First Nickel Reports Financial and Operating Results for the Three and Six Month Period Ended June 30, 2010
TORONTO, ONTARIO -- (Marketwire) -- 08/13/10 -- First Nickel Inc. ('First Nickel' or the 'Company') (TSX: FNI) announces that it has filed with the Canadian securities regulatory authorities its unaudited financial statements, and management's discussion and analysis for the three and six month period ended June 30, 2010.
Complete results will also be available on SEDAR and on the Company's website at www.firstnickel.com. All dollar amounts are expressed in Canadian currency unless otherwise stated.
Highlights / Summary
-- The net loss for the three month period ended June 30, 2010 was
$2,602,100, or $0.02 per share, compared to a net loss of $2,013,697, or
$0.01 per share in 2009.
-- Care and maintenance expenditures at Lockerby Mine in the second quarter
were $1,218,702, bringing the year-to-date amount to $2,562,602.
-- At June 30, 2010 the Company had net working capital of $2,008,642.
Lockerby Mine Operations
The Lockerby Mine has been on care and maintenance since October 19, 2008.
The mine staff and a skeleton crew have continued to work diligently at maintaining the facility at minimal cost. Progress was made in advancing detailed engineering work in anticipation of launching the Lockerby Depth capital project later this year. Details of the economic model of the Depth Zone Feasibility Study were issued on October 19, 2009, see press release No. 2009-11.
The Company continued negotiations with its unions regarding new contracts. On April 27, 2010 the Company signed a new agreement with the United Steelworkers who represent OCT (Office, Clerical and Technical) employees, and on July 23, 2010 tentative agreement was reached with the CAW for the P&M (Production and Maintenance) workers. Both of these agreements have three year terms to 2013.
Financial Results
The following table presents a summary of the results of operations for the three and six month periods ended June 30, 2010 and 2009:
Three months ended June 30, Six months ended June 30,
2010 2009 2010 2009
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(Unaudited) (Unaudited)
Sales Revenue $ - $ - $ - $ 4,483,662
----------------------------- ------------------------------
Operating costs
excluding
amortization - - - 4,173,121
Care and
maintenance
costs 1,218,702 1,128,708 2,562,602 2,558,942
Accretion on
asset
retirement
obligations 49,800 48,300 99,600 96,600
Amortization of
mining
properties and
equipment - - - 719,631
----------------------------- ------------------------------
1,268,502 1,177,008 2,662,202 7,548,294
----------------------------- ------------------------------
Operating loss
from mining
operations (1,268,502) (1,177,008) (2,662,202) (3,064,632)
----------------------------- ------------------------------
General and
administrative 570,066 547,868 1,104,386 1,073,206
Stock-based
compensation 1,500 167,237 3,000 347,037
Depreciation
and
amortization 4,260 4,359 8,520 8,718
Foreign
exchange loss
(gain) 387,081 3,995 111,689 (57,230)
Interest on
convertible
loan 235,520 - 471,040 -
Accretion on
convertible
loan 135,706 - 262,506 -
Interest and
other expenses 6,546 107,204 15,131 159,820
Loss on sale of
marketable
securities - 21,429 - 21,429
Interest and
other income (7,081) (15,403) (17,978) (64,284)
----------------------------- ------------------------------
1,333,598 836,689 1,958,294 1,488,696
----------------------------- ------------------------------
Loss before
taxes (2,602,100) (2,013,697) (4,620,496) (4,553,328)
Recovery of
income and
mining taxes - - - -
----------------------------- ------------------------------
Net loss for
the period $ (2,602,100) $ (2,013,697) $ (4,620,496) $ (4,553,328)
----------------------------- ------------------------------
Net loss per
share:
Basic and
diluted
(note 14) $ (0.02) $ (0.01) $ (0.03) $ (0.03)
Weighted
average number
of common
shares
outstanding 162,768,568 155,548,098 161,527,931 155,548,098
For the three month period ended June 30, 2010 the Company recorded a net loss of $2,602,100, or $0.02 per share, compared to a net loss of $2,013,697, or $0.01 per share, recorded for the three month period ended June 30, 2009. The Company has recorded a full valuation allowance against any income tax recovery.
No sales revenue was recorded in the three and six month period ended June 30, 2010. The six month period ended June 30, 2009 included only one month of sales revenue as the Company suspended mining operations at the Lockerby Mine in October 2008, and therefore only had one month of production available for settlement in 2009.
The following table sets out selected sales information for the periods indicated:
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Q 2 Q 2 YTD YTD
2010 2009 2010 2009 (i)
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Sales by Payable Metal
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Nickel - pounds - - - 486,849
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Copper - pounds - - - 287,827
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Cobalt - pounds - - - 9,096
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Average Price Received - US$/lb
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Nickel - - - $5.76
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Copper - - - $1.58
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Cobalt - - - $13.83
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Average Exchange Rate Realized
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US $ 1 = Canadian $ - - - $1.2280
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(i) only includes one month of sales
Care and maintenance costs of $1,218,702 recorded in the second quarter of 2010 are on budget, and are $125,198 (9%) lower then the costs recorded in the first quarter of 2010. These expenditures include ongoing costs of the staff retained at the mine site, energy, taxes, insurance, equipment rentals and materials required to maintain the mine.
General and administrative expenses totaled $570,066 in the second quarter of 2010, slightly higher than the $547,868 recorded in the second quarter of 2009. The increase is mostly attributable to higher legal fees.
Stock-based compensation costs of $1,500 recorded in the second quarter of 2010 relate to previously granted stock options with graded vesting schedule. No stock options were granted during the first six months of 2010.
A foreign exchange loss of $387,081 was recorded in the second quarter of 2010, versus an exchange loss of $3,995 in 2009. Exchange gains or losses arise from the revaluation of the US dollar cash balances and the US dollar convertible loan account.
The interest on the convertible loan amounted to $235,520 in the second quarter of 2010. Resource Capital Fund IV L.P. ('RCF') notified the Company of its option to receive common shares of the Company in payment of this interest. A total of 1,885,409 common shares were issued to RCF in full satisfaction of this liability.
Interest and other expenses of $6,546 recorded in the second quarter of 2010 include costs incurred on mineral properties that were previously written off. In 2009, interest and other expenses include a provision for the interest on the unspent flow-through funds (Part XII.6 tax), and costs incurred on mineral properties that were previously written off.
Interest and other income is mostly made up of interest earned on cash balances, and on short term deposits. The lower interest income in 2010, compared to 2009, mainly reflects lower interest rates.
Exploration Activity
Exploration efforts in the second quarter of 2010 have focused on the completion and submission of assessment reports to maintain the priority claim blocks on the Southeastern Ontario projects. Exploration programs consisting of surface mapping and prospecting, geophysical surveys and diamond drilling have been designed to test priority targets on the Raglan Hills and Belmont projects in Southeastern Ontario.
A diamond drill rig was mobilized onto the Henderson Option Property located in Raglan Township to complete a 500 metres drill program testing 3 conductive bodies defined by the surface TEM geophysical survey.
Surface prospecting and sampling has been completed on selected claims within the Belmont project to satisfy the minimum work requirements needed to maintain priority claims in good standing for an additional year. Properties identified as having limited exploration potential have been allowed to lapse.
The Company continues to actively source additional high quality exploration properties and reviews property submissions from individuals and corporations.
2010 Outlook
The feasibility studies completed in 2009 show robust economic returns for the capital plan proposed for the Lockerby Depth project. See press release No. 2009-11, dated October 19, 2009 for further details.
Negotiations with the banks on debt financing are progressing. Senior bank personnel visited the mine in July, and a full technical due diligence was conducted at the mine by an independent engineering firm for the banks earlier in the month. The recent ratification of new collective agreements by the Company's unionized employees along with further advancement of engineering and technical studies, position the Company for an early start to some of the required capital work once funding is acquired. The positive environment stemming from strengthening of metal markets in recent weeks, and a favorable outlook for the coming months, support the Company's view that the Lockerby Depth project can be launched in the second half of the year.
Qualified Person
The foregoing scientific and technical information has been prepared or reviewed by Paul C. Davis, P.Geo., Vice-President Exploration of the Company. Mr. Davis is a 'qualified person' within the meaning of National Instrument 43-101.
The Company follows rigorous quality control practices and procedures in full compliance of NI 43-101, and these are described on the Company's website and in all technical press releases.
First Nickel is a Canadian mining and exploration Company, whose principal asset is the Lockerby Mine near Sudbury, Ontario. In addition to its Lockerby operation, the Company maintains an active exploration program on projects near the mine around Sudbury, and elsewhere in Ontario. First Nickel's shares are traded on the TSX under the symbol FNI.
This news release contains forward-looking statements, which are subject to certain risks, uncertainties and assumptions, including the cash flows, metal prices, decrease costs, increase output, expected production, and expected exploration expenditures. A number of factors could cause actual results to differ materially from the results discussed in such statements, and there is no assurance that actual results will be consistent with them. Such factors include fluctuating metal prices, lower unit costs and other factors described in the Company's most recent Annual Information Form under the heading 'Risk Factors' which has been filed electronically by means of the System for Electronic Document Analysis and Retrieval ('SEDAR') located at www.sedar.com. Such forward-looking statements are made as at the date of this news release, and the company assumes no obligation to update or revise them, either publicly or otherwise, to reflect new events, information or circumstances, except as may be required under applicable securities law.
Contacts:
First Nickel Inc.
William J. Anderson
President & CEO
(416) 362-7050
(416) 362-9050 (FAX)
wanderson@firstnickel.com