  Each option isnon-refundable.  The $0.1 million hasbeen recorded as deferred revenue pending completion of the purchase.  At JMC’s option, $0.3 million will be due December 26,2010 and $1.6 million on or before December 26, 2011 if JMC decides tocomplete the purchase.  The Company hasalso retained a Production Royalty of 1.5% of all net smelter returns on futureproduction from the property.

 

**NOTE 5 — COMMON STOCKAND COMMON STOCK WARRANTS**

** **

Duringthe three months and six months ended June 30, 2009, we issued 363,663 and492,225 shares of common stock, respectively, pursuant to stock awards.

 

At June 30,2009, we had warrants outstanding totaling 7,455,434 of which 6,455,434 areexercisable at $3.75 per warrant and expire February 2011 and 1,000,000are exercisable at $10.00 per share once General Moly has received financingnecessary for the commencement of commercial production at the Mt. Hope Projectand will expire one year afterwards.

 

11

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**NOTE 6 — EQUITYINCENTIVES**

** **

In 2006, the Board andshareholders of the Company approved the 2006 Equity Incentive Plan (the “2006Plan”) which replaced the 2003 Equity Incentive Plan (the “2003 Plan”).  In 2007, the shareholders approved an amendmentto the 2006 Plan to increase the number of shares that may be issued under the2006 Plan.   The 2006 Plan authorizes theBoard, or a committee of the Board, to issue or transfer up to an aggregate of5,460,000 shares of common stock, including the unissued shares available underthe 2003 Plan, of which 449,485 remain available for issuance.  Awards under the Plan may include incentivestock options, non-statutory stock options, restricted stock units, restrictedstock awards, and stock appreciation rights.  Stock appreciation rights may be settled with cash or commonshares.  The Company settles the exerciseof other stock-based compensation with newly issued common shares.

 

Stock-based compensationcost is estimated at the grant date based on the award’s fair value ascalculated by the Black-Scholes option pricing model and is recognized ascompensation ratably on a straight-line basis over the requisitevesting/service period.  As of June 30,2009, there was $2.7 million of total unrecognized compensation cost related toshare-based compensation arrangements, which is expected to be recognized overa weighted-average period of 1.4 years.

 

*StockOptions and Stock Appreciation Rights*

 

All stock options andstock appreciation rights (“SARS”) are approved prior to or on the date ofgrant.  Stock options and SARS aregranted at an exercise price equal to or greater than the Company’s stock priceon the date of grant.  Awards vest over aperiod of zero to three years with a contractual term of five years aftervesting.  The Company estimates the fairvalue of stock options and SARS using the Black-Scholes valuation model,consistent with the provisions of SFAS No. 123(R).  Key inputs and assumptions used to estimatethe 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 andthe Company’s dividend yield.  Thefollowing table presents the weighted-average assumptions used in the valuationand the resulting weighted-average fair value per option or SAR award granted:

 

**StockOption and SARS Valuation Assumptions**

 
| Expected  Life *                                                                                                  |   | 3.5 to 5.5 years |   |
|-------------------------------------------------------------------------------------------------------------------|--------|------------------|--------|
| Interest  Rate                                                                                                    |   | 0.44% to 5.05%   |   |
| Volatility  **                                                                                                    |   | 66% to 123%      |   |
| Dividend  Yields                                                                                                  |   | —           |   |
|                                                                                                              |   |             |   |
| Weighted  Average Fair Value of Stock Appreciation Rights Granted During the Six Months  ended June 30, 2009 |   | $0.84            |   |

 

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*   The expected life is the number of yearsthat the Company estimates, based upon history, that options or SARS will beoutstanding prior to exercise or forfeiture.

 

* *The Company’s estimates of expected volatility are principally based on thehistoric volatility of the Company’s common stock over the most recent periodcommensurate with the estimated expected life of the Company’s stock options orSARS and other relevant factors.

 

The following tablesummarizes option activity under the Plans for the six months ended June 30,2009:

 

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**StockOption Activity**

 
| ** **                         | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Number of  Shares  Under  Option** | ** ** |
|------------------------------------|------------|----------------------------------------|------------|--------------------------------------|------------|
| Balance  at January 1, 2009   |       | $                                      | 5.27       |                                 | 3,855,490  |   |
| Options  Granted                   |       | $                                      | 1.69       |                                 | 40,000     |   |
| Options  Exercised                 |       | $                                      | 2.10       |                                 | (30,000    | ) |
| Options  Forfeited                 |       | $                                      | 7.99       |                                 | (248,334   | ) |
| Options  Expired                   |       | $                                      | 3.20       |                                 | (240,000   | ) |
| Balance  at June 30, 2009     |       | $                                      | 5.20       |                                 | 3,377,156  |   |
|                               |       |                                   |       |                                 |       |
| Exercisable  at June 30, 2009 |       |                                   |       | 2,703,830                            |       |

 

For the six months ended June 30,2009, there were 450,000 SARS granted at a weighted exercise average price of$0.84 per right, and 61,260 SARS were forfeited.  No SARS were exercised, none expired, andnone were exercisable during the six months ended June 30, 2009.    At June 30, 2009, the aggregateintrinsic value of exercisable (fully vested) options was $0.3 million and hada weighted-average remaining contractual term of 3 years.

 

*StockAwards*

 

Grants of stock awardshave been made to Board members, officers, and employees.  Stock awards have been granted as performancebased, earned over a required service period or to Board members for services.  Incentive based grants generally vest andstock is received without restriction to the extent of one-third of the grantedstock for each year following the date of grant.  Performance based grants are recognized ascompensation based on the probable outcome of achieving the performancecondition.  Compensation for stock awardsissued to Board members that are earned based on a required service period isrecognized over the vesting period of one to two years.  Stock awards issued to Board members thathave no required service period are recognized as compensation upon grant ofthe award.

 

The compensation expenserecognized by the Company for stock awards is based on the closing market priceof the Company’s common stock on the date of grant.  For the six months ended June 30, 2009,a total of 363,663 shares were granted to employees with a weighted averagegrant date fair value of $2.64 per share, while a total of 128,562 shares weregranted to Board Members and the Secretary of the Company with  a weighted average grant date fair value of$1.16 per share.

 

*Summaryof compensation recognized under equity incentives*

 

The following is asummary of compensation recognized under equity incentives for the six monthsended June 30, 2009 (in thousands):

 

**Stock-BasedCompensation Summary**

 
| Stock  Options                                                                                                            |   | $      | 928    |   |
|---------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| SARS                                                                                                                      |   | 223    |   |
| Forfeitures  related to the restructuring                                                                                 |   | (567   | )      |
| Stock  Awards:                                                                                                            |   |   |   |
| Vesting  over time                                                                                                        |   | 123    |   |
| Board members  and Secretary                                                                                              |   | 455    |   |
| Total                                                                                                                     |   | $      | 1,162  |   |
| The  compensation recognized under equity incentives for the six months ended  June 30, 2009 is recorded as follows: |   |   |   |
| Capitalized  as Development                                                                                               |   | $      | 358    |   |
| Expensed                                                                                                                  |   | 804    |   |
|                                                                                                                      |   | $      | 1,162  |   |

 

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*Taxes*

 

A portion of theCompany’s granted options qualify as incentive stock options (ISO) for incometax purposes.  As such, a tax benefit isnot recorded at the time the compensation cost related to the options isrecorded for book purposes due to the fact that an ISO does not ordinarilyresult in a tax benefit unless there is a disqualifying disposition.  Stock option grants of non-qualified optionsresult in the creation of a deferred tax asset, which is a temporarydifference, until the time that the option is exercised.

 

**NOTE 7— CHANGES IN EQUITY**

 
| ** **                                                        | ** ** | **Activity for  Six Months Ended** | ** ** |
|-------------------------------------------------------------------|------------|------------------------------------|------------|
| **Changes in Equity**                                             | ** ** | **June 30,  2009**            | ** ** | **June 30,  2008** | ** ** |
| Total Equity December 31, 2008 & 2007, respectively |       | $                                  | 213,048    |   | $ | 102,105 |   |
| Common stock:                                                     |       |                               |       |   |   |
| At beginning of period                                            |       | 72                                 |       | 66 |   |
| Exercised warrants                                                |       | —                             |       | 5 |   |
| Exercised options                                                 |       | 0                                  |       | 0 |   |
| At end of period                                                  |       | 72                                 |       | 71 |   |
|                                                              |       |                               |       |   |   |
| Additional paid-in capital:                                       |       |                               |       |   |   |
| At beginning of period                                            |       | 185,179                            |       | 159,828 |   |
| Exercised warrants                                                |       | —                             |       | 19,937 |   |
| Exercised options                                                 |       | 63                                 |       | 299 |   |
| Stock based compensation                                          |       | 616                                |       | 2,651 |   |
| Unvested shares earned                                            |       | —                             |       | (69 | ) |
| At end of period                                                  |       | 185,858                            |       | 182,646 |   |
|                                                              |       |                               |       |   |   |
| Accumulated deficit:                                              |       |                               |       |   |   |
| At beginning of period                                            |       | (72,203                            | )          | (57,789 | ) |
| Net loss                                                          |       | (5,754                             | )          | (9,068 | ) |
| At end of period                                                  |       | (77,957                            | )          | (66,857 | ) |
|                                                              |       |                               |       |   |   |
| Noncontrolling interest:                                          |       |                               |       |   |   |
| At beginning of period                                            |       | 100,000                            |       | — |   |
| Pos-Minerals cash contribution                                    |       | —                             |       | 100,000 |   |
| Net loss attributable to non-controlling interest                 |       | (239                               | )          | — |   |
| At end of period                                                  |       | 99,761                             |       | 100,000 |   |
|                                                              |       |                               |       |   |   |
| Total Equity June 30, 2009 & 2008, respectively     |       | $                                  | 207,734    |   | $ | 215,860 |   |

** **

**NOTE 8 — INCOME TAXES**

** **

At June 30,2009 and December 31, 2008, we had deferred tax assets principally arisingfrom the net operating loss carryforwards for income tax purposes multiplied byan expected rate of 35%.  As ourmanagement cannot determine that it is more likely than not that we willrealize the benefit of the deferred tax assets, a valuation allowance equal tothe deferred tax asset has been established at June 30, 2009 and December 31,2008.  The significant components of thedeferred tax asset at June 30, 2009 and December 31, 2008 were asfollows (in thousands):

 

14

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**Deferred Tax Asset Valuation**

 
| ** **                                             | ** ** | **June 30, 2009** | ** ** | **December 31, 2008** | ** ** |
|--------------------------------------------------------|------------|------------------------|------------|----------------------------|------------|
| Operating  loss carryforward                           |       | $                      | 114,140    |                       | $          | 94,004 |   |
| Unamortized  exploration expense                       |       | 7,147                  |       | 8,126                      |       |
| Deductible  stock-based compensation                   |       | 2,779                  |       | 2,779                      |       |
| Deductible  temporary difference                       |       | 124,066                |       | 104,909                    |       |
| Taxable  temporary difference — development costs |       | (51,943                | )          | (38,674                    | )          |
| Net  deductible temporary difference                   |       | 72,123                 |       | 66,235                     |       |
| Deferred  tax asset                                    |       | $                      | 25,243     |                       | $          | 23,182 |   |
| Deferred  tax asset valuation allowance                |       | $                      | (25,243    | )                          | $          | (23,182 | ) |
| Net  deferred tax asset                                |       | $                      | —     |                       | $          | — |   |

 

At June 30,2009 and December 31, 2008, we had net operating loss carryforwards ofapproximately $114.1 million and $94.0 million, respectively, whichexpire in the years 2022 through 2029.

 

**NOTE 9—COMMITMENTS ANDCONTINGENCIES**

** **

**Mt. Hope Lease Agreement**

 

TheMt. Hope Lease may be terminated upon the expiration of its 30-year term,earlier at the election of Eureka Moly, or upon our material breach and failureto cure such breach.  If Eureka Molyterminates the lease, termination is effective 30 days after receipt by MountHope Mines, Inc. (“MHMI”) of written notice to terminate the Mt. HopeLease and no further payments would be due to MHMI.  In order to maintain the lease, Eureka Molymust pay certain deferral fees and advance royalties as discussed below.

 

TheMt. Hope Lease Agreement requires a royalty advance (the “Construction RoyaltyAdvance”) of 3% of the construction capital cost estimate upon the earliest ofEureka Moly securing project financing in sufficient amounts to develop and putinto operation the Mt. Hope property at a production level of at least10 million pounds of annual production or October 19, 2008.

 

EurekaMoly has the right to defer the Construction Royalty Advance for one or twoyears by payment of a deferral fee (the “Deferral Fee”) in the amount of $0.4million on or before October 19, 2008 and October 19, 2009 in theevent project financing for the project has not been secured by each of thedates.  On October 17, 2008 EurekaMoly paid the $0.4 million Deferral Fee of October 19, 2008 discussedabove to MHMI thereby deferring the Construction Royalty Advance. Through June 30,2009 we have paid $3.7 million of the total Construction Royalty Advance.  Any remaining unpaid Construction RoyaltyAdvance amounts on October 19, 2011 must be paid 50% on October 19,2011 with the other 50% due on October 19, 2012.

 

Oncethe Construction Royalty Advance has been paid in full, Eureka Moly isobligated to pay an advance royalty (the “Annual Advance Royalty”) each October 19thereafter in the amount of $0.5 million per year.  The Construction Royalty Advance and theAnnual Advance Royalty are collectively referred to as the “Advance Royalties”.  All Advance Royalties are credited againstthe Production Royalties once the mine has achieved commercial production.  The Deferral Fees are not recoverable againstProduction Royalties.

 

EurekaMoly is obligated to pay the Construction Royalty Advance each time capital israised for the Mt. Hope Project.  Basedon the current estimate of raising capital and developing and operating themine, we believe Eureka Moly’s contractual obligations under the Mt. Hope LeaseAgreement will be as shown in the following table (in thousands).  This estimate is based on our current estimatesof the timing of securing project financing and construction capital costs.

 

15

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**Deferral Fee and Advance RoyaltyCommitments**

** **
| **Year** | ** ** | **Deferral Fees** | ** ** | **Advance Royalties** | ** ** | **Total** | ** ** |
|----------|------------|-------------------|------------|-----------------------|------------|-----------|------------|
| 2009     |       | 350               |       | —                |       | 350       |       |
| 2010     |       | —            |       | 22,150                | (1)        | 22,150    |       |
| 2011     |       | —            |       | 500                   |       | 500       |       |
| 2012 (2) |       | —            |       | 500                   |       | 500       |       |
| Total    |       | $                 | 350        |                  | $          | 23,150    |       | $ | 23,500 |   |
|          |            |                   |            |                       |            |           |            |  |  |  |

 

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(1)          Assumes project financing is completed by the Companyin 2010.

 

(2)          After the mine begins production, Eureka Molyestimates that the Production Royalties will be in excess of the Annual AdvanceRoyalties for the life of the project and, further, the Construction RoyaltyAdvance will be fully recovered (credited against MHMI Production Royalties) bythe end of 2014.

 

**Depositson project property, plant and equipment**

 

As acontinuing part of the development of the Mt. Hope Project, Eureka Moly hasplaced orders for mining and milling equipment that must be built tospecification and requires a long lead time for engineering and manufacturing.  Contractual commitments for long lead itemsrequire progress payments during the engineering and fabrication of theequipment and have cancellation penalties in the event Eureka Moly cancels thecontract.

 

At June 30,2009, we have contracts to purchase mining equipment comprised of two electricshovels and 24 haul trucks and milling process equipment comprised of two 230kVprimary transformers, a primary crusher, a semi-autogenous mill, two ballmills, various motors for the mills, two multi-hearth molybdenum roasters, 16flotation cells and other milling process equipment.

 

Wehave maintained equipment orders for custom-built grinding and other millingprocess equipment as a result of negotiations with vendors related toconstruction schedule, delivery timelines, storage and payment terms, largelycompleted during the second quarter of 2009. We have cancelled some mining equipment purchase contracts, and expectto complete the renegotiations for cancellation or suspension of the remainingmining equipment contracts during the third quarter of 2009. The followingtable sets forth Eureka Moly’s cash commitments under mining and millingequipment contracts (collectively, “Purchase Contracts”) at June 30, 2009(in thousands), inclusive of mining equipment contracts that are still beingrenegotiated.

 

**CashCommitments under Purchase Contracts**

 
| **Year**              | ** ** | **As of  June 30,  2009** | ** ** |
|-----------------------|------------|--------------------------------|------------|
| 2009 — Remainder |       | $                              | 10,965     |   |
| 2010                  |       | 65,003                         |       |
| 2011                  |       | 48,207                         |       |
| 2012                  |       | 30,371                         |       |
| Total                 |       | $                              | 154,546    |   |

 

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**ITEM 2.**     MANAGEMENT’SDISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

** **

Referencesmade in this Quarterly Report on Form 10-Q to “we,” “our,” “us,” or the“Company,” refer to General Moly, Inc.

 

Thefollowing discussion and analysis of our financial condition and results ofoperations constitutes management’s review of the factors that affected ourfinancial and operating performance for the six months ended June 30,2009 and 2008.  This discussion should beread in conjunction with the consolidated financial statements and notesthereto contained elsewhere in this report and in our Annual Report on Form 10-Kfor the year ended December 31, 2008, which was filed on February 27,2009.

 

**Overview**

 

We area development stage company and began the development of the Mt. HopeProject on October 4, 2007.  Duringthe year ended December 31, 2008 we also completed work on apre-feasibility study of our Liberty Property. We continue to approach the Liberty Property in a care and maintenancemode, and do not expect to spend appreciable amounts of capital on the LibertyProperty until market conditions warrant its development.

 

On October 4,2007, our Board of Directors approved the development of the Mt. HopeProject as contemplated in our Bankable Feasibility Study.  The Company completed basic engineering ofthe Mt. Hope Project during the year ended December 31, 2008 and updatedits capital cost estimate related to the Mt. Hope Project based upon havingcompleted 30% of the detailed engineering.

 

Thedevelopment of the Mt. Hope Project has an estimated total capitalrequirement of $1,154.0 million including development costs of approximately$1,039.3 million (in 2008 dollars) and $114.7 million in cash bondingrequirements and pre-payments.  Theseamounts do not include financing costs or amounts necessary to fund operatingworking capital.  Through the six monthsended June 30, 2009 we have spent approximately $122.3 million and have$70.1 million remaining cash on hand for use in the development of the Mt. HopeProject and other cash requirements.

 

Giventhe continued uncertainty in the project finance market, low molybdenum pricesat the time, and a longer than expected timeframe to receive the federalpermits to begin construction at the Mt. Hope project, on March 26, 2009,we implemented a cash conservation plan to reduce expenditures and conservecash for 2009 and 2010 in order to maximize financial flexibility.  In addition to conserving cash, the plansimplemented will retain the ability to start construction at the Mt. Hopeproject pending improvements in the molybdenum and capital markets.  With our June 30, 2009 consolidated cashbalance of $70.1 million, we have the capacity to continue our current level ofpermitting efforts, maintain efforts to secure project financing, and securethe most critical long lead equipment for the ultimate construction of the Mt.Hope project.

 

Oncefinancing is obtained and we have received the major operating permits and theROD from the BLM, it is expected that Mt. Hope can be constructed and inproduction within 20 months.  In theinterim, our permitting efforts are continuing full-time.  The Company has maintained its orders forgrinding, milling, and other specialty long lead equipment, although other engineering,administrative and third-party work has been slowed or suspended.

 

Wewill continue to work with Credit Suisse and Barclays to seek projectfinancing.   The Company has also engagedCutfield Freeman & Co., a London-based financial advisory firm, toassist the Company in primarily seeking bi-lateral agency and off-takefinancing to potentially augment the projected bank financing.  We will continue evaluating all sources ofcapital, including equity partners at the asset level and vendor financing.  Given our strong off-take agreements andother preparatory work completed, we believe the Company is well positioned toexecute a project finance facility once credit conditions improve and as themolybdenum price continues to recover.

 

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Overthe second quarter of 2009, spot molybdenum (“moly”) prices rose fromapproximately $7.70 per pound in April to over $10.50 per pound by June 30,2009 and have traded as high as $17 per pound more recently.  Higher prices have been caused by a number offactors, including Chinese moly imports, increasing steel capacity utilizationrates in developing nations, modestly improving steel capacity utilizationrates in the United States and Europe, an end to global inventory de-stocking,and moly supply reductions.

 

**Restructuring and Suspension ofProject Development**

 

Asdiscussed above, we implemented a cash conservation plan whereby total cashutilization other than equipment purchases is anticipated to decline to approximately$1 million per month by the fourth quarter of this year.  Based on our current cash on hand and ourcash conservation plan, the Company expects it will have adequate liquidity foroperations, as modified, through the end of 2010.  Engineering efforts, approximately 60%complete, have been suspended pending the completion of financing.

 

TheCompany has purchase orders for two types of equipment — milling processequipment and mining equipment.  Mostequipment orders for the custom-built grinding and other milling processequipment will be completed by the manufacturers and stored.  The grinding and milling process equipmentrequire the longest lead times and maintaining these orders is critical to theCompany’s ability to re-start the development of Mt. Hope rapidly.  With respect to the remaining milling processequipment, the manufacturers have agreed to suspend fabrication of theequipment.  The Company has negotiated withthe manufacturers regarding equipment fabrication costs incurred to date,storage costs, and the expected timing of restarting fabrication.  Based on our current plan, expectedtimetable, and the results of such negotiations, we expect to make additionalpayments of approximately $45 million under milling process equipment ordersthrough the end of 2010, and $6 million in 2011.  As additional financing is secured andequipment procurement is restarted, final pricing terms in the agreements thatwere suspended will be renegotiated under current market terms and conditions.

 

Some ordersfor mining equipment have been cancelled, and discussions with the remainingsuppliers to either cancel or suspend existing agreements are ongoing.  The lead times and costs associated with manyof these items have declined in recent months. Once financing is secured, the Company anticipates placing orders forthis mining equipment again.  The Companywill continue to evaluate all options to decrease Mt. Hope’s initial capitalrequirement and facilitate a timelier re-start of the project development.

 

Thecash conservation plan also impacted General Moly employees and contractorsupport.  In March 2009, the Companyinitiated plans to reduce administrative expenses by $5 million per yearthrough a combination of compensation restructuring and position eliminations.

 

**Permitting Update**

 

Majoroperating permits required for the Mt. Hope Project are the ROD, the waterpollution control permit and reclamation permit from the Nevada Division ofEnvironmental Protection—Bureau of Mining Regulation and Reclamation (“BMRR”),and an air quality permit from the Nevada Division of Environmental Protection—Bureau of Air Pollution Control (“BAPC”).

 

TheROD for the Mt. Hope Project will be effective on the date the BLM has recordedits decision to approve the plan of operations for the Mt. Hope Project.  We currently expect to receive the RODapproximately mid-year 2010.  In September 2006,the BLM determined that the plan of operations met the regulatory requirementswith respect to completeness and comprehensiveness.  Since that time, additional updates have beensubmitted to accommodate additional detail based on progression of projectdesign.  The BLM is preparing anenvironmental impact statement (“EIS”) analyzing the environmental impacts ofthe Mt. Hope Project and alternatives in accordance with the NationalEnvironmental Policy Act.  Preparation ofthis EIS requires the completion of certain hydrologic studies of both pit lakegeochemistry and regional hydrology. Following the completion of these studies and the EIS and any remainingBLM requirements, the BLM will make a decision on whether to approve the planof operations.  The ROD and the relateddecision of the BLM to approve the plan of operations may not be appealed untilBLM approval.

 

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FollowingMarch of 2009 discussions with the BLM related to the Company’s hydrologicstudies of both pit lake geochemistry and regional hydrology, the Companydetermined that additional analysis and data acquisition will be conducted toimprove the technical adequacy of the studies, largely focused on thehydrogeology of the open pit area.  Webelieve this further work, which comprises additional pump tests and analysisin the open pit mining area, does not indicate a concern related to ultimatepermit receipt; however, this work is the primary reason for the delay in theexpected receipt of the ROD from the fourth quarter of 2009 to approximatelymid-year 2010.

 

Theapplication for the air quality permit was submitted to BAPC in the thirdquarter 2008.  The application for thewater pollution control permit was submitted to BMRR in the third quarter2008.  The application for thereclamation permit is included with the plan of operations for the project, andwas submitted to the BLM and BMRR as part of the most recent update in January,2009.  Although the reclamation permit isadministered by BMRR, BLM review is required and the reclamation cost estimatemust be approved in conjunction with BLM approval of the Company’s plan ofoperations.  We believe these majoroperating permits will be received on or prior to the effective date of theROD.

 

Althoughwe currently are targeting the effectiveness of the ROD and the receipt of allmajor operating permits to occur in approximately mid-year 2010, circumstancesbeyond our control, including BLM or other agency delays or requests foradditional information or studies, and requests for review or appeals of theBLM decision, could cause the effectiveness of the ROD to be delayed.  The occurrence of any or a combination ofthese adverse circumstances may increase the estimated costs of development,require us to obtain additional interim financing, and delay our ability toconsummate project financing or other significant financing.  A delay in the ROD or the receipt of majoroperating permits also affects the satisfaction of the ROD ContributionConditions, extends the time for the receipt of POS-Minerals thirdcontribution, and may affect the contingent obligation of Eureka Moly to refundcapital contributions to POS-Minerals and the amount of any such refund.  See “—The Mt. Hope Joint Venture” below.

 

**Water Rights Update**

 

On March 26,2009, the Nevada State Engineer approved the Company’s previously filed waterapplications that requested mining and milling use of 11,300 acre feet annuallyof water to be drawn from a well field near the Mt. Hope project in KobehValley.  This ruling, combined withactual pump tests conducted in late 2008 that confirmed well pumping rates inKobeh Valley, is anticipated to meet the Mt. Hope project’s life-of-mine waterrequirements of approximately 7,000 gallons per minute.

 

Subsequentto that ruling and the Company’s announcement thereof, two appeals have beenfiled with the Seventh Judicial District Court of the State of Nevada tochallenge the State Engineer’s decision. Although the Company and its attorneys believe these appeals to bewithout merit and unlikely to succeed, a successful appeal could have a materialnegative impact on the Mt. Hope project. District Court dates associated with the appeals have not been set,pending the release of the Record on Appeal by the Nevada Attorney General’soffice.  A Stipulation and Order for theproceedings has now been established providing a 40-day period for thePetitioners to provide their opening briefs following receipt of the Record onAppeal.  This 40-day period will then befollowed by a combined 60 days for reply briefs.  We fully expect the  Attorney General to release the Record onAppeal in early August 2009,  andthen anticipate that the appeal will be ruled upon by the District Judge latein the fourth quarter of 2009 or early 2010.

 

Althoughthe water application approvals are under appeal, the State Engineer issued theCompany all water permits on July 21, 2009, providing the legal andregulatory authority to the use of the 11,300 acre feet annually of water forour mining operations.

 

**The Mt. Hope Joint Venture**

 

Effectiveas of January 1, 2008, we contributed all of our interest in the assets relatedto the Mt. Hope Project, including the Mt. Hope Lease, to EurekaMoly, and in February 2008 entered into the Mt. Hope Project JointVenture with POS-Minerals.  Under theterms of the Joint Venture, POS-Minerals owns a 20% interest in Eureka Moly, andGeneral Moly, through a subsidiary, owns an 80% interest. These ownershipinterests and/or the required contributions under the Joint Venture can changeas discussed below.

 

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Pursuantto the terms of the Joint Venture, POS-Minerals made its Initial Contributionsto the Joint Venture totaling $100.0 million during the year ended December 31,2008.  Additional amounts will be duefrom POS-Minerals within 15 days after the date the ROD Contribution Conditionshave been satisfied.  The RODContribution Conditions are the receipt of major operating permits for theproject, that the ROD has become effective, and any administrative or judicialappeals with respect thereto are final. See “—Permitting Update” above for a discussion of the status ofpermitting.

 

Ourcurrent forecast of the ROD Contribution Date occurring after December 31,2009 allows POS-Minerals to elect to either retain its 20% share bycontributing an additional $56.0 million plus its 20% share of all JointVenture costs incurred from the Closing Date to the ROD Contribution Date orreduce its ownership interest to 13% and fund its remaining 13% share of allJoint Venture costs incurred from the Closing Date to the ROD ContributionDate.  Such an election has not been madeby POS-Minerals, but is required to be made prior to January 31, 2010.

 

Inaddition, if commercial production at the Mt. Hope Project is not achieved by December 31,2011 for reasons other than a force majeure event, Eureka Moly may be requiredto return to POS-Minerals a portion of its contributions to the Joint Venture,with no corresponding reduction in POS-Minerals’ ownership percentage, based onits election prior to January 31, 2010 as to its third contribution.  Based on our current plan and expectedtimetable, it is unlikely the Mt. Hope Project will achieve commercialproduction by December 31, 2011.  IfPOS-Minerals elects to retain its 20% interest and makes its additional $56.0million contribution, the return of contributions will be $36.0 million.  If POS-Minerals elects to retain its 20%interest but does not make its additional $56.0 million contribution, thereturn of contributions will be zero. If POS-Minerals elects to reduce itsownership interest to 13%, the return of contributions will be $33.0million.  Such return of contributions isrequired to be made on or prior to January 27, 2012.  Our subsidiary that holds our interest in theJoint Venture is obligated under the terms of the Joint Venture to make capitalcontributions to fund the return of contributions to POS-Minerals, ifrequired.  If our subsidiary does notmake these capital contributions, our interest in the Joint Venture is subjectto dilution based on the Dilution Formula, calculated as a percentage equal tothe ratio of 1.5 times the amount of such unpaid contributions, over theaggregate amount of deemed capital contributions (as determined under the JointVenture agreement) of both parties to the Joint Venture.  At June 30, 2009 the aggregate amount ofdeemed capital contributions of both parties was $950 million.

 

Of the Initial Contributions of $100.0 million thatwere made by POS-Minerals during 2008, $0.1 million remain available to fundthe Mt. Hope Project Joint Venture costs. We are required, pursuant to the terms of the Joint Venture, to advancefunds required to pay costs for the development of the Mt. Hope Project thatexceed the Initial Contributions until the ROD Contribution Date, at whichpoint the contributions described above to be made by POS-Minerals will beapplied to reimburse us for POS-Minerals’ share of such development costs.  All costs incurred after the ROD ContributionDate will be allocated and funded pro rata based on each party’s ownershipinterest.  The interest of a party in theJoint Venture that does not make its pro rata capital contributions to fundcosts incurred after the ROD Contribution Date is subject to dilution based onthe Dilution Formula.

 

**Liquidity, Capital Resources andCapital Requirements**

 

*Forthe period from December 31, 2008 to June 30, 2009*

 

Ourcash balance at June 30, 2009 was $70.0 million compared to$78.5 million at December 31, 2008. Additionally, at June 30, 2009 we have $0.1 million of restrictedcash that represents the unspent amount of the Initial Contributions fromPOS-Minerals that is available for the continuing development of the Mt. HopeProject compared to $13.9 million at December 31, 2008.  Our total consolidated cash balance at June 30,2009 was $70.1 million compared to $92.4 million at December 31,2008.  The decrease in our cash balancesfor the six months ended June 30, 2009 was due primarily to developmentcosts incurred of $15.4 million, deposits on property plant and equipmenttotaling $1.3 million, and general and administrative costs of $5.6million.  Deposits on property, plant andequipment relate primarily to scheduled payments for long lead time equipmentfor the Mt. Hope Project.  See “— ContractualObligations” below.

 

Totalassets as of June 30, 2009 decreased to $215.9 million compared to$220.9 million as of December 31, 2008 primarily as a result of theincrease in the accumulated deficit of $5.8 million during the six month periodended June 30, 2009 and the changes discussed in the preceding paragraph.

 

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Asdiscussed above under “— Permitting and Water Rights Update”, we currentlyanticipate the effectiveness of the ROD and the satisfaction of the RODContribution Conditions to occur in mid-year 2010, but circumstances beyond ourcontrol could cause the effectiveness of the ROD and / or the satisfaction ofthe ROD Contribution Conditions to be delayed. We estimate that this will delay the achievement of the ROD ContributionDate to the second half of 2010 and allow POS-Minerals to elect to pay $56.0million plus its 20% share of Joint Venture costs incurred from the ClosingDate to the ROD Contribution Date to retain its 20% share of the Joint Ventureor alternatively, to reduce its interest from 20% to 13%, in which case wewould only receive reimbursement for Joint Venture costs for the resulting 13%ownership retained by POS-Minerals.

 

Asdiscussed above under “— Restructuring and Suspension of Project Development”,we have suspended engineering efforts and mining and most milling processequipment purchases for the Mt. Hope Project until such time as we can obtainadditional financing.  While we do notexpect to achieve full project financing until credit markets and the outlookfor molybdenum prices improve, we are continuing to evaluate a number ofpotential sources for capital, including the possibility of a sale of anotherminority interest in the Mt. Hope Project, additional support from currentstrategic partners, off-take related debt, and debt from private investmentgroups, as well as the capital markets.

 

Withour cash conservation plan, our non-equipment related cash requirements areexpected to decline to approximately $1 million per month by the fourth quarterof this year.  Based on our current planand expected timetable, we expect to make additional payments of approximately$45 million under milling process equipment orders through the end of 2010, and$6 million in 2011.  As additionalfinancing is secured and equipment procurement is restarted, agreements thatwere suspended will be renegotiated under current market terms andconditions.  Accordingly, based on ourcurrent cash on hand and our cash conservation plan, the Company expects itwill have adequate liquidity for operations, as modified and based onsuccessful renegotiation of mining equipment contracts, through the year ended December 31,2010.

 

Oncethe ROD is effective, additional capital will be required through thecommencement of commercial production at the Mt. Hope Project.  Our ability to develop the project isdependent on, among other things, our ability to raise the necessary capital tofund the Mt. Hope Project both in sufficient amount and in a timelymanner.  Additionally, if the currentlyestimated costs of the Mt. Hope Project are exceeded we will need to raiseadditional capital to fund such overruns. The Company is currently, and will on an ongoing basis be, pursuing themost efficient sources of funding for the project including, but not limitedto, the equity markets, the bank project finance markets and the high yieldcapital debt markets.

 

Thecash needs for the development of the Mt. Hope Project require that we orEureka Moly obtain project financing or other significant financing in additionto the capital contributions anticipated to be received from POS-Minerals.  The aggregate amount of additional financingrequired for the development of the Mt. Hope Project, minus the amountsanticipated to be received from POS-Minerals on the ROD Contribution Date isanticipated to range between $715 million and $850 million depending on theelection made by POS-Minerals to either retain its current 20% interest orreduce its interest in the Joint Venture to 13%.  These amounts do not include financing costsor amounts necessary to fund operating working capital.  During 2008, we engaged Barclays Capital andCredit Suisse Securities (USA) LLC to assist in our efforts to pursue projectfinancing for the Mt. Hope Project.  TheCompany has also engaged Cutfield Freeman & Co., a London-basedfinancial advisory firm, to assist the Company in primarily seeking bi-lateralagency and off-take financing to potentially augment the projected bankfinancing.  Our ability to obtain suchproject and / or agency financing depends on the effectiveness and the timingof the ROD, the anticipated price of molybdenum, our projected operating costsand the overall state of the economy and the credit markets.

 

The2008 disruptions in national and international credit markets have led to veryilliquid and volatile conditions.  Thereis a scarcity of credit and lenders are imposing tighter lending standards andhigher interest costs for loans.  Ourability to obtain the necessary funding for the Mt. Hope Project as well as theterms for such funding may be adversely affected by these disruptions in thecredit markets.  We may not be able toobtain the necessary financing for the Mt. Hope Project in a timelymanner, on customary or favorable terms, or at all.

 

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Wealso require additional capital to maintain our mining claims and other rightsrelated to the Liberty Property, as well as continue payment of ongoing generaland administrative costs associated with supporting our planned operations.

 

**Resultsof Operations**

 

*Six months ended June 30, 2009compared to six months ended June 30, 2008*

 

Forthe six months ended June 30, 2009 we had a consolidated net loss of $6.0million compared with a net loss of $9.1 million in the same period for 2008.

 

Forthe six months ended June 30, 2009 and 2008, exploration and evaluationexpenses were $0.4 million and $4.2 million, respectively.  For the six months ended June 30, 2008we incurred exploration and evaluation costs on the Liberty Property as wecompleted a pre-feasibility study on the Liberty Property in April 2008.  For the six months ended June 30, 2009the Liberty Property has been on a care and maintenance status, and,accordingly, the resulting exploration and evaluation expenses are considerablylower for the period.

 

Forthe six months ended June 30, 2009 and 2008, general and administrativeexpenses were $5.6 million and $5.9 million, respectively.  For the six months ended June 30, 2009restructuring costs resulting from the implementation of our cash conservationplan are included in general and administrative expenses.  In March 2009 we incurred costs relatedto one-time employee termination benefits totaling $0.8 million.  The majority of the affected employees werenot required to render service beyond 60 days, and accordingly, costsassociated with these one-time termination benefits were recognized in March 2009.  Additional costs of $0.1 million wererecognized during the second quarter, for those few affected employees whorendered services beyond 60 days.

 

Wealso incurred approximately $0.7 million in equipment contract cancellationcosts during the second quarter of 2009. Such costs were a combination of deposits forfeited and costs to cancelcontracts.

 

Interestincome was nil for the six months ended June 30, 2009 compared with $1.0million in 2008 as a result of substantially lower interest rates, and lowercash balances in 2009 compared with the corresponding periods in 2008.

 

**Contractual Obligations**

 

As acontinuing part of the development of the Mt. Hope Project, Eureka Moly hasplaced orders for mining and milling equipment that must be built tospecification and require long lead times for engineering andmanufacturing.  Contractual commitmentsfor long lead items require progress payments during the engineering andfabrication of the equipment and have cancellation penalties in the eventEureka Moly cancels the contract.

 

At June 30,2009, we have contracts to purchase mining equipment comprised of two electricshovels and 24 haul trucks and milling process equipment comprised of two 230kVprimary transformers, a primary crusher, a semi-autogenous mill, two ballmills, various motors for the mills, two multi-hearth molybdenum roasters, 16flotation cells and other milling process equipment.

 

Asdescribed above in “—Restructuring and Suspension of Project Development,” weare maintaining equipment orders for custom-built grinding and other milling process equipment as a result ofnegotiations with vendors related to construction schedule,  delivery timelines, storage and paymentterms.  We have cancelled some miningequipment orders, and expect to cancel or suspend the remaining miningequipment purchase contracts during the third quarter of 2009.

 

Thefollowing table sets forth Eureka Moly’s cash commitments under mining andmilling Purchase Contracts at June 30, 2009 (in millions), inclusive ofmining equipment contracts that are still being renegotiated.

 

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**CashCommitments under Purchase Contracts**

 
| **Period**            | ** ** | **As of  June 30, 2009** | ** ** |
|-----------------------|------------|-------------------------------|------------|
| 3rd Quarter 2009 |       | 6.7                           |       |
| 4th Quarter 2009 |       | 4.3                           |       |
| Total  2009           |       | 11.0                          |       |
| 2010                  |       | 65.0                          |       |
| 2011                  |       | 48.2                          |       |
| 2012                  |       | 30.3                          |       |
| Total                 |       | $                             | 154.5      |   |
|                       |            |                               |            |  |

 

Cashcommitments under Purchase Contracts are inclusive of $51 million under millingprocess equipment orders (approximately $45 million due through the end of2010, and $6 million in 2011), and $103.5 million in mining equipment ordersthat are being renegotiated as described below.

 

Wealso incurred approximately $0.7 million in equipment contract cancellationcosts during the second quarter of 2009. Such costs were a combination of deposits forfeited and costs to cancelcontracts.  At June 30, 2009, themajority of contracts had been cancelled or suspended.  We expect that the remaining contracts,related to mining equipment, will be cancelled or suspended by the end of thethird quarter of 2009.

 

As we continue therenegotiation or cancellation of Purchase Contracts that have not already beensuccessfully renegotiated, cancelled or suspended, we will take all appropriateaction to minimize any losses, but could be subject to claims or penaltiesunder the contracts or applicable law. The cancellation or suspension of certain contracts could cause a delayin the commencement of operations, have ramifications under the Joint Venturewith POS-Minerals and could add to the cost to develop our interest in the Mt.Hope Project.

 

Wealso estimate that we will be required to pay approximately $2.3 million inadditional handling, storage, freight and insurance costs related to thecustom-build grinding and other milling process equipment.  Based on our current plan, expectedtimetable, and the results of such negotiations, we expect to make additionalpayments of approximately $45 million under these milling process equipmentorders through the end of 2010, and $6 million in 2011.  As additional financing is secured andequipment procurement is restarted, agreements that were suspended will berenegotiated under current market terms and conditions.

 

**Changes inAccounting Policies**

** **

On January 1,2009, we adopted Statement of Financial Accounting Standards No. 160,“Noncontrolling Interests in Consolidated Financial Statements — an amendmentof ARB No. 51,” the provisions of which, among others, requires thatminority interests be renamed noncontrolling interests and that a companypresent such noncontrolling interests as equity for all periods presented.  The POS-Minerals contributions attributableto their 20% interest are shown as noncontrolling interest in the financialstatements.

 

**ITEM3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

** **

**Commodity Price Risk**

** **

We area development stage company in the business of the exploration, development andmining of properties primarily containing molybdenum.  As a result, upon commencement of production,our financial performance could be materially affected by fluctuations in themarket price of molybdenum and other metals we may mine.  The market prices of metals can fluctuatewidely due to a number of factors.  Thesefactors include fluctuations with respect to the rate of inflation, theexchange rates of the U.S. dollar and other currencies, interest rates, globalor regional political and economic conditions, banking environment, global andregional demand, production costs, and investor sentiment.

 

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Inorder to better manage commodity price risk and to seek to reduce the negativeimpact of fluctuations in prices, we will seek to enter into long term supplycontracts.  On December 28, 2007, weentered into a molybdenum supply agreement with ArcelorMittal that provides forArcelorMittal to purchase 6.5 million pounds of molybdenum per year, plusor minus 10%, once the Mt. Hope Project commences commercial operations atminimum specified levels. The supply agreement provides for a floor price alongwith a discount for spot prices above the floor price and expires five yearsafter the commencement of commercial production at the Mt. HopeProject.  Both the floor and thresholdlevels at which the percentage discounts change are indexed to a producer priceindex.

 

Additionally,on May 14, 2008, we entered into a molybdenum supply agreement with SeAHBesteel Corporation (“SeAH Besteel”), Korea’s largest manufacturer of specialtysteels, which provides for SeAH Besteel to purchase 4.0 million pounds ofmolybdenum per year, plus or minus 10%, once the Mt. Hope Projectcommences commercial operations at minimum specified levels. Like theArcelorMittal supply agreement, the supply agreement with SeAH Besteel providesfor a floor price along with staged discounts for spot prices above the floorprice and expires five years from the date of first supply under the agreement.  Both the floor and threshold levels at whichthe percentage discounts change are indexed to a producer price index.

 

On August 8,2008, the Company entered into a molybdenum supply agreement (the “SojitzAgreement”) with Sojitz Corporation.  TheSojitz Agreement provides for the supply of 5.0 million pounds per year ofmolybdenum for five years, beginning once the Mt. Hope Project reaches certainminimum commercial production levels. One million annual pounds sold under the Sojitz Agreement will be subjectto a per-pound molybdenum floor price and is offset by a flat discount to spotmoly prices above the floor.  Theremaining 4.0 million annual pounds sold under the Sojitz Agreement will besold with reference to spot moly prices without regard to a floor price.

 

Allthree long term supply agreements provide for supply only after commercialproduction levels are achieved, and no provisions require the Company todeliver product or make any payments if commercial production is neverachieved, or drops off in later periods. The agreements require that monthly shortfalls be made up only if theCompany’s portion of Mt. Hope production is available for delivery, afterPOS-Minerals has taken its share.  In noevent do these requirements to make up monthly shortfalls become obligations ofthe Company if production does not meet targeted levels.

 

Furthermore,each of the agreements have take-or-pay provisions that require the buyers toeither take delivery of product made available by the Company, or to pay asthough they had taken delivery pursuant to the term of the agreements.

 

Whilewe have not used derivative financial instruments in the past, we may elect toenter into derivative financial instruments to manage commodity pricerisk.  We have not entered into any marketrisk sensitive instruments for trading or speculative purposes and do notexpect to enter into derivative or other financial instruments for trading orspeculative purposes.

 

**Interest Rate Risk**

 

As of June 30,2009, we had a balance of cash and cash equivalents and restricted cash of$70.1 million.  If and to the extent thatthese funds were invested in interest bearing instruments during the entire sixmonth period ended June 30, 2009, a hypothetical 1% point decrease in therate of interest earned on these funds would affect our income for the sixmonth period ended June 30, 2009 by approximately $0.4 million.

 

**ITEM4.        CONTROLS AND PROCEDURES**

** **

Anevaluation was performed under the supervision and with the participation ofour management, including our principal executive officer and principalfinancial officer, of the effectiveness of our disclosure controls andprocedures (as defined in Rules 13a-15(e) and 15d-15(e) underthe Securities Exchange Act of 1934) as of the end of the period covered bythis Quarterly Report on Form 10-Q. Based on the foregoing, our management concluded that our disclosurecontrols and procedures are effective to ensure that information required to bedisclosed by us in reports that we file or submit under the Exchange Act is recorded,processed, summarized and reported within the 

 

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time periods specified in the Securities and ExchangeCommission rules and forms and such information is accumulated andcommunicated to our management, including our principal executive officer andprincipal financial officer, to allow timely decisions regarding requireddisclosure.

 

Therewere no changes in our internal control over financial reporting that occurredduring the quarter ended June 30, 2009 that have materially affected, orare reasonably likely to materially affect, our internal control over financialreporting.

 

**PART II**

** **

**OTHER INFORMATION**

 

**ITEM 1.        LEGAL PROCEEDINGS**

 

We areinvolved from time to time in litigation incidental to our business. We believethat the outcome of current litigation is not expected to have a materialadverse effect on our results of operations or financial condition.

 

**ITEM 1A.     RISK FACTORS.**

 

OurAnnual Report on Form 10-K for the year ended December 31, 2008, includingthe discussion under the heading “Risk Factors” therein, and this reportdescribe risks that may materially and adversely affect our business, resultsof operations or financial condition. The risks described in our Annual Report on Form 10-K and thisreport are not the only risks facing us. Additional risks and uncertainties notcurrently known to us or that we currently deem to be immaterial also maymaterially adversely affect our business, financial condition and/oroperations.

** **

**Special Note Regarding Forward-Looking Statements**

** **

Certainstatements in this report may constitute forward-looking statements, whichinvolve known and unknown risks, uncertainties and other factors, which maycause actual results, performance or achievements of our Company, theMt. Hope Project, Liberty Property and our other projects, or industryresults, to be materially different from any future results, performance orachievements expressed or implied by such forward-looking statements.  We use the words “may,” “will,” “believe,”“expect,” “anticipate,” “intend,” “future,” “plan,” “estimate,” “potential” andother similar expressions to identify forward-looking statements.  These forward-looking statements are subjectto a number of risks, uncertainties and assumptions that could cause actualresults to differ materially from those in the forward looking statements. Suchrisks, uncertainties and assumptions are described in the “Risk Factors”section included in our Annual Report on Form 10-K for the year ended December 31,2008 and this report, and include, among other things:

 

·                  our dependence on the success of the Mt. Hope Project;

·                  the ability to obtain all required permits and approvals for theMt. Hope Project and the Liberty Property;

·                  issues related to the management of the Mt. Hope Project pursuantto the Mt. Hope Joint Venture;

·                  risks related to the failure of POS-Minerals to make contributionspursuant to the Mt. Hope Joint Venture;

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

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

·                  the timing of exploration, development and production activities andestimated future production, if any;

·                  estimates related to costs of production, capital, operating andexploration expenditures;

·                  requirements for additional capital and the possible sources of suchcapital;

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

·                  title disputes or claims; and

·                  limitations of insurance coverage.

 

Youshould not place undue reliance on these forward-looking statements, whichspeak only as of the date of this report. These forward-looking statements are based on our current expectationsand are subject to a number of risks and uncertainties, including those setforth above.  Although we believe thatthe expectations reflected in these forward-looking statements are reasonable,our actual results could differ materially from those expressed in these 

 

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forward-looking statements, and any events anticipatedin the forward-looking statements may not actually occur.  Except as required by law, we undertake noduty to update any forward-looking statements after the date of this report toconform those statements to actual results or to reflect the occurrence ofunanticipated events.  We qualify allforward-looking statements contained in this report by the foregoing cautionarystatements.

 

**ITEM2.        UNREGISTERED SALES OF EQUITYSECURITIES AND USE OF PROCEEDS**

** **

None.

 

**ITEM3.        DEFAULTS UPON SENIOR SECURITIES**

** **

None.

 

**ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OFSECURITY HOLDERS**

** **

Weheld our Annual Meeting of Stockholders on June 18, 2009 (the “AnnualMeeting”) to (1) elect three Class II members to our Board ofDirectors and (2) ratify the selection of PricewaterhouseCoopers LLP asour independent auditor.

 

At thetime of the record date for our Annual Meeting, April 22, 2009, there were71,977,875 shares of our common stock outstanding.  At our Annual Meeting, a total of 40,612,230,or approximately 56% of our total outstanding shares, were represented inperson or by proxy.

 

Theresults of our Annual Meeting were as follows:

 

**(1)           Electionof Three Class II Members to our Board of Directors**

 

Ourstockholders elected the following three Class II Members to serve asmembers of our Board of Directors:

 
| **Name**                     | ** ** | **Votes Cast For** | ** ** | **Votes Withheld** |
|------------------------------|------------|--------------------|------------|--------------------|
| Ricardo  M. Campoy           |       | 40,098,647         |       | 513,583            |
| R.  David Russell            |       | 39,934,256         |       | 677,974            |
| Andrew  G. Sharkey, III |       | 39,637,515         |       | 974,715            |

 

Theterms of office of directors Bruce D. Hansen, Jean-Pierre M. Ergas, Gary A.Loving, Mark A. Lettes and Richard F. Nanna continued after the Annual Meeting.

 

**(2)           Ratificationof the Selection of PricewaterhouseCoopers LLP as our Independent Auditor**

 

Ourstockholders ratified the selection of PricewaterhouseCoopers LLP as ourindependent auditor by the following vote:

 
| For               |   | 40,229,970 |   |
|-------------------|--------|------------|--------|
| Against           |   | 273,971    |   |
| Abstain           |   | 108,289    |   |
| Broker  Non-Votes |   | 2,296,358  |   |
| Bank  Non-Votes   |   | 4,922,383  |   |

 

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**ITEM 5.        OTHER INFORMATION**

** **

None.

 

**ITEM 6.        EXHIBITS**

 
| **Exhibit  Number** | ** ** | **Description of Exhibit**                                                                                                                   |
|---------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------|
| 10.46†         |       | Form of Stay Bonus  Agreement (Filed as Exhibit 10.1 to our Current Report on Form 8-K  filed on May 12, 2009)           |
| 10.47†         |       | Daniel G. Zang Waiver and  Release Agreement (Filed as Exhibit 10.1 to our Current Report on  Form 8-K filed on May 20, 2009) |
| 31.1                |       | Certification  of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002                                    |
| 31.2                |       | Certification  of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley  Act of 2002                                    |
| 32.1                |       | Certification  of Chief Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002                                    |
| 32.2                |       | Certification  of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley  Act of 2002                                    |

 

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† Previously filed asindicated and incorporated herein by reference.

 

**SIGNATURES**

 

Pursuantto the requirements of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned,thereunto duly authorized.

 

Dated: August 4, 2009

 
|   | GENERAL  MOLY, INC. |
|--------|---------------------|
|   |                |
|   | By:                 | /s/  David A. Chaput |
|   |                | David  A. Chaput |
|   |                | Chief  Financial Officer and |
|   |                | Duly  Authorized Officer |

 

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