Crowflight Minerals Inc.
TSX : CML

Crowflight Minerals Inc.

November 16, 2009 17:35 ET

Crowflight Announces Third Quarter 2009 Financial Results

TORONTO, ONTARIO--(Marketwire – Nov. 16, 2009) - CROWFLIGHT MINERALS INC. ("Crowflight" or the "Company")(TSX:CML) today announces its financial results for the third quarter of 2009.

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.

Q3 2009 Financial and Operational Highlights:

  • For the quarter ended September 30, 2009, there was 384,327 pounds of nickel produced, and 276,918 pounds of commercial production nickel sold as compared to nil in the third quarter of last year as the mine was not yet in production.

  • Total metal revenue for the quarter ended September 30, 2009 was $2.3 million compared to nil for the third quarter last year.

  • Operating cash flow for the quarter ended September 30, 2009 was $389,211 compared to operating cash flow of negative $634,800 in the third quarter last year.

  • Loss for the quarter ended September 30, 2009 was $2.9 million or ($0.01) per share compared to net income of $9.9 million or $0.04 per share in the third quarter last year (due to a gain on derivative instruments in 2008).

  • Commercial nickel sales settled during the quarter ended September 30, 2009 were realized at an average price of US$7.41 per pound.

  • Net working capital4 as at September 30, 2009 was $15.2 million (including cash and cash equivalents of $13.7 million) compared to $7.7 million as at December 31, 2008.

  2009 Quarterly Bucko Mine Operations Production and Financial Data  
                   
    Q1-2009   Q2-2009   Q3-2009  
    Pre-production   Pre-production   Production   Production  
  Operating Statistics:                        
  Tonnes ore mined   31,091     42,224     18,377     27,634  
  Average Nickel head grade (%Ni)   0.95 %   1.25 %   0.93 %   1.05 %
  Tonnes ore milled   29,303     35,490     18,390     23,493  
    Average Recovery   31.97 %   61.40 %   62.62 %   69.70 %
  Nickel pounds:                        
      Produced   138,956     441,200     234,920     384,327  
      Payable sold1   65,498     268,636     254,139     276,918  
                           
  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  
  CAD/US exchange rate               1.16     1.09  
  Nickel revenue               2,007,450     2,231,683  
  Pricing adjustments3               -     52,810  
  Total metal revenue               2,007,450     2,284,493  
  Cost of sales               2,445,213     2,546,116  
  Accretion               -     -  
  Temporary shutdown costs               -     2,381,083  
  Depreciation, depletion, and amortization               336,093     605,141  
  Gross profit (loss)               (773,856 )   (3,247,847 )
  Net earnings (loss)               (3,193,607 )   (5,214,837 )
  Basic and diluted earnings (loss per share)             $ (0.01 ) $ (0.01 )
  Cash flow from operating activities               1,509,159     109,511  
  USD Cash Cost of sales per pound sold1,4             $ 8.28   $ 8.45  
                           
  1. Includes settlement of prior quarter sales
  2. Other metal revenue is recorded as an offset to Cost of Goods Sold in the Company's financial statements
  3. Pricing adjustments reflect final pricing/volume adjustments on lots sold in prior quarters
  4. Non-GAAP Measure
This press release refers to cash cost per pound and working capital which is not a recognized measure under Canadian GAAP. This non-GAAP financial measure does not have any standardized meaning prescribed by Canadian GAAP and is therefore unlikely to be comparable to a similar measure presented by other issuers. Management uses this measure internally. The use of this measure 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. Management believes that this is a better indication of its expected performance in future periods. 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.
  • In July 2009, the Company announced a private placement financing with Pala Investments Holdings Ltd ("Pala"), whereby the Company raised $15,000,000 through the issuance of 60,000,000 units of the Company at a price of $0.25 per unit. Each Unit consisted of one common share of the Company and one-half of one common share purchase warrant (each full warrant, a "Warrant"), each whole Warrant being exercisable to acquire one common share of the Company at a price of $0.30 until July 23, 2011. Net proceeds from the Offering were used to pay outstanding indebtedness, including $5.0 million to its mining contractor (an affiliate of Pala), and for capital development and general working capital purposes. The Offering also enabled the Bucko operation to complete an upgrade to its effluent treatment capabilities so that Crowflight continues to maintain strict compliance with all environmental guidelines.

  • Mill operations were temporarily suspended during July due to a lack of available ore from the main production stope. Poor ground conditions in the stope entrance required the development of a new stope access drift so that mining operations could resume safely. The new access was successfully completed by the end of the month. During the month of July, a new water treatment facility was also installed and commissioned at the Bucko Mine due to water issues that were encountered at the end of June. Thirty mill employees were temporarily laid off for four weeks until the mill resumed operation on August 4, 2009. 

  • In September 2009, Crowflight announced a private placement financing with Kingplace Enterprises Limited ("Kingplace") for a $20 million private placement financing, pursuant to which Kingplace agreed to purchase an aggregate of 80,000,000 common shares of the Company at a price of $0.25 per share. The primary purpose of the proceeds from the financing will be for the continued development of the Bucko Lake Project and the balance for general corporate purposes. The first tranche closed on September 29, 2009 for gross proceeds of $11,183,305 and the second tranche closed subsequent to the quarter's end on October 14, 2009 for gross proceeds of $8,816,695.

Outlook

As announced earlier today, the Company will be temporarily suspending all production mining and milling operations at the Bucko Lake Nickel Mine (Bucko) located in the Thompson Nickel Belt near Wabowden, Manitoba for three months, effective immediately to complete ramp development, accelerate mine development and upgrade the backfill plant.
As a result, Crowflight has revised its production guidance for 2009 and now expects to produce 1.3 million pounds of nickel, generating approximately 1.2 million pounds of payable nickel. Average cash cost of sales per pound of nickel4 for the full year 2009 is expected to be approximately US$7.50 - $8.50 per pound at an exchange rate of CDN$1.10 to US$1.00, primarily from costs incurred for the year-to-date and lower than expected production for the remainder of the year. Management expects that costs will decrease significantly as full capacity production is sustained at Bucko in 2010.

Capital expenditures for the remainder of 2009 are expected to be $6-7 million (consistent with the disclosure in the second quarter MD&A).

The Company also plans to spend $1.0 million dollars in exploration activity around the M11A deposit located 5 km from the Bucko mine site during the fourth quarter of 2009. This work will allow Crowflight to vest a 30% interest in the combined land package in the Thompson Nickel Belt held under option from Xstrata. Exploration drilling is expected to commence shortly with updates expected to be released over the coming weeks.

The Company plans to issue comprehensive guidance regarding 2010 production and costs in January 2010. It is anticipated that by the end of the first quarter 2010, the Bucko mine will be sufficiently developed and have adequate working places (stopes) available to sustain the full production rate of at least 1,000 tonnes per day.

The Company also announces the resignation of Mike Kelly from the Company's Board of Directors. Mr. Kelly's resignation follows his departure from the Company as President and CEO (refer to press release dated August 21, 2009). 

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, who is a Qualified Person under the National Instrument 43-101 guidelines.

Crowflight Minerals -- Canada's Newest Nickel Producer

Crowflight Minerals Inc. (TSX:CML) is a Canadian junior mining company that owns the Bucko Lake Nickel Mine near Wabowden, Manitoba. The Company is also focused on 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            
             
     September 30,     December 31,  
    2009     2008  
ASSETS   (unaudited)     (unaudited)  
Current          
  Cash and cash equivalents $ 13,675,834   $ 10,607,543  
  Restricted cash   -     2,999,998  
  Amounts receivable   11,306,065     607,125  
  Inventory   2,152,818     268,285  
  Prepaid expenses and deposits   126,970     138,463  
  Derivative asset   -     8,668,392  
    27,261,687     23,289,806  
           
Deposits and advances   534,709     536,709  
Property, plant and equipment   164,080,944     109,241  
Derivative assets   -     -  
Exploration and development property and deferred expenditures   16,728,808     153,939,715  
  $ 208,606,148   $ 177,875,471  
             
             
LIABILITIES            
Current            
  Accounts payable and accrued liabilities $ 11,512,348   $ 14,950,385  
  In-process working capital facility   334,286     -  
  Current portion of long term debt   -     -  
  Equipment leases   44,342     48,129  
  Derivative liability   217,348     624,223  
    12,108,324     15,622,737  
           
Equipment leases   73,176     107,286  
Long term debt   -     7,600,000  
Asset retirement obligations    918,387     359,000  
Future income tax liability   24,449,000     24,139,000  
    37,548,887     47,828,023  
             
SHAREHOLDERS' EQUITY            
Common shares   129,909,726     99,289,864  
Shares to be issued   8,816,695     -  
Warrants   10,195,919     4,944,374  
Contributed surplus   14,455,652     13,485,751  
Retained Earnings   7,679,269     12,327,459  
             
    171,057,261     130,047,448  
  $ 208,606,148   $ 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 webside at www.crowflight.com.
 
                 
                 
Consolidated Statements of Shareholders' Equity                
(unaudited)                          
  Common Shares   Shares to be issued Warrants   Contributed Surplus   Accumulated Deficit   Shareholders' 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 180,144,986   39,003,305   - -   -   -   39,003,305  
  Shares to be issued on private placement -   -   8,816,695 -   -   -   8,816,695  
  Value of warrants granted -   (4,842,336 ) - 4,842,336   -   -   -  
  Value of warrants granted related to debt facility -   -   - 107,597   -   -   107,597  
  Stock based compensation - shares 464,555   96,975   - -   -   -   96,975  
  Stock based compensation - options -   -   - -   969,901   -   969,901  
  Flow through shares 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 -   168,930   - -   -   -   168,930  
  Income for the period -   -   - -   -   (4,648,190 ) (4,648,190 )
                           
Balance, September 30, 2009 473,913,864   129,909,726   8,816,695 10,195,919   14,455,652   7,679,269   171,057,261  
                           
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 webside at www.crowflight.com.  
   
   
   
   
CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT  
(unaudited)  
For the three and nine months ended September 30,  
                       
  Three months ended September 30,     Nine months ended September 30,  
  2009     2008     2009     2008  
                               
Revenue                              
Nickel sales $ 2,231,683     $ -     $ 4,239,133     $ -  
Pricing adjustments   52,810             $ 52,810          
Revenue - after pricing adjustments $ 2,284,493     $ -     $ 4,291,943     $ -  
                               
Cost of sales (excludes accretion, depreciation, depletion and amortization)   2,546,116       -       4,991,329       -  
Depreciation, depletion and amortization   605,141       -       941,234       -  
Gross margin - mining operations   (866,764 )                           -         (1,640,620 )                           -  
                               
Temporary shutdown costs   2,381,083               2,381,083          
Loss from mine operations   (3,247,847 )                           -         (4,021,703 )                           -  
                               
Other expenses                              
Professional, consulting and management fees   1,036,527       704,210       2,327,994       2,642,092  
General and office   372,310       128,439       1,199,837       328,083  
Shareholder communications and investor relations   127,433       39,182       331,859       287,429  
Travel   42,214       32,173       160,900       142,405  
Interest expenses and bank charges   51,773       4,123       128,621       9,332  
Amortization   201       1,437       1,355       5,560  
                               
           1,630,458       909,564       4,150,566       3,414,901  
                               
(Loss) before the undernoted   (4,878,305 )     (909,564 )     (8,172,269 )     (3,414,901 )
                               
Interest income   3,161       66,605       26,672       199,126  
Interest on long term debt                         -       (482,309 )     (48,673 )     (901,140 )
General exploration                         -       (106,921 )     (50,000 )     (106,921 )
Debt facility transaction costs   (322 )     (499,594 )     (383,464 )     (2,544,796 )
Write down of exploration property and deferred expenditures                         -       -       (50,000 )     -  
Accretion                         -       (299,695 )     57,416       (789,180 )
Recovery of expenditures                         -       -       66,958       -  
Net gain (loss) on derivative instruments   (339,371 )     18,267,980       1,402,100       18,267,980  
                               
Income/(loss) before income taxes   (5,214,837 )     16,036,502       (7,151,260 )     10,710,168  
                               
Future income taxes   2,308,970       (6,145,000 )     2,503,070       (5,189,000 )
                               
Income/(loss) for the period   (2,905,867 )     9,891,502       (4,648,190 )     5,521,168  
                               
RETAINED EARNINGS/(DEFICIT), beginning of period   10,585,136       (26,522,274 )     12,327,459       (22,151,940 )
                               
RETAINED EARNINGS/(DEFICIT), end of period $ 7,679,269     $ (16,630,772 )   $ 7,679,269     $ (16,630,772 )
                               
                               
Loss per share - basic & diluted $ (0.01 )   $ 0.04     $ (0.01 )   $ 0.02  
                               
Weighted average number of shares - basic & diluted   415,524,927       269,683,888       351,897,975       261,202,344  
                               
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 webside at www.crowflight.com.  
   
   
   
   
CONSOLIDATED STATEMENTS OF CASH FLOWS  
unaudited  
For the three and nine months months ended September 30,  
   
  Three months ended September 30,     Nine months ended September 30,  
  2009     2008     2009     2008  
OPERATING ACTIVITIES:                              
Net income/(loss) for the period $ (2,905,867 )   $ 9,891,502     $ (4,648,190 )   $ 5,521,168  
Charges not affecting cash:                              
  Amortization   603,321       1,437       940,568       5,560  
  Stock-based compensation expense   334,705       508,473       1,052,626       2,047,060  
  Warrants issued on In-process working capital facility                           -         -       107,597       -  
  Accretion                           -         299,695       (57,416 )     789,180  
  Debt facility transaction costs                           -         499,594                                 -         2,544,796  
  Capitalized interest                           -         203,525                                 -         622,356  
  Change in value of derivative instruments   (131,737 )     (18,267,980 )     8,261,517       (18,267,980 )
  Future income tax recovery   (2,308,970 )     6,145,000       (2,503,070 )     5,189,000  
Net change in non-cash working capital   4,797,759       83,954       7,236,213       (1,036,472 )
                               
    389,211       (634,800 )     10,389,845       (2,585,332 )
                               
FINANCING ACTIVITIES:                              
Debt facility, net of transaction costs                           -       39,500,406       (7,600,000 )     62,673,758  
Retirement of debt facility                           -       (15,000,000 )                               -         (15,000,000 )
Common shares issued through private placements   21,132,546       -       28,425,966       10,184,706  
Shares issued from exercise of warrants and options                           -       11,250                                 -         1,015,866  
Payments on equipment leases   (10,624 )     (20,312 )     (37,897 )     (67,656 )
                               
    21,121,922       24,491,344       20,788,069       58,806,674  
                               
INVESTING ACTIVITIES:                              
Exploration and development property, plant and equipment, and deferred expenditures   (6,761,989 )     (25,076,313 )     (27,070,312 )     (60,997,071 )
(Increase) decrease in deposits and prepaid exploraton expenditure                           -       -                                 -         318,554  
(Decrease)/Increase in accounts payable attributable to property development and exploration   (2,732,055 )     6,888,246       (4,039,309 )     8,492,386  
Release of restricted cash                           -       -       2,999,998       -  
                               
    (9,494,044 )     (18,188,067 )     (28,109,623 )     (52,186,131 )
                               
CHANGE IN CASH AND CASH EQUIVALENTS   12,017,089       5,668,477       3,068,291       4,035,211  
                               
CASH AND CASH EQUIVALENTS, beginning of period $ 1,658,745     $ 7,371,522               10,607,543       9,004,788  
                               
CASH AND CASH EQUIVALENTS, end of period $ 13,675,834     $ 13,039,999     $ 13,675,834     $ 13,039,999  
                               
                               
Cash and cash equivalents consist of:                              
  Cash   5,509,476       5,488,999       5,509,476       5,488,999  
  Cash equivalents   8,166,358       7,551,000                  8,166,358       7,551,000  
  $ 13,675,834     $ 13,039,999     $ 13,675,834     $ 13,039,999  
                               
SUPPLEMENTAL INFORMATION:                              
Warrants granted related to debt facility   -       -       107,597       3,719,479  
Warrants granted as cost of issue   -       -       301,612       244,831  
Stock based compensation charged to exploration properties   -       -       14,250       -  
Amortization of assets deferred to exploration properties   604       7,193       9,437       21,582  
Interest received   3,161       68,120       28,672       206,923  
Interest paid   8,885       -       69,405       158,221  
Income taxes paid   -       -       -       -  
Common shares issued for settlement of accounts payable   5,053,939       -       10,053,939       -  
Shares to be issued on private placement   8,816,695       -       8,816,695       -  
                               
                               
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  
 
   
   
TSX Trading Symbol: CML
Total Shares Outstanding: 509.2MM
Fully Diluted: 624.4MM
52-Week Trading Range: C$0.09 - $0.35

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