**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 ended  March 31, 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 mark whether the registrant (1) hasfiled all reports required to be filed by Section 13 or 15(d) of theExchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for at least 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 mark whether the registrant is alarge accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See the definitions of “large accelerated filer,” “acceleratedfiler” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

 

Indicate by check mark whether the registrant is ashell company (as defined in Rule 12b-2 of the Exchange Act).  **YES ****o**** NO ****x**

 

The number of shares outstanding of registrant’scommon stock as of April 28, 2009 was 71,972,875.

 

 

 

----

 

**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)**

 
| ** **                                                                                                                                 | ** ** | **March 31,  2009** | ** ** | **December 31,  2008** | ** ** |
|--------------------------------------------------------------------------------------------------------------------------------------------|------------|--------------------------|------------|-----------------------------|------------|
| **ASSETS**                                                                                                                                 | ** ** | ** **               | ** ** | ** **                  | ** ** |
| CURRENT ASSETS                                                                                                                             |       |                     |       |                        |       |
| Cash and cash equivalents                                                                                                                  |       | $                        | 77,295     |                        | $          | 78,462 |   |
| Restricted cash — Eureka Moly, LLC                                                                                                    |       | 3,139                    |       | 13,915                      |       |
| Deposits, prepaid expenses and other current assets                                                                                        |       | 462                      |       | 326                         |       |
| Total Current Assets                                                                                                                       |       | 80,896                   |       | 92,703                      |       |
| Mining properties, land and water rights                                                                                                   |       | 87,487                   |       | 79,292                      |       |
| Deposits on project property, plant and equipment                                                                                          |       | 32,209                   |       | 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                                                                                                     |       | 712                      |       | 763                         |       |
| Other assets                                                                                                                               |       | 2,994                    |       | 2,994                       |       |
| TOTAL ASSETS                                                                                                                               |       | $                        | 217,717    |                        | $          | 220,929 |   |
| ** **                                                                                                                                 | ** ** | ** **               | ** ** | ** **                  | ** ** |
| **LIABILITIES AND EQUITY**                                                                                                                 | ** ** | ** **               | ** ** | ** **                  | ** ** |
| CURRENT LIABILITIES                                                                                                                        |       |                     |       |                        |       |
| Accounts payable and accrued liabilities                                                                                                   |       | $                        | 6,302      |                        | $          | 6,692 |   |
| Provision for post closure reclamation and remediation costs                                                                               |       | 90                       |       | 90                          |       |
| Current portion of long term debt                                                                                                          |       | 128                      |       | 128                         |       |
| Total Current Liabilities                                                                                                                  |       | 6,520                    |       | 6,910                       |       |
| Provision for post closure reclamation and remediation costs, net of  current portion                                                      |       | 641                      |       | 641                         |       |
| Long term debt, net of current portion                                                                                                     |       | 298                      |       | 330                         |       |
| Total Liabilities                                                                                                                          |       | 7,459                    |       | 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,  71,977,875 and 71,852,646 shares issued and outstanding, respectively |       | 72                       |       | 72                          |       |
| Additional paid-in capital                                                                                                                 |       | 185,492                  |       | 185,179                     |       |
| Accumulated deficit before exploration stage                                                                                               |       | (213                     | )          | (213                        | )          |
| Accumulated deficit during exploration and development stage                                                                               |       | (74,990                  | )          | (71,990                     | )          |
| Total General Moly, Inc. stockholders’ equity                                                                                    |       | 110,361                  |       | 113,048                     |       |
| Noncontrolling interest                                                                                                                    |       | 99,897                   |       | 100,000                     |       |
| Total Equity (NOTE 7)                                                                                                                      |       | 210,258                  |       | 213,048                     |       |
| **TOTAL LIABILITIES AND EQUITY**                                                                                                           |       | $                        | 217,717    |                        | $          | 220,929 |   |

 

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

 

2

----

 

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

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

 
| ** **                                                                         | ** ** | **Three Months Ended**   | ** ** | **January 1, 2002  (Inception of  Exploration Stage)  to** | ** ** |
|------------------------------------------------------------------------------------|------------|--------------------------|------------|--------------------------------------------------------------------------------|------------|
| ** **                                                                         | ** ** | **March 31,  2009** | ** ** | **March 31,  2008**                                                       | ** ** | **March 31,  2009** | ** ** |
| REVENUES                                                                           |       | $                        | —     |                                                                           | $          | — |   | $ | — |   |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| OPERATING EXPENSES:                                                                |       |                     |       |                                                                           |       |   |   |
| Exploration and evaluation                                                         |       | 198                      |       | 2,525                                                                          |       | 36,902 |   |
| General and administrative expense                                                 |       | 2,913                    |       | 3,225                                                                          |       | 42,196 |   |
| TOTAL OPERATING EXPENSES                                                           |       | 3,111                    |       | 5,750                                                                          |       | 79,098 |   |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| LOSS FROM OPERATIONS                                                               |       | (3,111                   | )          | (5,750                                                                         | )          | (79,098 | ) |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| OTHER INCOME                                                                       |       |                     |       |                                                                           |       |   |   |
| Interest and dividend income                                                       |       | 8                        |       | 530                                                                            |       | 3,940 |   |
| Other income                                                                       |       | —                   |       | —                                                                         |       | 65 |   |
| TOTAL OTHER INCOME                                                                 |       | 8                        |       | 530                                                                            |       | 4,005 |   |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| LOSS BEFORE TAXES                                                                  |       | (3,103                   | )          | (5,220                                                                         | )          | (75,093 | ) |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| INCOME TAXES                                                                       |       | —                   |       | —                                                                         |       | — |   |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| CONSOLIDATED NET LOSS                                                              |       | (3,103                   | )          | (5,220                                                                         | )          | (75,093 | ) |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| LESS: NET LOSS ATTRIBUTABLE TO NONCONTROLLING INTEREST                             |       | 103                      |       | —                                                                         |       | 103 |   |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| NET LOSS ATTRIBUTABLE TO GENERAL MOLY, INC.                                        |       | $                        | (3,000     | )                                                                              | $          | (5,220 | ) | $ | (74,990 | ) |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| BASIC AND DILUTED NET LOSS ATTRIBUTABLE TO GENERAL MOLY PER SHARE OF  COMMON STOCK |       | $                        | (0.04      | )                                                                              | $          | (0.08 | ) |   |   |
|                                                                               |       |                     |       |                                                                           |       |   |   |
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING — BASIC AND  DILUTED     |       | 71,964                   |       | 66,652                                                                         |       |   |   |

 

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

 

3

----

 

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

** **

**(Unaudited — In thousands)**

 
| ** **                                                                                     | ** ** | **Three Months Ended**   | ** ** | **January 1,  2002  (Inception of  Exploration  Stage) to** | ** ** |
|------------------------------------------------------------------------------------------------|------------|--------------------------|------------|----------------------------------------------------------------------------|------------|
| ** **                                                                                     | ** ** | **March 31,  2009** | ** ** | **March 31,  2008**                                                   | ** ** | **March 31,  2009** | ** ** |
| CASH FLOWS FROM OPERATING ACTIVITIES:                                                          |       |                     |       |                                                                       |       |   |   |
| Consolidated Net loss                                                                          |       | $                        | (3,103     | )                                                                          | $          | (5,220 | ) | $ | (75,093 | ) |
| Adjustments to reconcile net loss to net cash used by operating  activities:                   |       |                     |       |                                                                       |       |   |   |
|                                                                                           |       |                     |       |                                                                       |       |   |   |
| Services and expenses paid with common stock                                                   |       | —                   |       | —                                                                     |       | 1,990 |   |
| Depreciation and amortization                                                                  |       | 85                       |       | 72                                                                         |       | 638 |   |
| Equity compensation for employees and directors                                                |       | 284                      |       | 871                                                                        |       | 12,268 |   |
| (Increase) decrease in deposits, prepaid expenses and other                                    |       | (136                     | )          | 175                                                                        |       | (370 | ) |
| Decrease (increase) in restricted cash held for electricity  transmission                      |       | 259                      |       | —                                                                     |       | (12,286 | ) |
| (Decrease) increase in accounts payable and accrued liabilities                                |       | (390                     | )          | (2,430                                                                     | )          | 6,280 |   |
| Increase in post closure reclamation and remediation costs                                     |       | —                   |       | 88                                                                         |       | 522 |   |
| Net cash used by operating activities                                                          |       | (3,001                   | )          | (6,444                                                                     | )          | (66,051 | ) |
|                                                                                           |       |                     |       |                                                                       |       |   |   |
| CASH FLOWS FROM INVESTING ACTIVITIES:                                                          |       |                     |       |                                                                       |       |   |   |
| Payments for the purchase of equipment                                                         |       | —                   |       | (155                                                                       | )          | (1,324 | ) |
| Purchase of securities                                                                         |       | —                   |       | —                                                                     |       | (137 | ) |
| Purchase and development of mining properties, land and water rights                           |       | (8,200                   | )          | (7,201                                                                     | )          | (81,954 | ) |
| Deposits on property, plant and equipment                                                      |       | (710                     | )          | (7,353                                                                     | )          | (32,209 | ) |
| (Increase) in restricted cash held for reclamation bonds                                       |       | —                   |       | (110                                                                       | )          | (642 | ) |
| Cash provided by sale of marketable securities                                                 |       | —                   |       | —                                                                     |       | 246 |   |
| Net cash (used by) investing activities                                                        |       | (8,910                   | )          | (14,819                                                                    | )          | (116,020 | ) |
|                                                                                           |       |                     |       |                                                                       |       |   |   |
| CASH FLOWS FROM FINANCING ACTIVITIES:                                                          |       |                     |       |                                                                       |       |   |   |
| Proceeds from issuance of stock, net of issuance costs                                         |       | —                   |       | 11,644                                                                     |       | 165,105 |   |
| Cash proceeds from POS-Minerals Corporation                                                    |       | —                   |       | 50,000                                                                     |       | 100,000 |   |
| Cash paid to POS-Minerals Corporation for purchase price adjustment                            |       | —                   |       |                                                                       |       | (2,994 | ) |
| Decrease (increase) decrease in restricted cash — Eureka Moly, LLC                        |       | 10,776                   |       | (39,459                                                                    | )          | (3,139 | ) |
| Net increase in debt                                                                           |       | (32                      | )          | 19                                                                         |       | 348 |   |
| Net cash provided by financing activities                                                      |       | 10,744                   |       | 22,204                                                                     |       | 259,320 |   |
| Net (decrease) increase in cash and cash equivalents                                           |       | (1,167                   | )          | 941                                                                        |       | 77,249 |   |
| Cash and cash equivalents, beginning of period                                                 |       | 78,462                   |       | 78,371                                                                     |       | 46 |   |
| Cash and cash equivalents, end of period                                                       |       | $                        | 77,295     |                                                                       | $          | 79,312 |   | $ | 77,295 |   |
|                                                                                           |       |                     |       |                                                                       |       |   |   |
| NON-CASH INVESTING AND FINANCING ACTIVITIES:                                                   |       |                     |       |                                                                       |       |   |   |
| Equity compensation capitalized as development                                                 |       | $                        | 29         |                                                                       | $          | 412 |   | $ | 4,158 |   |
| 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.**

 

4

----

 

**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 conducting exploration andevaluation activities on our Liberty molybdenum property (the “Liberty Property”)in Nye County, Nevada.  In addition, wehave certain other, non-core, mineral interests in the Western United Statesthat we are currently evaluating for potential development or sale.

 

**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,including our lease of the Mt. Hope Project into a newly formed entity, EurekaMoly, 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 has made its first and secondcash contributions 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”) thatcertain specified conditions (the “ROD Contribution Conditions”) are met,including the receipt of major operating permits, the Record of Decision (“ROD”)from the United States Bureau of Land Management for the project has becomeeffective, and any administrative or judicial appeals with respect thereto arefinal.  We are currently targeting theeffectiveness of the ROD and the satisfaction of the ROD ContributionConditions to occur in mid-year 2010, but circumstances beyond our controlcould cause the effectiveness of the ROD and / or the satisfaction of the RODContribution 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 by contributingan additional $56.0 million plus its 20% share of all Joint Venture costsincurred from the Closing Date to the ROD Contribution Date or reduce itsownership interest to 13% and fund its remaining 13% share of all Joint Venturecosts incurred from the Closing Date to the ROD Contribution Date.  Such election is required to be made prior toJanuary 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, the Joint Venture withPOS-Minerals requires Eureka Moly to return to POS-Minerals a portion of thecontributions made.  If required, thereturn of contributions to POS-Minerals will be $36.0 million, with no correspondingreduction in POS-Minerals’ ownership interest in Eureka Moly, if POS-Mineralshas elected to retain its 20% interest and has contributed the additional $56.0million required by the agreement.  Ifrequired, the return of contributions to POS-Minerals will be $33.0 million ifPOS-Minerals has elected to reduce its ownership interest to 13%.  Based on our current plan and expectedtimetable it is unlikely the Mt. Hope Project will 

 

5

----

 

achieve commercial production by December 31,2011.  Such return of contributions arerequired to be made on or prior to January 27, 2012.

 

TheInitial Contributions of $100.0 million that were made by POS-Minerals during2008 are available to fund the Mt. Hope Project Joint Venture costsincurred subsequent to the Closing Date. 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.  In the event Eureka Moly isrequired to return a portion of the POS-Minerals contributions due to a delayin production beyond December 31, 2011, as discussed above, such amountwill be funded by the Company only.

 

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

** **

Ourcash balance at March 31, 2009 was $77.3 million compared to$78.5 million at December 31, 2008. Additionally we have $3.1 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.

 

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%.   During 2008, we engaged Barclays Capital andCredit Suisse Securities (USA) LLC to assist in our efforts to pursue projectfinancing for the Mt. Hope Project.  Ourability to obtain such project financing depends on the effectiveness and thetiming of the ROD, the anticipated price of molybdenum, our projected fixed andvariable operating costs and the overall state of the economy and the creditmarkets in general.

 

Recentdisruptions 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 the creditmarkets.  We may not be able to obtainthe necessary financing for the Mt. Hope Project in a timely manner, oncustomary or favorable terms, or at all.

 

Giventhe continued uncertainty in the project finance market, current low molybdenumprices, and a longer than expected timeframe to receive the federal permits tobegin construction at the Mt. Hope project, on March 26, 2009 weimplemented a cash conservation plan to reduce expenditures and conserve cashfor 2009 and 2010 in order to maximize financial flexibility.  With our March 31, 2009 consolidated cashbalance of $80.4 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.

 

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 is negotiatingwith the manufacturers regarding costs incurred to date with respect to equipmentfabrication, storage costs, the timing of restarting fabrication and futurepayment terms.  Based on our currentplan,  expected timetable, and results ofsuch negotiations,we expect to make additional payments of approximately $46million under milling process equipment orders through the end of 2010, and $16million in 2011.

 

Ordersfor mining equipment will be cancelled or suspended.  The lead times and costs associated with manyof these items have declined in recent months. Once financing is secured, the Company anticipates placing orders for 

 

6

----

 

this mining equipment again.  The Company will continue to evaluate alloptions to decrease Mt. Hope’s initial capital requirement and facilitate atimelier re-start of the project development.

 

Thecash conservation plan will also reduce our total cash utilization toapproximately $1 million per month by the fourth quarter of this year for allexpenditures other than the key equipment purchases discussed above.  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, currently approximately60% complete, have been suspended pending the completion of financing.

 

Thecash conservation plan has also impacted General Moly employees and contractorsupport.  The Company has initiated plansto reduce administrative expenses by $5 million per year through a combinationof compensation restructuring and position eliminations.  In March 2009 we incurred costs relatedto one-time employee termination benefits totaling $0.8 million.  All of the affected employees were notifiedin March 2009.  The majority of theaffected employees are not required to render service beyond 60 days, andaccordingly, costs associated with these one-time termination benefits wererecognized in March, 2009.  Additionalcosts of $0.1 million will be recognized during subsequent quarters, for thosefew affected employees who will render service beyond 60 days.

 

Wealso expect to incur approximately $3 million in equipment contractcancellation and suspension costs during the second quarter of 2009.  Such costs will be a combination of depositsforfeited and cash costs to cancel or suspend contracts.  At March 31, 2009, none of the contractshad been cancelled or suspended and, accordingly, no cancellation or suspensioncosts have been recognized.  We expectsubstantially all of the cancellation and suspension of contracts will occurduring the three months ended June 30, 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, and debt from private investment groups, as well asthe 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 timely manner.  Additionally, if the currently estimatedcosts 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.

 

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.

 

**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 results reported inthese interim Condensed Consolidated Financial Statements are not necessarilyindicative of the 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.

 

7

----

 

*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 whichestablishes our ownership interest in Eureka Moly at 80%.  At March 31, 2009 and December 31,2008, the consolidated financial statements include all of our wholly ownedsubsidiaries and our majority owned Joint Venture Eureka Moly.  On January 1, 2009, we adopted Statementof Financial Accounting Standards No. 160 - Noncontrolling Interests inConsolidated Financial Statements — an amendment of ARB No. 51 (SFAS No. 160),the provisions of which, among others, requires that minority interests berenamed noncontrolling 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 financialstatements.   The prior periods presentedhave also been reclassified to conform to the current classification requiredby 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.

 

*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 primarilyengaged in development of the Mt. Hope Project and exploration andevaluation of the Liberty Property until we enter the 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 7,445,434and 9,204,481 shares of common stock, options to purchase 3,490,490 and4,162,500 shares of common stock and awards totaling 185,000 and 255,000 at March 31,2009 and 2008, respectively, were not included in the computation of dilutedearnings per share for the three months ended March 31, 2009 and 2008because to do so would have been antidilutive. Therefore, basic loss per share is the same as 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 basisover proven and probable reserves.

 

8

----

 

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 forIncome Taxes” (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.

 

*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 reasonably estimated.

 

Estimates of such liabilities are based upon currentlyavailable facts, existing technology and presently enacted laws and regulationstaking into consideration the likely effects of inflation and other societaland economic factors, and include estimates of associated legal costs.  These amounts also reflect prior experiencein remediating contaminated sites, other companies’ clean-up experience anddata released by The Environmental Protection Agency or otherorganizations.  Such estimates are bytheir nature imprecise and can be expected to be revised over time because ofchanges in government regulations, operations, technology and inflation.  Recoveries are evaluated separately from theliability and, when recovery is assured, the Company records and reports anasset 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 (BS) model to determine the 

9

----

 

fair value of stock-basedawards under Statement of Financial Accounting Standards (SFAS) No. 123(R),*Share-Based Payment*.  Forstock-based compensation that is earned upon the satisfaction of a servicecondition, the cost is recognized on a straight-line basis (net of estimatedforfeitures) over the requisite vesting period (up to three years). Awards expire five years from the date of vesting.

 

Further informationregarding stock-based compensation can be found in Note 6 — “Equity Incentives.”

 

**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 March 31,2009 and December 31, 2008 (in thousands):

 

**Mining Properties, Land and Water Rights**

 
| ** **                     | ** ** | **At March 31,  2009** | ** ** | **At  December 31,  2008** | ** ** |
|--------------------------------|------------|----------------------------------|------------|---------------------------------|------------|
| Mt. Hope Project:         |       |                             |       |                            |       |
| Development costs              |       | $                                | 62,921     |                            | $          | 54,722 |   |
| Mineral, land and water rights |       | 10,253                           |       | 10,253                          |       |
| Advance Royalties              |       | 3,650                            |       | 3,650                           |       |
| Total Mt. Hope Project    |       | 76,824                           |       | 68,625                          |       |
| Total Liberty Property         |       | 9,774                            |       | 9,778                           |       |
| Other Properties               |       | 889                              |       | 889                             |       |
| Total                          |       | $                                | 87,487     |                            | $          | 79,292 |   |

 

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

** **

Duringthe three months ended March 31, 2009 we issued 128,562 shares ofcommon stock pursuant to stock awards.

 

At March 31,2009, 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.

 

**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 amended the 2006Plan to increase the number of shares that may be issued under the 2006Plan.   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 767,833 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 are settled with cash.  The Company settles the exercise of otherstock-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 March 31,2009, there was $2.3 million of total unrecognized compensation cost related toshare-based compensation arrangements, which is expected to be recognized overa weighted-average period of 1.5 years.

 

10

----

 

*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 Valuation Assumptions**

 
| Expected Life *                                                                      |   | 3.5  to 5.5 years |   |
|--------------------------------------------------------------------------------------|--------|-------------------|--------|
| Interest Rate                                                                        |   | 1.13%  to 5.05%   |   |
| Volatility **                                                                        |   | 67%  to 94%       |   |
| Dividend Yields                                                                      |   | —            |   |
|                                                                                 |   |              |   |
| Weighted Average Fair Value of Stock Appreciation Rights Granted  During the Quarter |   | $0.84             |   |

 

----

*   The expected life is the number of yearsthat the Company estimates, based upon history, that options 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 optionsand other relevant factors.

 

The following tablesummarizes option activity under the Plans for the three months ended March 31,2009:

 
| **Stock Option Activity** | ** ** | **Weighted  Average  Exercise  Price** | ** ** | **Number of  Shares  Under  Option** | ** ** |
|-------------------------------------|------------|----------------------------------------|------------|-------------------------------------------|------------|
| Balance at January 1, 2009     |       | $                                      | 5.27       |                                      | 3,855,490  |   |
| Options Granted                     |       | $                                      | 0.96       |                                      | 1,166      |   |
| Options Exercised                   |       | —                                 |       | —                                    |       |
| Options Forfeited                   |       | 7.93                                   |       | (236,166                                  | )          |
| Options Expired                     |       | 2.80                                   |       | (130,000                                  | )          |
| Balance at March 31, 2009      |       | $                                      | 5.16       |                                      | 3,490,490  |   |
|                                |       |                                   |       |                                      |       |
| Exercisable at March 31, 2009  |       |                                   |       | 2,662,163                                 |       |

 

For the three monthsended March 31, 2009, there were 450,000 SARS granted at a weightedexercise average price of $0.83 per right, and 61,260 were forfeited.  No SARS were exercised, and none expiredduring the three months ended March 31, 2009.    At March 31, 2009, the aggregateintrinsic value of exercisable (fully vested) options was $0.1 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 forservices.  Incentive based grantsgenerally vest and stock is received without restriction to the extent ofone-third of the granted stock 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 

 

11

----

 

members of the Board ofDirectors that are earned based on a required service period is recognized overthe vesting period of one to two years. Stock awards issued to Board members that have no required serviceperiod are recognized as compensation upon grant of the 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 three months ended March 31,2009 a total of 128,562 shares were granted to Board Members and the Secretaryof the Company which had a weighted average grant date fair value of $1.16 pershare.

 

*Summaryof compensation recognized under equity incentives*

 

The following is a summaryof compensation recognized under equity incentives for the three months ended March 31,2009 (in thousands):

 

**Stock-Based Compensation Summary**

 
| Stock Options                                                                                                               |   | $      | 545    |   |
|-----------------------------------------------------------------------------------------------------------------------------|--------|--------|--------|--------|
| SARS                                                                                                                        |   | 44     |   |
| Forfeitures related to the restructuring                                                                                    |   | (567   | )      |
| Stock Awards:                                                                                                               |   |   |   |
| Vesting over time                                                                                                           |   | 44     |   |
| Board of Directors and Secretary                                                                                            |   | 320    |   |
| Total                                                                                                                       |   | $      | 386    |   |
| The compensation recognized under equity incentives for the three  months ended March 31, 2009 is recorded as follows: |   |   |   |
| Capitalized as Development                                                                                                  |   | $      | 29     |   |
| Expensed                                                                                                                    |   | 357    |   |
|                                                                                                                        |   | $      | 386    |   |

 

*Taxes*

 

A portion of the Company’sgranted options qualify as incentive stock options (ISO) for income taxpurposes.  As such, a tax benefit is notrecorded at the time the compensation cost related to the options is recordedfor book purposes due to the fact that an ISO does not ordinarily result in atax 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.

 

12

----

 

**NOTE 7 — CHANGES INEQUITY**

 
| ** **                                                   | ** ** | **Activity for  Three Months Ended** | ** ** |
|--------------------------------------------------------------|------------|------------------------------------------------|------------|
| **Changes in Equity**                              | ** ** | **March 31,  2009**                       | ** ** | **March 31,  2008** | ** ** |
| Total Equity December 31, 2008 & 2007, respectively |       | $                                              | 213,048    |   | $ | 102,105 |   |
| Common stock:                                                |       |                                           |       |   |   |
| At beginning of period                                       |       | 72                                             |       | 66 |   |
| Exercised Warrants                                           |       | —                                         |       | 3 |   |
| At end of period                                             |       | 72                                             |       | 69 |   |
|                                                         |       |                                           |       |   |   |
| Additional paid-in capital:                                  |       |                                           |       |   |   |
| At beginning of period                                       |       | 185,179                                        |       | 159,828 |   |
| Exercised Warrants                                           |       | —                                         |       | 11,645 |   |
| Stock based compensation                                     |       | 313                                            |       | 1,279 |   |
| At end of period                                             |       | 185,492                                        |       | 172,752 |   |
|                                                         |       |                                           |       |   |   |
| Accumulated deficit:                                         |       |                                           |       |   |   |
| At beginning of period                                       |       | (72,203                                        | )          | (57,789 | ) |
| Net loss                                                     |       | (3,000                                         | )          | (5,220 | ) |
| At end of period                                             |       | (75,203                                        | )          | (63,009 | ) |
|                                                         |       |                                           |       |   |   |
| Noncontrolling interest:                                     |       |                                           |       |   |   |
| At beginning of period                                       |       | 100,000                                        |       | 50,000 |   |
| Net loss attributable to noncontrolling interest             |       | (103                                           | )          | — |   |
| At end of period                                             |       | 99,897                                         |       | 50,000 |   |
|                                                         |       |                                           |       |   |   |
| Total Equity March 31, 2009 & 2008, respectively    |       | $                                              | 210,258    |   | $ | 159,812 |   |
|                                                              |            |                                                |            |  |  |  |  |  |  |

 

**NOTE 8 — INCOME TAXES**

 

At March 31,2009 and December 31, 2008, we had deferred tax assets principally arisingfrom the net operating loss carry forwards for income tax purposes multipliedby an 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 March 31, 2009 and December 31,2008.  The significant components of thedeferred tax asset at March 31, 2009 and December 31, 2008 were asfollows (in thousands):

 
| **Deferred Tax Asset**                      | ** ** | **March 31, 2009** | ** ** | **December 31, 2008** | ** ** |
|-------------------------------------------------------|------------|------------------------------|------------|---------------------------------|------------|
| Operating loss carry forward                          |       | $                            | 104,152    |                            | $          | 94,004 |   |
| Unamortized exploration expense                       |       | 7,641                        |       | 8,126                           |       |
| Deductible stock-based compensation                   |       | 2,779                        |       | 2,779                           |       |
| Deductible temporary difference                       |       | 114,572                      |       | 104,909                         |       |
| Taxable temporary difference – development costs |       | (45,234                      | )          | (38,674                         | )          |
| Net deductible temporary difference                   |       | 69,338                       |       | 66,235                          |       |
| Deferred tax asset                                    |       | $                            | 24,268     |                            | $          | 23,182 |   |
| Deferred tax asset valuation allowance                |       | $                            | (24,268    | )                               | $          | (23,182 | ) |
| Net deferred tax asset                                |       | $                            | —     |                            | $          | — |   |

 

At March 31,2009 and December 31, 2008, we had net operating loss carry forwards ofapproximately $104.2 million and $94.0 million, respectively, whichexpire in the years 2022 through 2029.

 

13

----

 

**NOTE 9—COMMITMENTS ANDCONTINGENCIES**

** **

**Mt. Hope Project**

 

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 March 31,2009 we have paid $3.3 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 currentestimates of the timing of securing project financing and construction capitalcosts.

 
| **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 |   |
|          |            |                        |            |                            |            |           |            |  |  |  |

 

----

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

 

(2)          After the mine begins production, Eureka Moly estimatesthat the Production Royalties will be in excess of the Annual Advance Royaltiesfor the life of the project and, further, the Construction Royalty Advance willbe fully recovered (credited against MHMI Production Royalties) by the end of2014.

 

**Depositson project property, plant and equipment (including subsequent events)**

 

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 

 

14

----

 

manufacturing. Contractual commitments for long lead items require progress paymentsduring the engineering and fabrication of the equipment and have cancellationpenalties in the event Eureka Moly cancels the contract.

 

At March 31,2009, we have contracts to purchase mining equipment comprised of two electricshovels, three blast hole drills, 24 haul trucks and two front end loaders andmilling process equipment comprised of two 230kV primary transformers, aprimary crusher, a semi-autogenous mill, two ball mills, various motors for themills, two multi-hearth molybdenum roasters, 16 flotation cells and othermilling process equipment (collectively, the “Purchase Contracts”).

 

Weplan to maintain equipment orders for custom-built grinding and other millingprocess equipment pending on-going negotiations with vendors related toconstruction schedule, delivery timelines, storage and payment terms.  We plan to cancel or suspend mining equipmentpurchase contracts.We expect to complete the renegotiations and cancellation orsuspension for certain other contracts by mid-2009. The following table setsforth Eureka Moly’s cash commitments under Purchase Contracts at March 31,2009 (in thousands), prior to such renegotiations.

 

**CashCommitments Under Purchase Contracts**

 
| **Year**                        | ** ** | **As of March 31,  2009** | ** ** |
|---------------------------------|------------|------------------------------------------|------------|
| 2009 – Remainder |       | $                                        | 71,369     |   |
| 2010                            |       | 100,244                                  |       |
| 2011                            |       | 17,798                                   |       |
| Total                           |       | $                                        | 189,411    |   |

 

**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 three months ended March 31,2009 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. Hope Projecton October 4, 2007.  During the yearended December 31, 2008 we also completed work on a pre-feasibility studyof our Liberty Property.  We continue toprudently advance the Liberty Property but do not expect to spend appreciableamounts of capital on the Liberty Property until market conditions warrant thedevelopment of this property.

 

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 threemonths ended March 31, 2009 we have spent approximately $122.7 million andhave $80.4 million remaining cash on hand for use in the development of the Mt.Hope Project and other cash requirements.

 

15

----

 

Giventhe continued uncertainty in the project finance market, current low molybdenumprices, and a longer than expected timeframe to receive the federal permits tobegin construction at the Mt. Hope project, on March 26, 2009 weimplemented a cash conservation plan to reduce expenditures and conserve cashfor 2009 and 2010 in order to maximize financial flexibility and conserve ourcash.  In addition to conserving cash,the plans implemented will retain the ability to start construction at the Mt.Hope project pending improvements in the molybdenum and capital markets. Withour March 31, 2009 consolidated cash balance of $80.4 million, we have thecapacity to continue our current level of permitting efforts, maintain effortsto secure project financing, and secure the most critical long lead equipmentfor 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 will continue full-time.  The Company will maintain its orders forgrinding, milling, and other specialty long lead equipment, although otherengineering, administrative and third-party work will be slowed orsuspended.  We will continue to work withCredit Suisse and Barclays to seek project financing.  Additionally, we will continue evaluating allsources of potential interim capital, including equity partners at the assetlevel and vendor financing.  Given ourstrong off-take agreements and other preparatory work completed, we believe theCompany is well positioned to execute a project finance facility once themolybdenum price and credit conditions improve.

 

**Restructuring and Suspension ofProject Development**

 

Asdiscussed above, we have implemented a cash conservation plan whereby totalcash utilization other than equipment purchases is anticipated to decline toapproximately $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, currently approximately60% 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 the Company’sability 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 is negotiatingwith the manufacturers regarding costs incurred to date with respect to equipmentfabricated, storage costs, the timing of restarting fabrication and futurepayment terms.  Based on our current planand expected timetable, we expect to make additional payments of approximately$46 million under milling process equipment orders through the end of 2010,and  $16 million in 2011.

 

Ordersfor mining equipment will be cancelled or suspended.  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 has also impacted General Moly employees and contractorsupport.  The Company has initiated plansto reduce administrative expenses by $5 million per year through a combinationof compensation restructuring and position eliminations.

 

**Permitting and Water Rights Update**

 

Followingrecent discussions with the BLM related to the Company’s hydrologic studies ofboth pit lake geochemistry and regional hydrology, the Company determined thatadditional analysis and data acquisition will be conducted to improve thetechnical adequacy of the studies.  Webelieve this further work 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 mid-year 2010.  We expect to receive the ROD approximatelymid-year 2010.  State-issued permitsrelated to Air Quality, Tailings Dam Safety, and Water Pollution Control areanticipated to be received well before the federal permit (ROD) is received.

 

16

----

 

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.  Subsequent to that ruling and the Company’sannouncement thereof, two appeals have been filed with a Nevada District Courtto challenge 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 amaterial negative impact on the Mt. Hope project.  District Court dates associated with theappeals have not been set nor has a timeframe been determined for resolution ofthese appeals; however, the Company anticipates the Court proceedings willlikely occur in the fourth quarter of 2009. Although the water application approvals are under appeal, the Companymaintains legal authority to continue further testing and development of thewell field at Mt. Hope.  In addition, weexpect the State Engineer to issue the final water permits in the secondquarter of 2009, which allows the use of all the granted water applications formining pending the final outcome of the appeal.

 

**The Mt. Hope Joint Venture**

 

Effectiveas of January 1, 2008, we contributed all of our interest in the assetsrelated to the Mt. Hope Project, including the Mt. Hope Lease, toEureka Moly, and in February 2008 entered into the Mt. Hope ProjectJoint Venture with POS-Minerals.  Underthe terms of the Joint Venture, POS-Minerals owns a 20% interest in EurekaMoly, and General Moly, through a subsidiary, owns an 80% interest. Theseownership interests and/or the required contributions under the Joint Venturecan change as discussed below.

 

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.  Additionally, in the third quarterof 2008, we paid to POS-Minerals $3.0 million as a final purchase priceadjustment based on the terms of the Joint Venture Agreement related to thedifference in the budgeted versus actual expenditures of the Mt. Hope Projectprior to the Closing Date. Once the ROD Contribution Conditions, including thereceipt of major operating permits and that the ROD is effective, are met andany administrative or judicial appeals with respect thereto are final,additional amounts will be due from POS-Minerals within 15 days after the RODContribution Date.

 

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 election is required to bemade 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, the Joint Venture withPOS-Minerals requires Eureka Moly to return to POS-Minerals a portion of thecontributions made.  If required, thereturn of contributions to POS-Minerals will be $36.0 million, with nocorresponding reduction in POS-Minerals’ ownership interest in Eureka Moly, ifPOS-Minerals has elected to retain its 20% interest and has contributed theadditional $56.0 million required by the agreement.  If required, the return of contributions toPOS-Minerals will be $33.0 million if POS-Minerals has elected to reduce itsownership interest to 13%.  Based on ourcurrent plan and expected timetable it is unlikely the Mt. Hope Project willachieve commercial production by December 31, 2011.  Such return of contributions is required tobe made on or prior to January 27, 2012.

 

TheInitial Contributions of $100 million that were made by POS-Minerals during2008 are available to fund the Mt. Hope Project Joint Venture costsincurred subsequent to the Closing Date. 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.  In the event Eureka Moly isrequired to return a portion of the POS-Minerals contributions due to a delayin production beyond December 31, 2011, discussed above, such amount willbe funded by the Company only.

 

17

----

 

**Liquidity, Capital Resources andCapital Requirements**

 

*Forthe period from December 31, 2008 to March 31, 2009*

 

Ourcash balance at March 31, 2009 was $77.3 million compared to$78.5 million at December 31, 2008. Additionally, at March 31, 2009 we have $3.1 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 March 31,2009 was $80.4 million compared to $92.4 million at December 31,2008.  The decrease in our cash balancesfor the three months ended March 31, 2009 was due primarily to developmentcosts incurred of $8.2 million, deposits on property plant and equipmenttotaling $0.7 million, general and administrative costs of $2.8 million andexpense items of $0.2 million incurred for continuing exploration andevaluation of our Liberty Property. Deposits on property, plant and equipment relate primarily to scheduledpayments for long lead time equipment for the Mt. Hope Project.  See “— Contractual Obligations” below.

 

Totalassets as of March 31, 2009 decreased to $217.7 million compared to$220.9 million as of December 31, 2008 primarily as a result of thechanges discussed in the preceding paragraph.

 

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, and debt from private investment groups, as well as thecapital markets.

 

Withour cash conservation plan, our cash requirements are expected to decline toapproximately $1 million per month by the fourth quarter of this year, otherthan for key equipment purchases.  Basedon our current plan, expected timetable, and results of ongoing negotiationswith manufacturers, our equipment purchases for milling process equipment areexpected to total approximately $46 million through December 2010, withan  additional $16 million expected in2011.  All orders for mining equipmentwill be cancelled or suspended. Accordingly, based on our current cash on hand and our cash conservationplan, the Company expects it will have adequate liquidity for operations, asmodified, 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 is anticipatedto range between $715 million and $850 million depending on the election madeby POS-Minerals to either retain its current 20% interest or reduce itsinterest in the Joint Venture to 13%.  During 2008, we engaged Barclays Capital 

 

18

----

 

and Credit Suisse Securities (USA) LLC to assist inour efforts to pursue project financing for the Mt. Hope Project.  Our ability to obtain such project financingdepends on the effectiveness and the timing of the ROD, the anticipated priceof molybdenum, our projected fixed and variable operating costs and the overallstate of the economy and the credit markets in general.

 

Recentdisruptions 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.

 

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**

 

*Three months ended March 31,2009 compared to three months ended March 31, 2008*

 

Forthe three months ended March 31, 2009 we had a consolidated net loss of$3.1 million compared with a net loss of $5.2 million in the same period for2008.

 

Forthe three months ended March 31, 2009 and 2008, exploration and evaluationexpenses were $0.2 million and $2.5 million, respectively.  For the three months ended March 31,2008 we incurred exploration and evaluation costs on the Liberty Property as wecompleted a pre-feasibility study on the Liberty Property in April 2008.  For the three months ended March 31,2009 the Liberty Property has been on a care and maintenance status, and,accordingly, the resulting exploration and evaluation expenses are considerablylower for the period.

 

Forthe three months ended March 31, 2009 and 2008, general and administrativeexpenses were $2.9 million and $3.2 million, respectively.  For the three months ended March 31,2009 we implemented a restructuring of our operations as a part of a cashconservation plan that are included in general and administrativeexpenses.  In March 2009 we incurredcosts related to one-time employee termination benefits totaling $0.8million.  The majority of the affectedemployees are not required to render service beyond 60 days, and accordingly,costs associated with these one-time termination benefits were recognized inMarch, 2009.  Additional costs of $0.1million will be recognized during subsequent quarters, for those few affectedemployees who will render service beyond 60 days.

 

Wealso expect to incur approximately $3 million in contract cancellation andsuspension costs during the second quarter of 2009.  Such costs will be a combination of depositsforfeited and cash costs to cancel or suspend. At March 31, 2009, none of the contracts had been cancelled orsuspended and, accordingly, no cancellation or suspension costs have beenrecognized.  We expect substantially allof the suspension and cancellation of contracts will occur in the three monthsended June 30, 2009 (see below under “— Contractual Obligations”).

 

Interestincome was nil for the three months ended March 31, 2009 compared with$0.5 million in 2008 as a result of substantially lower interest rates, andlower cash 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 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 March 31,2009, we have contracts to purchase mining equipment comprised of two electricshovels, three blast hole drills, 24 haul trucks and two front end loaders andmilling process equipment comprised of two 230kV 

 

19

----

 

primary transformers, a primary crusher, asemi-autogenous mill, two ball mills, various motors for the mills, twomulti-hearth molybdenum roasters, 16 flotation cells and other milling processequipment (collectively, the “Purchase Contracts”).

 

Asdescribed above in “—Restructuring and Suspension of Project Development,” weplan to maintain equipment orders for custom-built grinding and other milling process equipment pendingon-going negotiations with vendors related to construction schedule,  delivery timelines, storage and paymentterms.  We plan to cancel or suspend allmining equipment purchase contracts.

 

Weexpect to complete the renegotiations and cancellation or suspension foraffected contracts by mid-2009. The following table sets forth Eureka Moly’scash commitments under Purchase Contracts at March 31, 2009 (in millions),prior to such renegotiations.

 

**Cash Commitments Under PurchaseContracts**

 
| **Period**            | ** ** | **As of March 31,  2009** | ** ** |
|-----------------------|------------|------------------------------------------|------------|
| 2nd Quarter 2009 |       | 33.4                                     |       |
| 3rd Quarter 2009 |       | 15.5                                     |       |
| 4th Quarter 2009 |       | 22.5                                     |       |
| Total 2009            |       | 71.4                                     |       |
| 2010                  |       | 100.2                                    |       |
| 2011                  |       | 17.8                                     |       |
| Total                 |       | $                                        | 189.4      |   |
|                       |            |                                          |            |  |

 

As Eureka Molyrenegotiates or cancels Purchase Contracts, it could be subject to claims forbreach of contract.  As we cancel orsuspend contracts, we will take all appropriate action to minimize any losses, butcould be subject to claims or penalties under the contracts or applicablelaw.  The cancellation or suspension ofcertain contracts could cause a delay in the commencement of operations, haveramifications under the Joint Venture with POS-Minerals and could add to thecost to develop our interest in the Mt. Hope Project.

 

Weexpect to incur approximately $3 million in equipment contract cancellation andsuspension costs during the second quarter of 2009.  Such costs will be a combination of depositsforfeited and cash costs to cancel or suspend contracts.  At March 31, 2009, none of the contractshad been cancelled or suspended and, accordingly, no cancellation or suspensioncosts have been recognized.  We expectsubstantially all of the cancellation and suspension of contracts will occurduring the three months ended June 30, 2009.

 

We also estimate that wewill be required to pay approximately $4 million in additional handling,storage and insurance costs.  We estimatethat the total remaining commitments will be approximately $46 million throughthe end of 2010, and $16 million in 2011.

 

**Changes inAccounting Policies**

** **

On January 1,2009, we adopted Statement of Financial Accounting Standards No. 160, “NoncontrollingInterests in Consolidated Financial Statements — an amendment of ARB No. 51,”the provisions of which, among others, requires that minority interests berenamed noncontrolling 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 financial statements.

 

20

----

 

**ITEM 3.             QUANTITATIVEAND 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.

 

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 theagreement.  Both the floor and thresholdlevels at which the percentage discounts change are indexed to a producer priceindex.

 

On August 8,2008, the Company entered into a molybdenum supply agreement (the “SojitzAgreement”) with Sojitz Corporation.  TheSojitz Agreement provides for the supply of five 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 besubject to a per-pound molybdenum floor price and is offset by a flat discountto spot moly prices above the floor.  Theremaining four million annual pounds sold under the Sojitz Agreement will besold with reference to spot moly prices without regard to a floor price.

 

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 anymarket risk sensitive instruments for trading or speculative purposes and donot expect to enter into derivative or other financial instruments for tradingor speculative purposes.

 

**Interest Rate Risk**

 

As of March 31,2009, we had a balance of cash and cash equivalents and restricted cash of$80.4 million.  If and to the extent thatthese funds were invested in interest bearing instruments during the entirethree month period ended March 31, 2009, a hypothetical 1% point decreasein the rate of interest earned on these funds would affect our income for thethree month period ended March 31, 2009 by approximately $0.2 million.

 

**ITEM 4.             CONTROLSAND 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 

 

21

----

 

the period covered by this Quarterly Report on Form 10-Q.  Based on the foregoing, our managementconcluded that our disclosure controls and procedures are effective to ensurethat information required to be disclosed by us in reports that we file orsubmit under the Exchange Act is recorded, processed, summarized and reportedwithin the time periods specified in the Securities and Exchange Commission rules andforms and such information is accumulated and communicated to our management,including our principal executive officer and principal financial officer, toallow timely decisions regarding required disclosure.

 

DuringJanuary 2009, the Company completed a conversion to an SAP ERPsystem.  This represents a materialchange in internal control over financial reporting since management’s lastassessment of the Company’s internal control over financial reporting, whichwas completed as of December 31, 2008.

 

Subsequentto the implementation, various controls were modified due to the new systems,and additional compensating controls over financial reporting were establishedto ensure the accuracy and integrity of our financial statements during thepost-implementation phase.  We believethe new accounting software contains automated internal control features thatwill permit the Company to migrate away from the manual internal controlprocesses previously required, and the system and process changes will enhanceinternal control over financial reporting in future periods.  Management evaluated the effectiveness of ourdisclosure controls and procedures as of March 31, 2009.  Based upon that evaluation, managementconcluded that our disclosure controls and procedures were effective.

 

Additionally,during the first quarter, the Company initiated changes in its plannedoperations for 2009 and 2010.  Suchchanges included reduction of corporate and operational personnel, includingpersonnel who were involved in the execution and monitoring of internalcontrols.  Management has undertakencertain actions to ensure impacted controls have been reassigned to otherpersonnel and does not believe the reduction has had a material impact on thecontrol environment.

 

Therewere no other changes in our internal control over financial reporting thatoccurred during the quarter ended March 31, 2009 that have materiallyaffected, or are reasonably likely to materially affect, our internal controlover financial reporting.

 

**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.               RISKFACTORS.**

** **

OurAnnual Report on Form 10-K for the year ended December 31, 2008,including the discussion under the heading “Risk Factors” therein, and thisreport describe risks that may materially and adversely affect our business,results of operations or financial condition. The risks described in our Annual Report on Form 10-K and 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” and othersimilar expressions to identify forward-looking statements.  These forward-looking statements are subjectto a 

 

22

----

 

numberof risks, uncertainties and assumptions that could cause actual results todiffer materially from those in the forward looking statements. Such risks,uncertainties and assumptions are described in the “Risk Factors” sectionincluded 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 theseforward-looking statements, and any events anticipated in the forward-lookingstatements may not actually occur. Except as required by law, we undertake no duty to update anyforward-looking statements after the date of this report to conform thosestatements to actual results or to reflect the occurrence of unanticipatedevents.  We qualify all forward-lookingstatements contained in this report by the foregoing cautionary statements.

 

**ITEM 2.                  UNREGISTEREDSALES OF EQUITY SECURITIES AND USE OF PROCEEDS**

** **

None.

 

**ITEM 3.                  DEFAULTSUPON SENIOR SECURITIES**

** **

None.

 

**ITEM 4.                  SUBMISSIONOF MATTERS TO A VOTE OF SECURITY HOLDERS**

** **

None.

 

**ITEM 5.                  OTHERINFORMATION**

** **

None.

 

**ITEM 6.                  EXHIBITS**

 
| **Exhibit  Number** | ** ** | **Description of Exhibit**                                                                                                                                                                                               |
|---------------------|------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 10.39†         |       | Second Amendment to  Employment Agreement, dated effective as of February 27, 2009, between  the Company and Bruce D. Hansen (Filed as Exhibit 10.1 to our Current  Report on Form 8-K filed on March 5, 2009) |
| 10.40†         |       | Second Amendment to  Employment Agreement, dated effective as of February 27, 2009, between  the Company and David A. Chaput (Filed as Exhibit 10.2 to our Current  Report on Form 8-K filed on March 5, 2009) |
| 10.41†         |       | Form of Stock  Appreciation Right Grant Notice and Agreement under 2006 Equity Incentive  Plan of the Company (Filed as Exhibit 10.3 to our Current Report on  Form 8-K filed on March 5, 2009)                |
| 10.42               |       | Change of Control  Severance Agreement, dated effective as of April 23, 2009, between the  Company and Robert Pennington                                                                                                      |

 

23

----

 
| **Exhibit  Number** | ** ** | **Description of Exhibit**                                                                                |
|---------------------|------------|---------------------------------------------------------------------------------------------------------------------|
| 10.43               |       | Change of Control  Severance Agreement, dated as of March 9, 2009, between the Company and  Gregory E. McClain |
| 10.44               | ** ** | **Change of Control Severance Agreement, dated as  of March 6, 2009, between the Company and Daniel G. Zang**  |
| 10.45               | ** ** | **Waiver and Release dated as of August 1,  2008, between the Company and Andrew J. Russell**                  |
| 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           |

 

----

†Previously filed as indicated and incorporated herein by reference.

 

24

----

 

**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: May 1, 2009 |                |
|-------------------------|---------------------|
|                    |                |
|                    | GENERAL  MOLY, INC. |
|                    |                |
|                    | By:                 | /s/  David A. Chaput |
|                    |                | David  A. Chaput |
|                    |                | Chief  Financial Officer and |
|                    |                | Duly  Authorized Officer |

 

25

----