Crowflight Announces Second Quarter 2010 Financial Results
16.08.2010 | Marketwire
TORONTO, ONTARIO -- (Marketwire) -- 08/16/10 -- CROWFLIGHT MINERALS INC. ('Crowflight' or the 'Company') (TSX: CML) today announces its financial results for the second quarter of 2010.
Complete interim financial statements and related Management's Discussion and Analysis will be filed under the Company's profile on www.sedar.com. All amounts are in Canadian dollars unless otherwise indicated.
Q2 2010 Financial and Operational Highlights:
-- For the quarter ended June 30, 2010, Crowflight produced 1,177,468
pounds of nickel, and sold 917,977 pounds of nickel payable as compared
to 234,920 pounds of nickel produced and 254,139 pounds of nickel sold
in the second quarter of last year.
-- Total metal revenue for the quarter ended June 30, 2010 was $9.7 million
compared to $2.0 million for the second quarter last year.
-- Operating cash flow for the quarter ended June 30, 2010 was negative
$8.8 million compared to operating cash flow of $1.5 million in the
second quarter last year.
-- Loss for the quarter ended June 30, 2010 was $5.1 million or ($0.01) per
share compared to net loss of $3.3 million or ($0.01) per share in the
second quarter last year.
-- Commercial nickel sales settled during the quarter ended June 30, 2010
were realized at an average price of US$10.25 per pound compared with
US$6.79 per pound in the second quarter of 2009.
-- Net working capital as at June 30, 2010 was negative $4.8 million
(including cash and cash equivalents of $1.8 million) compared to $3.2
million as at December 31, 2009.
2010 Quarterly Bucko Mine Operations Production and Financial Data
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Q1-2010 Q2-2010
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Operating Statistics:
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Tonnes ore mined 11,177 67,189
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Average Nickel head grade (%Ni) 1.02% 1.31%
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Tonnes ore milled 9,431 58,605
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Average Recovery 66.94% 69.42%
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Nickel pounds:
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Produced 141,970 1,177,468
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Payable sold(1) 117,600 917,977
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Commercial Production Metal Sales Revenue:
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Average Ni price (US$/lb) $ 9.77 $ 10.25
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CAD/US exchange rate $ 1.04 $ 1.03
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Nickel revenue 893,266 9,594,466
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Pricing adjustments(3) 304,756 80,902
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Total metal revenue 1,198,022 9,675,368
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Cost of sales(2) 3,867,822 12,250,533
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Temporary shutdown costs 4,480,891 -
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Depreciation, depletion, and amortization 36,432 1,580,676
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Gross profit (7,187,123) (4,155,841)
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Net earnings (loss) before tax (8,935,360) (5,142,199)
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Basic and diluted earnings (loss per share) $ (0.01) $ (0.01)
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Cash flow from operating activities (8,944,040) (8,769,568)
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USD Cost of sales per pound sold(1)(4) $ 37.34 $ 14.43
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(1) Includes settlement of prior quarter sales
(2) Other metal revenue is recorded as an offset to cost of sales in the
Company's financial statements
(3) Pricing adjustments reflect final pricing/volume adjustments on lots
sold in prior quarters
(4) Cash cost per pound sold is a Non-GAAP measure. Refer to 'Non-GAAP
Measures' section for reconciliation to GAAP measure
-- On April 6, 2010, the Company received an offer from Jinchuan Group Ltd.
('Jinchuan') to acquire all of the common shares of Crowflight in
consideration for an aggregate cash payment of $150,000,000. Based on
the number of Crowflight common shares outstanding at the time of the
announcement, this Offer equated to approximately $0.26 per common
share. The Offer represents a premium of 47.3% to the closing price on
the Toronto Stock Exchange for the Company's common shares on April 2,
2010 and a premium of 56.8% to the 20 day volume weighted average
trading price. On a partially diluted basis, taking into account the
outstanding convertible securities of the Company outstanding on the
date of the Offer that have an exercise price of equal to or less than
$0.22, the Offer equated to approximately $0.22 per share. On this
basis, the Offer represented a premium of 27.0% to the closing price on
the Toronto Stock Exchange for the Company's common shares on April 2,
2010 and a premium of 35.1% to the 20 day volume weighted average price.
Please see press release dated April 6, 2010.
-- On May 6, 2010, the Company announced the resignation of Greg Collins,
Vice President of Exploration for Crowflight, effective April 30th.
-- The Company entered into a series of financial instruments to price
protect nickel sales from July 2010 - June 2011. The Company has hedged
approximately 850,000 pounds of nickel at prices ranging from US$9.00 -
$11.00 per pound of nickel.
-- On May 10, 2010, the Company announced it continues discussions with
Jinchuan regarding the offer letter (the 'Offer') from Jinchuan to
acquire all of the common shares of Crowflight in consideration for an
aggregate cash payment of $150,000,000 (for details regarding the Offer,
please see the Company's press release of April 6, 2010).
-- On June 16, 2010, Michael Barton and Gregory Radke resigned from the
Board of Directors of the Company. Messrs. Barton and Radke represented
Pala Investments Holdings Limited ('Pala') on the Board. Their
resignation occurred in connection with Pala selling all 152,311,221
common shares and 50,588,235 warrants of Crowflight that it held to King
Place Enterprises Limited ('King Place') for a total purchase price of
CAD$30.75 million. King Place has disclosed that, as a result of this
purchase, it holds a total of 247,029,971 Crowflight common shares
(representing approximately 42.3% of the outstanding common shares) and
50,588,235 Crowflight share purchase warrants. King Place is a private
company which is now affiliated with Hebei Wenfeng Industrial Group, the
parent company of Hebei Wenfeng Iron and Steel Co., Ltd., a significant
Chinese steel producing company.
-- During the quarter, Crowflight provided an update regarding the offer
from Jinchuan to acquire all of the common shares of Crowflight in
consideration for an aggregate cash payment of $150,000,000.
Negotiations continue between representatives of the Company and
Jinchuan. Jinchuan has confirmed the continued validity of the Offer,
and Crowflight and Jinchuan have agreed that the Offer will remain valid
until August 31, 2010. The Offer is premised on Jinchuan obtaining 100%
of the offtake from the Bucko Lake Mine and any of the Crowflight
exploration properties that are subsequently placed into production.
-- Subsequent to the quarter's end, Crowflight announced the appointment of
David Hunter, MBA, CA as Chief Financial Officer for the Company,
effective June 30, 2010. Mr. Hunter replaces Anna Ladd who previously
held the role.
-- Subsequent to the quarter's end, a major supplier to the Bucko site
filed a lien against the property for services rendered. The supplier is
continuing to provide services to the site and negotiations have been
underway to resolve this situation. Filing of the lien has not affected
the operations of the Bucko Lake Mine.
-- Subsequent to the quarter's end, the Company announced that it had
completed a $5.05 million bridge loan from King Place Enterprises
Limited ('King Place') with the potential for a further financing of $5
million to be arranged by King Place on commercially reasonable efforts,
private placement basis. The loan will be in the form of a $5,050,000
principal amount promissory note (the 'Note') to be issued by Crowflight
to King Place. The potential additional $5 million financing would
result from the sale, on a private placement basis, of a further
35,714,285 common shares of the Company as arranged by King Place, at a
price of $0.14, within 35 days following the date hereof, subject to the
receipt of regulatory approval. King Place is a related party to the
Company as the Company understands that it holds more than 40% of the
outstanding common shares of the Company.
Outlook
Crowflight does not expect to meet its 2010 guidance as previously disclosed in February 2010 (please see press release dated February 24, 2010). The Company is currently reviewing its 2010 production plan and costs for the remainder of this year, and expects to give updated guidance later this year once a steady state of production of 1,000 tonnes per day has been achieved.
Non-GAAP Measures
This press release refers to net working capital and cash cost per pound, which are not recognized measures under Canadian GAAP. These non-GAAP performance measures do not have any standardized meaning prescribed by Canadian GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. Management uses these measures internally. The use of these measures enables management to better assess performance trends. Management understands that a number of investors and others who follow the Company's performance assess performance in this way. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Canadian GAAP.
Three Months Three Months
Ended March Ended June 30,
31, 2010 2010
---------------- ----------------
Bucko Lake Mine operating expenses,
excluding depreciation, depletion and
amortization 4,682,279 14,093,975
Less by-product credit (111,084) (475,108)
---------------- ----------------
Cash cost net of by-products 4,571,195 13,618,868
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Exchange rate (US$1 to C$) 1.04 1.03
Cash cost net of by-products USD USD 4,391,604 USD 13,244,020
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Nickel payable sold (lb) 117,600 917,977
Cash cost per pound of nickel payable sold,
net of by-product credits in USD/lb USD 37.34 USD 14.43
---------------- ----------------
Qualified Person/Quality Control Procedures
This press release has been reviewed by Steve Davies, P.Eng, Chief Operating Officer of Crowflight, who is a Qualified Person under the National Instrument 43-101 guidelines.
About Crowflight Minerals
Crowflight Minerals Inc. (TSX: CML) is a Canadian junior mining company that owns the Bucko Lake Nickel Mine near Wabowden, Manitoba that resumed production in March 2010. The Company also holds nickel, copper and Platinum Group Mineral (PGM) projects in the Thompson Nickel Belt and Sudbury Basin.
Cautionary Note on Forward-Looking Information
This press release contains forward-looking statements under Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the Company's development potential and timetable of the Company's properties, including the Bucko Lake Project; the future price of nickel and other minerals; foreign exchange rates; the estimation of mineral reserves and mineral resources; conclusions of economic evaluations; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; capital expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as 'plans', 'expects' or 'does not expect', 'is expected', 'budget', 'scheduled', 'estimates', 'forecasts', 'intends', 'anticipates' or 'does not anticipate', or 'believes', or variations of such words and phrases or statements that certain actions, events or results 'may', 'could', 'would', 'might' or 'will be taken', 'occur' or 'be achieved'. Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Estimates regarding the anticipated timing, amount and cost of mining at the Bucko Lake Project are based on assumptions underlying mineral reserve and mineral resource estimates and the probability of realizing such estimates that are set out herein. Capital and operating cost estimates are based on extensive research of the Company, purchase orders placed by the Company to date, recent estimates of construction and mining costs and other factors that are set out herein. Production estimates are based on mine plans and production schedules, which have been developed by the Company's personnel and independent consultants.
Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to those risks of the Company described in its annual information form that is available under its profile on SEDAR at www.sedar.com. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward- looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws.
Further information is available on the Company's website at www.crowflight.com.
INTERIM CONSOLIDATED BALANCE SHEETS
(unaudited)
As at
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June 30, December 31,
2010 2009
ASSETS
Current
Cash and cash equivalents $ 1,790,558 $ 10,040,475
Amounts receivable 4,521,330 1,291,687
Inventory (Note 4, Note 12) 3,511,983 1,031,734
Prepaid expenses and deposits 234,457 135,290
Derivative asset (Note 6) 1,144,911 -
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11,203,239 12,499,186
Deposits and advances 534,709 534,709
Property, plant and equipment (Note 5) 145,059,949 138,568,967
Exploration and development property
and deferred expenditures (Note 7) 14,923,492 14,704,437
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$ 171,721,389 $ 166,307,299
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LIABILITIES
Current
Accounts payable and accrued
liabilities (Note 12) $ 15,326,685 $ 9,282,060
Loan 619,340 -
Equipment leases 47,497 45,371
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15,993,522 9,327,431
Equipment leases 36,671 61,281
Asset retirement obligations (Note 10) 958,038 918,387
Future income tax liability (Note 13) 3,222,000 6,000,200
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20,210,231 16,307,299
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Foreign exchange gain
SHAREHOLDERS' EQUITY
Common shares (Note 11(a)) 150,669,787 138,758,903
Warrants (Note 11(b)) 9,855,793 10,195,919
Contributed surplus (Note 11(d)) 16,975,990 15,698,606
Retained Earnings (Deficit) (25,990,412) (14,653,428)
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151,511,158 150,000,000
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$ 171,721,389 $ 166,307,299
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These financials should be read in conjunction with the Notes and
Management's Discussion and Analysis available online at www.sedar.com and
on the Company's website at www.crowflight.com.
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Interim Consolidated Statements of Shareholders' Equity
(unaudited)
Contributed
Common Shares Warrants Surplus
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No. $ $ $
------------------------------------------------
Balance, December 31, 2008 293,304,323 99,289,864 4,944,374 13,485,751
Private placement 215,411,765 47,820,000 - -
Value of warrants granted - (4,842,336) 4,842,336 -
Value of warrants granted
related to debt facility - - 107,597 -
Exercise of stock options 245,000 49,000 - -
Valuation allocation on
exercise of stock options - 18,586 - (18,586)
Stock based compensation -
shares (Note 11 (a)) 562,464 113,130 - -
Stock based compensation -
options (Note 11 (c)) - - - 2,231,441
Flow through share tax
effect (Note 13) - (2,982,000) - -
Value of broker warrants - (301,612) 301,612 -
Share issue costs - (523,400) -
Tax effect of cost of issue - 117,671 - -
Loss for the period - - - -
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Balance, December 31, 2009 509,523,552 138,758,903 10,195,919 15,698,606
Private placement
(Note 11 (a)) 72,200,000 11,552,000 - -
Stock based compensation -
shares (Note 11 (a)) 181,243 33,312 - -
Stock based compensation -
options (Note 11 (c)) - - - 1,032,553
Share issue costs - (125,000) - -
Exercise of warrants 1,588,259 317,652 - -
Valuation allocation on
exercise of warrants - 95,295 (95,295)
Valuation allocation on
expiry of warrants - - (244,831) 244,831
Tax effect of cost of issue - 37,625 - -
Loss for the period - - - -
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Balance, June 30, 2010 583,493,054 150,669,787 9,855,793 16,975990
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Interim Consolidated Statements of Shareholders' Equity
(unaudited)
Accumulated Shareholders'
Deficit Equity
-----------------------------------------------------------------
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$ $
-------------------------------------
Balance, December 31, 2008 12,327,459 130,047,448
Private placement - 47,820,000
Value of warrants granted - -
Value of warrants granted
related to debt facility - 107,597
Exercise of stock options - 49,000
Valuation allocation on
exercise of stock options - -
Stock based compensation -
shares (Note 11 (a)) - 113,130
Stock based compensation -
options (Note 11 (c)) - 2,231,441
Flow through share tax
effect (Note 13) - (2,982,000)
Value of broker warrants - -
Share issue costs - (523,400)
Tax effect of cost of issue - 117,671
Loss for the period (26,980,887) (26,980,887)
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Balance, December 31, 2009 (14,653,428) 150,000,000
Private placement
(Note 11 (a)) - 11,552,000
Stock based compensation -
shares (Note 11 (a)) - 33,312
Stock based compensation -
options (Note 11 (c)) - 1,032,553
Share issue costs - (125,000)
Exercise of warrants - 317,652
Valuation allocation on
exercise of warrants - -
Valuation allocation on
expiry of warrants - -
Tax effect of cost of issue - 37,625
Loss for the period (14,360,984) (14,360,984)
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Balance, June 30, 2010 (29,014,412) 148,487,158
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These financials should be read in conjunction with the Notes and
Management's Discussion and Analysis available online at
www.sedar.com and on the Company's website at www.crowflight.com.
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INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT
(unaudited)
For the three and six months ended June 30,
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Three months ended Six months ended
June 30, June 30,
2010 2009 2010 2009
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Revenue
Nickel sales $ 9,594,466 $ 2,007,450 $ 10,487,732 $ 2,007,450
Pricing adjustments 80,902 - 385,658 -
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Revenue - after
pricing adjustments $ 9,675,368 $ 2,007,450 10,873,390 $ 2,007,450
Cost of sales
(excludes
accretion,
depreciation,
depletion and
amortization) 12,250,533 2,445,213 16,118,355 2,445,213
Depreciation,
depletion and
amortization 1,580,676 336,093 1,617,108 336,093
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Gross margin -
mining operations (4,155,841) (773,856) (6,862,073) (773,856)
Temporary shutdown
costs (Note 3) - - 4,480,891 -
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Loss from mining
operations (4,155,841) (773,856) (11,342,964) (773,856)
Other expenses
Professional,
consulting and
management fees
(Notes 11(a) and
(c) and 12) 1,448,664 707,173 2,628,482 1,291,467
General and office 292,824 703,061 485,628 827,527
Shareholder
communications and
investor relations 67,587 118,320 202,506 204,426
Travel 10,537 68,282 42,771 118,686
Interest expenses
and bank charges 25,118 42,006 60,965 76,848
Amortization 201 201 402 1,154
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1,844,931 1,639,043 3,420,754 2,520,108
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(Loss) before the
undernoted (6,000,772) (2,412,899) (14,763,718) (3,293,964)
Interest income 4,145 2,000 13,401 23,511
Interest on long
term debt - (481) - (48,673)
General exploration - - - (50,000)
Debt facility
transaction costs - (383,142) - (383,142)
Write down of
exploration
property and
deferred
expenditures (Note
7) (50,000) (50,000) (101,771) (50,000)
Accretion (Note 10) (19,825) - (39,651) 57,416
Recovery of
expenditures - - - 66,958
Unrealized gain on
derivative
instruments (Note
6) 686,254 (349,085) 686,254 1,741,471
Foreign exchange
gain 237,999 - 127,926 -
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Income/(loss) before
income taxes (5,142,199) (3,193,607) (14,077,559) (1,936,423)
Future income taxes
(Note 13) 24,000 (71,900) 2,740,575 194,100
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Income/(loss) for
the period (5,118,199) (3,265,507) (11,336,984) (1,742,323)
RETAINED
EARNINGS/(DEFICIT),
beginning of period (20,872,213) 13,850,643 (14,653,428) 12,327,459
--------------------------------------------------------
RETAINED
EARNINGS/(DEFICIT),
end of period $ (25,990,412) $ 10,585,136$ (25,990,412) $ 10,585,136
--------------------------------------------------------
--------------------------------------------------------
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Loss per share -
basic & diluted $ (0.01) $ (0.01) $ (0.02) $ (0.01)
Weighted average
number of shares -
basic 583,243,050 319,225,711 563,749,209 319,225,711
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These financials should be read in conjunction with the Notes and
Management's Discussion and Analysis available online at www.sedar.com and
on the Company's website at www.crowflight.com.
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INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
unaudited
For the three and six months ended June 30
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Three months ended
June 30, Six months ended June 30,
2010 2009 2010 2009
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OPERATING ACTIVITIES:
Net (loss) for the
period $ (5,118,199) $(3,265,507) $(11,336,984) $ (1,742,323)
Charges not affecting
cash:
Depreciation,
depletion and
amortization 1,580,877 336,294 1,617,510 337,247
Stock-based
compensation expense
(Note 11(a) and (c)) 394,123 352,374 1,065,865 717,921
Warrants issued on
In-process working
capital facility
(Note 8) - 107,597 - 107,597
Accretion (Note 10) 19,825 - 39,651 (57,416)
Change in value of
derivative
instruments (686,254) 349,085 (686,254) 8,393,254
Future income tax
(recovery)/expense
(Note 13) (24,000) 71,900 (2,740,575) (194,100)
Net change in non-cash
working capital (4,935,940) 3,557,416 (5,672,822) 2,438,453
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(8,769,568) 1,509,159 (17,713,608) 10,000,633
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FINANCING ACTIVITIES:
Debt facility, net of
transaction costs - - - (7,600,000)
Private placements:
Common shares issued - 7,820,000 11,552,000 7,820,000
issue costs - (526,580) (125,000) (526,580)
Shares issued from
exercise of warrants 317,652 - 317,652 -
Payments on equipment
leases (11,369) (10,508) (22,484) (27,273)
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306,283 7,282,912 11,722,168 (333,853)
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INVESTING ACTIVITIES:
Exploration and
development property,
plant and equipment,
and deferred
expenditures (5,648,019) (9,164,180) (7,990,092) (20,308,323)
Increase (decrease) in
accounts payable
attributable to
property development
and exploration 6,725,089 420,045 5,731,617 (1,307,253)
Change in restricted
cash (Note 9) - - - 2,999,998
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Foreign exchange gain 1,077,070 (8,744,135) (2,258,475) (18,615,578)
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CHANGE IN CASH AND
CASH EQUIVALENTS (7,386,215) 47,936 (8,249,917) (8,948,798)
CASH AND CASH
EQUIVALENTS,
beginning of period $ 9,176,773 $ 1,610,809 10,040,475 10,607,543
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CASH AND CASH
EQUIVALENTS, end of
period $ 1,790,558 $ 1,658,745 $ 1,790,558 $ 1,658,745
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Cash and cash
equivalents consist
of:
Cash 1,716,092 1,350,858 1,716,092 1,350,858
Cash equivalents 74,466 307,887 74,466 307,887
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$ 1,790,558 $ 1,658,745 $ 1,790,558 $ 1,658,745
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SUPPLEMENTAL
INFORMATION:
Stock based
compensation charged
to exploration
properties - - - 14,250
Amortization of assets
deferred to
exploration
properties 604 604 1,208 8,833
Interest received 4,145 2,000 13,401 23,511
Interest paid 61,500 9,969 97,347 60,520
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These financials should be read in conjunction with the Notes and
Management's Discussion and Analysis available online at www.sedar.com and
on the Company's website at www.crowflight.com.
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Contacts:
Crowflight Minerals
David Hunter
Chief Financial Officer
(416) 861-5885
Crowflight Minerals
Heather Colpitts
Manager, Investor and Public Relations
(416) 861-5803
info@crowflight.com