Ivernia Reports Third Quarter 2015 Financial Results

TORONTO, ON--(Marketwired - October 27, 2015) - Ivernia Inc. (collectively with its subsidiaries "Ivernia" or the "Company") (TSX: IVW) today reported results for the three and nine months ended September 30, 2015. With the Paroo Station Mine (the "Mine") on care and maintenance, the operating cost base of the Mine has been reduced significantly, maintenance work has been limited and administrative costs have been reduced to the extent possible. Principal activities during the quarter included entering into a merger agreement (the "Merger Agreement") with Geo Zone Exploration Limited ("Geo Zone") whereby the Company will acquire 100% of the outstanding common shares of Geo Zone for an aggregate purchase price of $30 million (the "Merger") based on an independent valuation of Geo Zone carried out by Roscoe Postle Associates Inc. In connection with the Merger, Enirgi Group Corporation ("Enirgi Group") will convert approximately C$12.464 million ($9.3 million) of outstanding debt owed by the Company to Enirgi Group into Ivernia common shares (the "Debt Conversion"), which together with the Merger are collectively referred to herein as the "Transaction". Subject to Ivernia shareholder approval, the Company anticipates closing of the Transaction to occur on or around November 13, 2015.

The net loss for the third quarter of 2015 was $2.0 million or $nil per share, compared to a net income of $3.9 million or $nil per share for the third quarter of 2014. The net loss of $2.0 million was primarily due to $2.5 million of net care and maintenance costs and finance expenses of $0.5 million partially offset by a foreign exchange gain of $1.1 million resulting from the translation of our Canadian dollar denominated loans into US dollars. The net loss for the first nine months of 2015 was $11.2 million or $0.01 per share compared to a net loss of $4.5 million or $0.01 per share for the first nine months of 2014 due to the fact that the Mine was on full care and maintenance for the past two quarters.

THIRD QUARTER 2015 HIGHLIGHTS

Operational

• A minimum complement of care and maintenance staff is at the Mine site full-time to maintain the site in good order.

Financial

• Gross loss of $1.3 million and net loss of $2.0 million.
• Cash used in operations of $2.8 million.
• On August 31, 2015, on the recommendation of the independent special committee of the Board of Directors (the "Special Committee") and approval of the Board of Directors, the Company entered into the Merger Agreement.
• The Transaction is subject to Ivernia shareholder approval at a special meeting of shareholders to be held on October 28, 2015.
• Following the completion of the Transaction, the Company plans to change its name to "LeadFX Inc." (the "Name Change") and to effect a share consolidation of the issued and outstanding common shares of Ivernia at ratio between 50:1 and 100:1 (the "Share Consolidation") subject to shareholder approval.
• The Company received conditional approval from the Toronto Stock Exchange for the Transaction, the Name Change and Share Consolidation on September 16, 2015.
• The Company has entered into five voting and support agreements to vote in favour of the Transaction with certain disinterested shareholders of the Company that control approximately 22% of the Company's issued and outstanding shares representing more than 50% of the shares eligible to vote on the Transaction at the special meeting of shareholders on October 28, 2015.
• The Mine is on full care and maintenance and as a result additional financing will be required to meet its commitments to its lenders, meet the ongoing costs of care and maintenance and the costs of any potential future restart of the Mine.

Full details of the Transaction, Name Change and Consolidation, including the Merger Agreement and management information circular of the Company dated September 14, 2015 (the "Circular"), are available at www.sedar.com and on the Company's website at www.ivernia.com.

FINANCIAL AND OPERATING HIGHLIGHTS

Summary financial and operating highlights:

OPERATIONS REVIEW

Care and Maintenance

During the fourth quarter of 2014 the LME lead price declined significantly. Early in 2015, customer negotiations concluded that treatment charges would increase further, at least in the short term, when compared to 2014 charges.

Consequently, treatment charges, together with the decline in LME lead prices, were significant considerations in the decision to place the Mine on care and maintenance and appoint a Special Committee to conduct a financial and strategic review of the Company.

Summary mine production, process production, shipments and inventories:

FINANCIAL REVIEW

The net loss for the third quarter of 2015 was $2.0 million or $nil per share, compared to a net income of $3.9 million or $nil per share for the third quarter of 2014. The net loss of $2.0 million was primarily due to $2.5 million of net care and maintenance costs and finance expenses of $0.5 million partially offset by a foreign exchange gain of $1.1 million resulting from the translation of our Canadian dollar denominated loans into US dollars. The net loss for the first nine months of 2015 was $11.2 million or $0.01 per share compared to a net loss of $4.5 million or $0.01 per share for the first nine months of 2014 due to the fact that the Mine was on full care and maintenance for the past two quarters.

With the decision to move into care and maintenance, sales of lead concentrate have ceased and the operating cost base for the site has been reduced significantly to a level which is commensurate with the Mine being on care and maintenance. Maintenance work has been limited and administrative costs have been reduced to the extent possible. We continue to explore alternative avenues to sell the remaining consumables on hand to generate cash inflows to help meet the on-going costs of care and maintenance.

Foreign exchange

The foreign exchange gains of $1.1 million and $2.2 million for the third quarter and first nine months of 2015, respectively, were primarily driven by the translation of our Canadian dollar denominated loans due to the weakening of the C$ against the US$ with the C$/US$ rate decreasing from $0.8620 on December 31, 2014 and $0.8017 on June 30, 2015 to $0.7466 on September 30, 2015.

Finance expenses

Finance expenses of $0.5 million for the third quarter of 2015 (2014: $1.0 million) were comprised primarily of interest incurred on the Sprott Facility (defined below) and the Enirgi Facility (defined below) in the amount of $0.4 million and accretion expense of $0.1 million on the decommissioning liability. Interest expense and accretion expense on the decommissioning liability in the third quarter of 2014 was $0.9 million and $0.1 million, respectively.

Finance expenses of $1.8 million for the first nine months of 2015 (2014: $3.1 million) were comprised primarily of interest incurred on the Sprott Facility (defined below) and the Enirgi Facility (defined below) in the amount of $1.6 million and accretion expense of $0.2 million on the decommissioning liability. Interest expense and accretion expense on the decommissioning liability in the first nine months of 2014 was $2.8 million and $0.3 million, respectively. Finance expenses have decreased due to a reduction in principal owing to Sprott and a weakening of the C$ against the US$.

Price of Lead

During the third quarter of 2015, the LME Cash Settlement Lead Price averaged $1,714 per tonne compared to $2,183 per tonne in the same period in 2014. During the first nine months of 2015, the LME cash settlement lead price averaged $1,818 per tonne compared to $2,128 per tonne for the same period 2014. The LME lead price continues to be impacted by soft demand for lead in Europe and China and weak market fundamentals affecting commodities in general.

LIQUIDITY AND FINANCIAL CONDITION

Statement of Cash Flows

Operating activities

Cash used in operating activities was $2.8 million for the third quarter of 2015 compared to $10.0 million for the same period in 2014. Cash used in operating activities was $2.4 million for the first nine months of 2015 compared to $4.0 million for the same period in 2014. Operations were cash flow negative in 2015 due to the costs incurred while the Mine is on care and maintenance.

Investing activities

Following the cessation of all operating and transportation activities during the first quarter, the Office of the Environmental Protection Authority of Western Australia refunded the transportation bond of A$5 million ($3.9 million) during the third quarter of 2015 resulting in positive cash flows from investing activities for the first nine months of 2015 and a reduction in restricted cash.

Financing activities

We met our scheduled Sprott Facility (defined below) principal repayment of C$0.8 million per month on January 31, 2015. On February 12, 2015 we reached agreement with Sprott on a five-month forbearance on principal repayments ending on June 30, 2015. On June 17, 2015 Sprott agreed to a further extension of forbearance period as discussed below under "Sprott Facility - 2013". In consideration, we repaid $3.8 million of the balance owing to Sprott resulting in $4.6 million of cash being used in financing activities for the nine months ending September 30, 2015.

Sprott Facility - 2013

On January 29, 2013, the Company entered into a C$20 million secured loan facility (the "Sprott Facility") with Sprott. The Sprott Facility bears interest at a rate of 12% per annum, compounded monthly, which is payable at the end of each month. The Sprott Facility is secured by the Mine and all of its assets.

On June 17, 2015, the Company and Sprott entered into a forbearance extension agreement (the "Sprott Forbearance Extension Agreement") pursuant to which Sprott agreed that it would not exercise its rights under the Sprott Facility until the earlier of (i) November 15, 2015; (ii) the date a transaction (including a merger, sale of the Mine or restructuring) is completed which realizes the value of the Company and its assets; or (iii) for a transaction which realizes the value of the Company and its assets where negotiations have commenced and in principle agreement is reached, the date on which the that transaction is reasonably determined to have been terminated (the "Sprott Forbearance Period"). In consideration, the Company repaid C$4.75 million ($3.8 million) of the balance owing to Sprott representing the proceeds of the refund of the transportation bond. During the forbearance period, Sprott retains the right to terminate the forbearance extension should certain limited events of default occur, including but not limited to, the Company becoming insolvent or bankrupt or there being a further unfavorable material change in the financial condition of the Company.

The Sprott Forbearance Extension Agreement allows Sprott, at its option, to demand repayment of the balance owing to them under the Sprott Facility at the end of the Sprott Forbearance Period. Unless terminated earlier, the balance owing to Sprott on November 15, 2015 will be approximately C$9.7 million ($7.2 million). The maturity date under the Sprott Facility has been brought forward to the end of the Sprott Forbearance Period. All other terms and conditions of the Sprott Facility remain the same.

An event of default under the Sprott Facility or the Enirgi Facility that triggers early repayment of the outstanding indebtedness would have a material adverse impact on our financial condition forcing the Company to seek additional future funding. See "Risk Factors - Funding Requirements" in the 2014 AIF.

A copy of the Credit Agreement has been filed on SEDAR at www.sedar.com.

Enirgi Facility - 2012

On June 29, 2012, the Company obtained a C$6 million ("Principal Sum") secured loan facility from its majority shareholder, Enirgi Group (the "Enirgi Facility"). Amounts drawn down on the Enirgi Facility bear interest at an annual simple rate of 8.3%, with interest payable in arrears.

Concurrently with the extension of the forbearance period of the Sprott Facility, Enirgi Group agreed to extend the terms granted to the Company until the end of the Sprott Forbearance Period. Subject to the foregoing, interest under the Enirgi Facility will become payable in accordance with the terms of the Enirgi Facility at the end of the Sprott Forbearance Period. All other terms and conditions of the Enirgi Facility, including the maturity date of June 30, 2016, will remain the same. As disclosed under "Operations Review", the Company has entered into a Debt Conversion agreement which is subject to final shareholder approval that will result in, among other things, the principal and accrued interest in the amount of approximately C$6.6 million ($4.9 million) being converted into approximately 262 million Ivernia common shares using an Ivernia share price of C$0.025. If the Debt Conversion proceeds, interest incurred before August 15, 2015 will be converted to Ivernia common shares while interest incurred after August 15, 2015 will be forgiven by the Enirgi Group. Interest continues to be accrued until such time that the Transaction is approved by the shareholders.

Capital Resources, Liquidity and Working Capital Requirements

During the first quarter of 2015, the Company completed the transition of the Mine's operations to care and maintenance. As of September 30, 2015, the Company had approximately $1.6 of million in cash and cash equivalents and a working capital deficit of $15.7 million. During the first nine months of 2015 we incurred significant cash outflows associated with employee redundancies, contract terminations, contract suspensions, demobilization, and preparation of the site to function in a care and maintenance state. We have concluded negotiations relating to the suspension or termination of our key contractual commitments. The majority of these costs have been paid however several costs are accrued as liabilities as at September 30, 2015 and are unpaid. As a result of care and maintenance, the Company expects to have an ongoing working capital deficiency until such time as an appropriate financing solution is secured. Management and the Board have been focused on managing the Company's working capital requirements in light of the fact that the Mine is on care and maintenance. In quarter one, the Finance Committee of the Board of Directors was re-constituted into a Special Committee of independent directors tasked with undertaking a review of strategic alternatives for the Company. The Special Committee has been able to secure forbearances on making principal and interest payments under the Sprott Facility and Enirgi Facility and forbearances on making payments under the Management Services Agreements as an interim step, which will provide temporary relief from making principal and interest payments to Sprott and paying for ongoing management services provided by Enirgi Group and EMG. In addition, on the recommendation of the Special Committee and approval of the Board of Directors, the Company has entered into the Transaction which is subject to final Toronto Stock Exchange and shareholder approval.

The Company's ability to continue as a going concern is dependent on raising additional funds to meet its debts and obligations as they fall due. On a historic basis, the Company's major sources of funding have been the issuance of equity and debt for cash. The Special Committee and management are continuing to examine potential transactions which may realize the value of the Company and its assets in addition to the Transaction currently being undertaken which is subject to shareholder and Toronto Stock Exchange approval and various financing alternatives to address future funding requirements. The Company will need to obtain additional financing to service its working capital deficiency of $15.7 million, meet its commitments to lenders, and meet the costs of care and maintenance and any potential future restart of the Mine. The amount of this funding requirement will be contingent on several factors including, but not limited to, the closing of the Transaction, the nature of any additional transactions undertaken by the Company, the outcome of further negotiations with the Company's lenders, the costs and duration of care and maintenance and the timing and cost of any potential future restart of mining and milling operations. In addition, if the Transaction is completed, additional funding may be required to meet the debts and obligations of Geo Zone and any costs of a potential re-commencement of operations at its 83.5% owned subsidiary's (Chief Consolidated Mining Company) properties.

While the Company has entered into voting and support agreements with certain disinterested shareholders, there is no guarantee that the Company will be able to complete the Transaction and there is no assurance that the Company will either be able to complete any further transactions or be able to secure sufficient financing to fund its commitments to lenders, the costs of ongoing care and maintenance or the costs of any potential future restart of operations. If the Company is unable to complete the Transaction, any further transactions or secure additional financing, the Company may be unable to meet its commitments to lenders, keep the Mine on care and maintenance or restart the Mine which could affect its ability to continue as a going concern. A decision to restart the Mine will be contingent on several factors including, but not limited to, a sustained recovery in the LME lead price, a reduction in treatment charges and a favourable USD:AUD foreign exchange rate.

These material uncertainties create significant doubt as to the Company's ability to continue as a going concern. As at September 30, 2015 the condensed interim consolidated financial statements do not reflect any adjustments to carrying values of assets and liabilities and the reported expenses and balance sheet classifications that would be necessary should the going concern assumption be inappropriate.

Management's Discussion and Analysis and Consolidated Financial Statements

Ivernia's unaudited financial statements and management's discussion and analysis for the three and nine months ended September 30, 2015 will be filed today and will be available on SEDAR at www.sedar.com and on the Company's website at www.ivernia.com

About Ivernia

Ivernia is an international lead metal mining company and the owner of the Paroo Station Mine, located in Western Australia. Ivernia trades under the symbol "IVW" on the Toronto Stock Exchange. Ivernia and the Mine operate under a management services arrangement with Enirgi Group Corporation, Ivernia's majority shareholder. On January 16, 2015 the Mine was placed on care and maintenance amid difficult market conditions.

Additional information on Ivernia is available on at SEDAR at www.sedar.com and the Company's website at www.ivernia.com

Forward-Looking Statements

Certain statements contained in this news release are forward-looking information within the meaning of securities laws. All statements included herein (other than statements of historical facts) which address activities, events or developments that management anticipates will or may occur in the future are forward-looking statements, including statements as to the following: the timing and length of care and maintenance and future sales, the Merger and the Debt Conversion, the timing of the implementation of the Merger and the Debt Conversion and the potential benefits of the Merger and the Debt Conversion, the likelihood of the Merger and the Debt Conversion being completed, principal steps of the Merger and the Debt Conversion, statements relating to the business and future activities of, and developments related to, Ivernia and Geo Zone and their subsidiaries after the date of this MD&A and before the closing of the Transaction and to and of Ivernia after the closing of the Transaction, Ivernia shareholder approval of the Merger and the Debt Conversion, final Toronto Stock Exchange approval of the Transaction; the Company's intention to change its name to "LeadFX Inc.", the Company's intention to complete the Share Consolidation, the market position and future financial or operating performance of Ivernia, and the liquidity of Ivernia common shares following the closing of the Transaction and completion of the Share Consolidation, any results or outcomes of the strategic review, any alternative transaction undertaken, future targets and estimates for production and sales, the Company's ability to meet its working capital needs and debt repayments in the near term, the circumstances or timing and costs surrounding a restart of the Mine, projections with respect to cash flows and working capital, forbearance by our lenders pursuant to the Sprott Forbearance Extension Agreement and Enirgi Group Corporation's extension of the Enirgi Forbearance Letter, the receipt of required additional financing requirements to operate and restart the Mine, the cost and timing for completion of capital projects necessary for any future operations, the Company's ability to comply with the transportation and operating conditions for the Mine, capital expenditures, operating costs, cash costs, Mineral Resources, Mineral Reserves, life of mine, recovery rates, grades and prices, business strategies and measures to implement such strategies, competitive strengths, estimated goals and plans for Ivernia's future business operations, lead market outlook and other such matters. Forward-looking statements are often, but not always, identified by the use of words such as "seek", "anticipate", "contemplate", "target", "believe", "plan", "estimate", "expect", and "intend" and statements that an event or result "may", "will", "can", "should", "could" or "might" occur or be achieved and other similar expressions.

These statements are based upon certain reasonable factors, assumptions and analyses made by management in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. However, whether actual results and developments will conform with management's expectations is subject to a number of risks and uncertainties, including factors underlying management's assumptions, such as, the ability of Ivernia to complete the Transaction, the ability of Ivernia to satisfy conditions under the Merger Agreement and the Debt Conversion Agreement, the ability of Ivernia to satisfy the requirements of the Toronto Stock Exchange such that it will issue the final Exchange bulletin, the ability of Ivernia to successfully integrate Ivernia and Geo Zone and manage risks, the existence of undetected or unregistered interests or claims over the property of Geo Zone, expected concentrate sales when in operations, the costs and other capital expenditures required to maintain operations and transportation, the timing, need and ability to raise additional financing and the risks relating to ramping up mining and milling throughput and operations, funding requirements, operations being placed on care and maintenance, the restart of mining and milling operations, matters relating to regulatory compliance and approvals, shareholder dilution, matters relating to public opinion, presence of a majority shareholder and Management Services Agreements, matters related to the Esperance settlement and shipments through the Fremantle port, regulatory proceedings and litigation and general operating risks such as metal price volatility, lead carbonate concentrate treatment charges, exchange rates, the fact that the Company has a single mineral property, health and safety, environmental factors, mining risks, metallurgy, labour and employment regulations, government regulations, insurance, dependence on key personnel, constraints on cash distribution from the Mine, the nature of mineral exploration and development and common share price volatility.

Additional factors and considerations are discussed in the 2014 AIF and the Circular and elsewhere in other documents filed from time to time by Ivernia with Canadian securities regulatory authorities. While Ivernia considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. These factors may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and there can be no assurance that the actual results or developments anticipated by management will be realized or, even if substantially realized, that they will have the expected results on the Company. Undue importance should not be placed on forward-looking information nor should reliance be placed upon this information as of any other date. Except as required by law, while it may elect to, Ivernia is under no obligation and does not undertake to update this information at any particular time.

Contact

For further information please contact:

Ivernia Inc.
Jessica Helm
VP, Corporate Communications
Suite 3001, 1 Adelaide Street East
Toronto, Ontario M5C 2V9
(416) 867 9298
Email: investor@ivernia.ca