Crowflight Minerals Inc.
TSX : CML

Crowflight Minerals Inc.

April 01, 2010 07:30 ET

Crowflight Announces Fourth Quarter and Year End 2009 Financial Results

TORONTO, ONTARIO--(Marketwire - April 1, 2010) - CROWFLIGHT MINERALS INC. ("Crowflight" or the "Company") (TSX:CML) today announces its financial results for the fourth quarter and year end of 2009.

Complete audited annual 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.

2009 IN REVIEW - HIGHLIGHTS FOR THE YEAR

  • The Bucko Lake Nickel Mine ("Bucko") located in the Thompson Nickel Belt near Wabowden, Manitoba shipped its first nickel concentrate in February 2009. The commencement of nickel concentrate shipments marked a major milestone for the Company as it transitioned from an exploration and development company to a nickel producer.

  • In February 2009, the Company was able to monetize all remaining nickel forward sales and foreign exchange contracts for net proceeds of $10.1 million. Of this, $7.6 million was used to pay off the outstanding balance of the $55 debt facility used to build the Bucko Mine. As a result of this transaction, Crowflight was free of any long-term debt used to build the mine.

  • An updated National Instrument (NI) 43-101 compliant Minerals Reserve and Resource estimate in March 2009 increased Proven & Probable reserves at Bucko by 22% from the 2007 Bankable Feasibility Study.

  • The Company raised a total of $47.8 million through private placements throughout the year. This included two strategic investments in Crowflight made by Pala Investments Holdings Limited ("Pala") and Kingplace Enterprises Limited. These strategic investments provided Crowflight with strong financial partners committed to maximizing the potential of the Bucko Mine.

  • In June 2009, commercial production was declared at the Bucko Lake Nickel Mine (commercial production being defined as throughput greater than 60% of mill nameplate capacity).

  • In November 2009, Crowflight temporarily suspended all production mining and milling operations at
    the Bucko Mine for three months in order to complete ramp development, review the mining method (subsequently redesigned the mine method, please see press release dated February 1st, 2010), accelerate mine development, continue with diamond drilling underground and upgrade the backfill plant. The Bucko Mine subsequently resumed milling operations and shipments of nickel concentrate in March 2010.

  • For the year 2009, the Company produced approximately 1,382,000 pounds of nickel and sold 1,152,000 pounds of payable nickel.

HIGHLIGHTS FOR THE FOURTH QUARTER OF 2009

  • For the quarter ended December 31, 2009, 183,000 pounds of nickel were produced, and 287,000 pounds of commercial production nickel sold as compared to nil in the fourth quarter of 2008 as the mine was not yet in production.

  • Total metal revenue for the quarter ended December 31, 2009 was $2.4 million compared to nil for the fourth quarter last year.

  • Operating cash flow for the quarter ended December 31, 2009 was negative $4.2 million compared to operating cash flow of $61.8 million in the fourth quarter last year (due to a gain on derivative instruments in 2008).

  • Loss for the quarter ended December 31, 2009 was $22.3 million or ($0.04) per share compared to income of $28.9 million or $0.11 per share in the fourth quarter last year (due to a gain on derivative instruments in 2008.) The loss for Q4-2009 included a $33.7 million write down to property, plant and equipment and certain exploration assets which generated a tax benefit of $15 million, giving an after tax write down of $18.7 million.

  • Commercial nickel sales settled during the quarter ended December 31, 2009 were realized at an average price of US$7.35 per pound.

  • Net working capital (non-GAAP measure, see "Non-GAAP Measures" section) as at December 31, 2009 was $3.2 million (including cash and cash equivalents of $10.0 million) compared to $7.7 million as at December 31, 2008.

  • On October 14, 2009, Crowflight closed the second tranche of its private placement financing with Kingplace Enterprises Limited for gross proceeds of approximately $8.8 million. Pursuant to the second tranche, Crowflight issued 35,266,779 common shares of the Company at a price of $0.25 per share. The primary intended use for the proceeds from the financing was the continued development of the Bucko Lake Project and the balance for general corporate purposes. The first tranche of the financing for $11.2 million closed during the third quarter of 2009.

  • In addition to the temporary three-month suspension of all production mining and milling operations at the Bucko Mine mentioned above in the "2009 in Review – Highlights for the Year" section, the Company also announced on November 16, 2009 that Paul Keller stepped down as Crowflight's Vice President Operations and Chief Operating Officer, effective November 16, 2009.

  • Crowflight completed an exploration drill program around its M11A deposit located 5 kilometres from the Bucko mine site during the fourth quarter of 2009. The work was designed to infill and explore for extensions to mineralization identified at the M11A North deposit while meeting the Company's ongoing commitment to fund exploration under its option agreement with Xstrata. Expenditures made during this program will allow Crowflight to vest its initial 35% interest in the combined land package in the Thompson Nickel Belt held under option from Xstrata.

2009 Quarterly Bucko Mine Operations Production and Financial Data

  Q1-2009   Q2-2009   Q3-2009   Q4-2009 Total-2009
  Pre-   Pre- Production Production Production    
  production production                
Operating Statistics:                        
Tonnes ore mined   31,091      42,224   18,377   27,634   16,605   135,931
Average Nickel head grade (%Ni)   0.95%   1.25%   0.93%   1.05%   0.69%   1.00%
Tonnes ore milled   29,303      35,490   18,390   23,493   18,294   124,970
Average Recovery   31.97%      61.40%   62.62%   69.70%   64.88%   55.52%
Nickel pounds:                        
  Produced   138,956   441,200   234,920   384,327   183,203   1,382,606
  Payable sold1   65,498   268,636   254,139   276,918   287,506   1,152,697
 
Pre-production Metal Sales Revenue:                        
Average Ni price (US$/lb) $ 4.46 $ 5.73                
CAD/US exchange rate   1.26   1.15                
Nickel revenue1 $ 368,318 $ 1,939,400                
Other metals revenue 2 $ 5,935   86,700                
Total metal revenue $ 374,253 $ 2,026,100                
 
Commercial Production Metal Sales                        
Revenue:                        
Average Ni price (US$/lb)         $ 6.79 $ 7.41 $ 7.35   7.19
CAD/US exchange rate           1.16   1.09   1.07   1.10
Nickel revenue           2,007,450   2,231,683   2,254,773   6,493,906
Pricing adjustments3           -   52,810   184,171   236,981
Total metal revenue           2,007,450   2,284,493   2,438,944   6,730,887
Cost of sales           2,445,213   2,546,116   4,391,982   9,383,311
Accretion           -   -   -   -
Temporary shutdown costs           -   2,381,083   2,561,917   4,943,000
Depreciation, depletion, and amortization           336,093   605,141   357,940   1,299,174
Gross profit           (773,856) (3,247,847)   (4,872,895)   (8,894,598)
Net earnings (loss) before tax5         (3,193,607) (5,214,837)   (40,832,756) (47,984,016)
Basic and diluted earnings (loss per share)         $ (0.01) $ (0.01) $ (0.04) $ (0.07)
Cash flow from operating activities6           1,509,159   389,211   (4,180,453)   6,209,391
USD Cash Cost of sales per pound sold1,4         $ 8.28 $ 8.45 $ 14.31 $ 10.38
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. Non-GAAP Measure - see "Non-GAAP Measures" section
5. Total net earnings (loss) before tax total for 2009 includes pre-production net earnings (loss)
6. Cash flow from operating activities total for 2009 includes pre-production cash flow

Outlook

As announced February 24, 2010, Crowflight's production targets for 2010 from Bucko are approximately 8.6 million pounds of payable nickel based on projections of 342,000 tonnes at a 1.63% nickel grade and assuming a 78% recovery. The average operating cash costs (non-GAAP measure, see "Non-GAAP Measures" section) for the entire year are projected to be between US$5.70 - $5.90 per pound of payable nickel (using a USD: CAD exchange rate of 0.94) as a result of lower tonnages in the first half of 2010 as the mine resumes production. The average operating cash cost projected for the second half of the year is expected to average US$5.15 - $5.35 per pound of payable nickel when the mine is expected to be in full production.

Crowflight currently estimates capital requirements for 2010 to be approximately CAD$14 million for continued mine development, upgrading of the backfill plant and increasing the tailings pond capacity.

Further to the Bucko operational updates that Crowflight provided in the press releases dated February 1 and 24, 2010, the ramp connecting surface to the 1,000' Level has been completed. The ramp connection has been designed to develop access to new areas for mining and allow for the use of large 40-tonne class trucks to haul ore directly from the stoping levels to surface. The trucking via ramp is important to allow for efficient mining cycle time as well as the continuous transport of ore to surface from a number of operating mining levels.

Production mining, milling and nickel concentrate shipments resumed at Bucko in March, 2010 and the mine is ramping up to achieve the second quarter target of 1,000 tonnes per day (tpd) of ore which is planned to increase to 1,200 tpd in the second half of 2010.

Greg Radke has replaced Jan Castro as a member of the Board of Directors. Mr. Radke has been appointed by Pala. The Company would like to thank Mr. Castro for his contribution to, and continuing support of, the Company.

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 a 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.

Qualified Person/Quality Control Procedures

This press release has been prepared and reviewed by Mr. Greg Collins, P.Geo. (APGO/APEGM) VP Exploration of Crowflight and Steve Davies, P.Eng, and Chief Operating Officer of Crowflight, both of whom are Qualified Persons 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 recently resumed production. 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 risks related to: unexpected events and delays during construction, expansion and start-up; variations in mineral grade and recovery rates; receipt and revocation of government approvals; timing and availability of external financing on acceptable terms; actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of minerals, particularly nickel; failure of plant, equipment or processes to operate as anticipated; reliance on joint venture partners; accidents, labour disputes and other risks of the mining industry. 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.

CONSOLIDATED BALANCE SHEETS 
As at December 31, 
 
    December 31,   December 31,
    2009   2008
ASSETS        
Current        
  Cash and cash equivalents $ 10,040,475 $ 10,607,543
  Restricted cash   -   2,999,998
  Amounts receivable   1,291,687   607,125
  Inventory   1,031,734   268,285
  Prepaid expenses and deposits   135,290   138,463
  Derivative asset   -   8,668,392
 
    12,499,186   23,289,806
 
Deposits and advances   534,709   536,709
Property, plant and equipment   138,568,967   109,241
Exploration and development property and deferred expenditures   14,704,437   153,939,715
 
  $ 166,307,299 $ 177,875,471
 
 
LIABILITIES        
Current        
  Accounts payable and accrued liabilities $ 9,282,060 $ 14,950,385
  Equipment leases   45,371   48,129
  Derivative liability   -   624,223
    9,327,431   15,622,737
 
Equipment leases   61,281   107,286
Long term debt   -   7,600,000
Asset retirement obligations   918,387   359,000
Future income tax liability   6,000,200   24,139,000
    16,307,299   47,828,023
 
SHAREHOLDERS' EQUITY        
Common shares   138,758,903   99,289,864
Warrants   10,195,919   4,944,374
Contributed surplus   15,698,606   13,485,751
Retained Earnings   (14,653,428)   12,327,459
 
    150,000,000   130,047,448
 
  $ 166,307,299 $ 177,875,471

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.

Consolidated Statements of Shareholders' Equity        
        Contributed Accumulated Shareholders'
  Common Shares Warrants Surplus Deficit Equity
  No. $ $ $ $ $
 
Balance, December 31, 2007 249,978,487 86,671,512 2,025,712 10,193,512 (22,151,940) 76,738,796
      -      
  Private placement 39,680,000 15,251,000 - - - 15,251,000
  Value of warrants granted related to debt facility - - 3,719,479 - - 3,719,479
  Value of warrants to be granted - - 849,709 - - 849,709
  Exercise of warrants and broker warrants 1,115,836 446,334 - - - 446,334
  Valuation allocation on exercise of warrants - 118,742 (118,742) - - -
  Exercise of stock options 2,530,000 569,531 - - - 569,531
  Valuation allocation on exercise of stock options - 979,566 - (979,566) - -
  Stock based compensation - - - 2,364,835 - 2,364,835
  Flow through share tax effect - (3,563,000) - - - (3,563,000)
  Value of broker warrants - (375,186) 375,186 - - -
  Valuation allocation on expiry of warrants and            
  broker warrants - - (1,906,970) 1,906,970 - -
  Share issue costs - (1,198,635) - - - (1,198,635)
  Tax effect of cost of issue - 390,000 - - - 390,000
  Income for the period - - - - 34,479,399 34,479,399
 
Balance, December 31, 2008 293,304,323 99,289,864 4,944,374 13,485,751 12,327,459 130,047,448
 
  Private placement 215,411,765 47,820,000 - - - 47,820,000
  Value of warrants granted - (4,842,336) 4,842,336 - - -
  Value of warrants granted related to debt facility - - 107,597 - - 107,597
  Exercise of stock options 245,000 49,000 - - - 49,000
  Valuation allocation on exercise of stock options - 18,586 - (18,586) - -
  Stock based compensation - shares 562,464 113,130 - - - 113,130
  Stock based compensation - options - - - 2,231,441 - 2,231,441
  Flow through share tax effect - (2,982,000) - -   (2,982,000)
  Value of broker warrants - (301,612) 301,612 - - -
  Share issue costs - (523,400)       (523,400)
  Tax effect of cost of issue - 117,671 - - - 117,671
  Loss for the period - - - - (26,980,887) (26,980,887)
 
Balance, December 31, 2009 509,523,552 138,758,903 10,195,919 15,698,606 (14,653,428) 150,000,000

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.

CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT 
For the years ended December 31, 
 
    2009   2008
 
Revenue        
Nickel sales $ 6,493,906 $ -
Pricing adjustments   236,981 $ -
Revenue - after pricing adjustments   6,730,887 $ -
 
Cost of sales (excludes accretion, depreciation, depletion and amortization)   9,383,311   -
Depreciation, depletion and amortization   1,299,174   -
Gross margin - mining operations   (3,951,598)   -
 
Temporary shutdown costs   4,943,000   -
Loss from mine operations   (8,894,598)   -
 
Other expenses        
Professional, consulting and management fees   4,439,524   3,194,231
General and office   1,359,469   410,509
Shareholder communications and investor relations   375,500   439,525
Travel   202,637   169,088
Interest expenses and bank charges   140,930   11,495
Amortization   1,557   6,816
    6,519,617   4,231,664
 
(Loss) before the undernoted (15,414,215)   (4,231,664)
 
Interest income   45,581   253,448
Interest on long term debt   (48,673)   (2,317,355)
General exploration   (50,000)   (106,921)
Debt facility transaction costs   (383,464)   (5,993,883)
Write down of property, plant and equipment (30,601,829)   -
Write down of exploration property and deferred expenditures   (3,185,941)   (5,244,395)
Accretion   57,416   (28,000)
Recovery of expenditures   66,958   -
Net gain on derivative instruments   1,530,151   70,624,169
Income/(loss) before income taxes (47,984,016)   52,955,399
 
Future income taxes   21,003,129   (18,476,000)
 
Income/(loss) for the year (26,980,887)   34,479,399
 
RETAINED EARNINGS/(DEFICIT), beginning of year   12,327,459   (22,151,940)
 
RETAINED EARNINGS/(DEFICIT), end of year $ (14,653,428) $ 12,327,459
 
Income (loss) per share - basic & diluted $ (0.07) $ 0.13
Weighted average number of shares - basic 390,323,874 264,303,511
Weighted average number of shares - diluted 390,323,874 267,145,855

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.

CONSOLIDATED STATEMENTS OF CASH FLOWS 
For the years ended December 31, 
 
    2009   2008
OPERATING ACTIVITIES:        
Net income/(loss) for the period $ (26,980,887) $ 34,479,399
Charges not affecting cash:        
  Depreciation, depletion and amortization   1,300,731   6,816
  Stock- based compensation expense   2,330,321   2,364,835
  Warrants issued on In-process working capital facility   107,597   -
  Accretion   (57,416)   28,000
  Debt facility transaction costs   -   7,175,683
  Capitalized interest   -   -
  Change in value of derivative instruments   8,044,169   (8,044,169)
  Write down of property, plant and equipment   30,601,829   -
  Write down of exploration property and deferred expenditures   3,135,941   5,244,395
  Future income tax (recovery)/expense   (21,003,129)   18,476,000
Net change in non- cash working capital   8,730,235   (498,933)
    6,209,391   59,232,026
FINANCING ACTIVITIES:        
Debt facility, net of transaction costs   -   47,612,059
Retirement of debt facility   (7,600,000)   (42,400,000)
Private placements   37,242,661   14,052,365
Shares issued from exercise of warrants and options   49,000   1,015,865
Payments on equipment leases   (48,763)   (74,444)
    29,642,898   20,205,845
INVESTING ACTIVITIES:        
Exploration and development property, plant and equipment, and deferred expenditures   (33,631,896)   (82,559,511)
(Increase) decrease in deposits and prepaid exploration expenditure   -   318,554
(Decrease)/Increase in accounts payable attributable to property development and        
exploration   (5,787,459)   7,405,839
Change in restricted cash   2,999,998   (2,999,998)
    (36,419,357)   (77,835,116)
CHANGE IN CASH AND CASH EQUIVALENTS   (567,068)   1,602,755
CASH AND CASH EQUIVALENTS, beginning of year   10,607,543   9,004,788
CASH AND CASH EQUIVALENTS, end of year $ 10,040,475 $ 10,607,543
 
Cash and cash equivalents consist of:        
  Cash   2,259,673   559,438
  Cash equivalents   7,780,802   10,048,105
  $ 10,040,475 $ 10,607,543
SUPPLEMENTAL INFORMATION:        
Warrants granted related to debt facility   107,597   4,569,188
Warrants granted as cost of issue   301,612   375,186
Stock based compensation charged to exploration properties   14,250   -
Amortization of assets deferred to exploration properties   10,041   28,242
Equipment acquired by capital lease   -   41,003
Repayment of bridge facility with final tranche   -   15,000,000
Interest received   34,363   257,347
Interest paid   83,807   1,135,555
Income taxes paid   -   -
Common shares issued for settlement of accounts payable   10,053,939   -
 
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

Contact Information

  • Crowflight Minerals
    Anna M. Ladd
    VP Finance and CFO
    (416) 861-5891
    or
    Crowflight Minerals
    Heather Colpitts
    Manager, Investor and Public Relations
    (416) 861-5803
    info@crowflight.com
    www.crowflight.com