Aberdeen International Inc.

Aberdeen International Inc.

December 15, 2008 20:30 ET

Aberdeen Announces Q3 2009 NAV of $0.69 Per Share and Q3 2009 Financial Results

- Requested Equity Conversion of the Simmer & Jack Royalty Loan - Records Loss of $0.46 per Share for the Quarter - Completes Share Buyback under Issuer Bid for 2008 - Royalty Income of $2.0 million - Aberdeen to Host Conference Call on December 16, 2008 - 10:00 am ET

TORONTO, ONTARIO--(Marketwire - Dec. 15, 2008) - ABERDEEN INTERNATIONAL INC. ("Aberdeen", or the "Company") (TSX:AAB) is pleased to announce that it has released its financial results for the third quarter ending October 31 2008.

As at October 31, 2008, Aberdeen's Net Asset Value ("NAV") was $65.1 million, or $0.69 per share, down from an NAV of $1.10 per share at July 31, 2008. The components of Aberdeen's NAV are as follows:

- Cash and cash equivalents of $1.4 million;

- Portfolio Investments at estimated fair value of $27.8 million;

- Estimated fair value of the Convertible Royalty Loan Facility of $29.0 million, based on the assumed conversion to equity of Simmer and Jack Mines, Limited;

- Other assets of $14.4 million (including future tax assets of $8.5 million); less

- Total liabilities of $7.5 million (including future tax liabilities of $5.8 million).

- Shares outstanding at the end of the quarter of 94,874,339.

Aberdeen will host a conference call to update shareholders on Wednesday December 16, 2008 at 10:00 am ET. Stan Bharti, Executive Chairman and George Faught, President and CEO, will moderate.

Conference call date: Wednesday December 17,2008
Conference call time: 10:00 am ET
Dial-in numbers: 416-695-6140 - Local and International
877-323-2010 - North America Toll Free

The current credit crisis and growing concerns of a global recession have negatively impacted commodity prices, driving down equity prices for stocks in the resource sector. This has significantly and adversely affected the fair market value of Aberdeen's portfolio investments and Convertible Royalty Loan. As a result, Aberdeen recorded a net loss of $44.6 million, or $0.46 per share, during the quarter. However, with no debt on Aberdeen's balance sheet, the Company is well positioned to deal with the current downturn and management believes that the market weakness is, to a large degree, liquidity driven and the fundamentals of the investment portfolio will still bring value appreciation when growth returns to the global economy.

Stan Bharti, Chairman of Aberdeen stated, "This quarter has seen tremendous value carved out of the market, particularly in the junior resource sector. Our portfolio investments have been severely impacted with the sell off this quarter; however, we are actively assisting our investee companies to ensure full value can be realized when the market eventually rebounds."

Results of Operations

During the three months ended October 31, 2008, the Company recorded a net loss of $44.6 million, or $0.46 per share, compared with earnings of $3.6 million, or $0.03 per share, in the comparative period last year. A net loss of $31.2 million, or $0.31 per share, was recorded for the nine months ended October 31, 2008.

During the quarter, Aberdeen recorded net losses on investments of $49.5 million. Shares prices of junior resource companies, the sector in which the Company holds most of its investments, have experienced a sharp downturn over the last quarter, along with the broader market in general.

The Company also recorded an unrealized loss of $19.2 million on its Convertible Royalty Loan ("Loan"). Prior to the current quarter, the Company has estimated the fair value of the Loan based on a discounted cash flow analysis of expected cash flow from the remaining graduated royalty and interest payments, the repayment of the US$10,000,000 principal and the 1% NSR for the life of the mines. The Loan was fair valued using the discounted cash flow approach as this scenario had a significantly higher probability of occurring due to Simmers' share price at the time. However, as at October 31, 2008, with a weaker Simmers share price reducing the value of the shares that would be received on conversion, the probability of the shareholders approving the conversion has increased significantly. As a result, the Company has fair valued the Loan based on receiving Simmers shares in addition to the royalty and interest payments for the balance of the fourth calendar quarter of 2008.

During the quarter, the Company recorded a current income tax provision of $1.0 million and a future tax recovery of $20.4 million. The current income tax provision was the result of royalty and interest income and advisory service fees, partially offset by general and administrative expenses that are currently deductible. The future income tax recovery resulted from the unrealized losses on both the portfolio investments and the Loan.

Simmer Loan Agreement

On October 16, 2008 Aberdeen delivered notice to Simmer and Jack Mines Limited ("Simmer") of its election to convert the amount owed by Simmer under the US$10 million loan facility (the "Loan Facility") into ordinary shares of Simmer at a conversion rate of Rand 0.80. Simmer has advised Aberdeen that it will put the conversion request to shareholders by way of a Shareholder Circular and vote. Notwithstanding Aberdeen's requests to have a meeting earlier, it is expected that it is unlikely that the shareholders' meeting will take place prior to late January 2009.

Aberdeen believes that, pursuant to the agreement for the Loan Facility (the "Loan Agreement"), the outstanding amount under the Loan Facility can only be converted into ordinary shares and that Simmer's shareholders must provide approval before any such conversion. We believe that sections 2.4 and 2.10 of the agreement provide that, in the event that Simmer shareholders do not approve the conversion of the Loan Facility into ordinary shares within a reasonable period of time, then the amount outstanding under the Loan Facility shall be repayable in full, together with interest (section 2.4) and Aberdeen shall be entitled to an additional 1% NSR on gold produced from Simmer's Northwest assets in perpetuity (section 2.10).

However, Simmer has notified Aberdeen that it considers the amount outstanding under the Loan Facility to have already been converted upon receipt of Aberdeen's election to convert notwithstanding the absence of shareholder approval. Simmer has also notified Aberdeen that it does not intend to pay the Graduated Royalty in respect of production during the three months ended December 31, 2008. Further, Simmer has also notified Aberdeen that, in the event that shareholders do not approve the conversion of the Loan Facility into Simmer ordinary shares, it does not intend to repay the approximately US$10 million due under the Loan Facility, rather it shall pay only the 1% NSR.

Aberdeen does not consider that there is any basis on which Simmer can deem the Loan Facility to have been converted as at the date of the Company's notice to convert. Accordingly, the Company intends to take all necessary steps to enforce its rights under the Loan Agreement in the event that Simmer does not make the Graduated Royalty Payment in respect of gold produced during the three months ended December 31, 2008, or if Simmer does not repay in full the US$10 million outstanding under the Loan Agreement and the Simmer shareholders do not approve the conversion of the Loan Facility into ordinary shares at the shareholders' meeting in January.

Aberdeen has posted a copy of the Loan Agreement under its profile on SEDAR at www.sedar.com. For ease of reference, please find below certain of the relevant sections of the Loan Agreement (highlight has been added):

Section 2.10 - Conversion of Facility. The Borrower acknowledges that the Lender, in its sole discretion, has the option at any time following the one year anniversary of the first Advance, to convert the amount of the Facility outstanding to ordinary shares of the Borrower at a conversion rate of Rand 0.80 (eighty cents) per ordinary share, subject to the approval of the shareholders of the Borrower. In the event that the approval of the shareholders of the Borrower has not been obtained within a reasonable period of time, the Lender shall be entitled to a 1% net smelter royalty on gold produced from the Borrower's Northwest assets (all properties held by the Borrower through Buffelsfontein Gold Mines Limited, listed in Schedule "B", will be subject to a net smelter royalty in favour of the Lender with the royalty being calculated on the revenue of those properties), which is in addition to the net smelter royalty referred to in Section 2.9, with such additional royalty to be payable in perpetuity.

Section 2.9 - Net Smelter Royalty. The Borrower agrees to grant the Lender a net smelter royalty on the Borrower's Northwest assets (all properties held by the Borrower through Buffelsfontein Gold Mines Limited, listed in Schedule "B", will be subject to a net smelter royalty in favour of the Lender with the royalty being calculated on the revenue of those properties) as per the schedule attached hereto as schedule "A", with such amount listed in the schedule based on the full Facility having been advanced... Net smelter royalty payments shall be made to the lender within 15 days of the payments of interest on the last day of each applicable Interest Period and within 15 days of the Final Repayment Date.

Section 2.4 - Repayment. The Borrower shall pay to the Lender the amount of the Facility on the Final Repayment Date, unless the Facility has been converted in accordance with Section 2.10.

George Faught, Aberdeen's President and CEO, stated, "Aberdeen has seen a very difficult quarter and we are well positioned to continue with our business strategy. On the Simmer and Jack conversion, we are highly disappointed with Simmers' management in their stance on the Graduated Royalty and Loan repayment. We await the vote by Simmers Shareholders to occur and should we be denied conversion will pursue all remedies to collect the remaining Graduated Royalty and interest payments and the US$10 million principal due."

On January 31, 2008, Aberdeen announced it had initiated a Normal Course Issuer Bid ("NCIB") to purchase for cancellation its common shares through the facilities of the Toronto Stock Exchange. Based on the public float of 81,888,340 common shares, the Company may repurchase for cancellation a maximum of 8,188,834 shares through January 31, 2009. During the quarter, Aberdeen repurchased 6,334,734 common shares at an average cost of $0.25 per share. To date, the Company has repurchased 8,056,334 common shares under the NCIB at an average cost of $0.32 per share.

About Aberdeen International Inc:

Aberdeen is a publicly traded global investment and merchant banking company focused on small cap companies in the resource sector. Aberdeen will seek to acquire significant equity participation in pre-IPO and/or early stage public resource companies with undeveloped or undervalued high-quality resources. Aberdeen will focus on companies that: (i) are in need of managerial, technical and financial resources to realize their full potential; (ii) are undervalued in foreign capital markets; and (iii) operate in jurisdictions with moderate local political risk. Aberdeen will seek to provide value-added managerial and board advisory services to companies. The Corporation's intention will be to optimize the return on its investment over an 18 to 24 month investment time frame.

Aberdeen International Inc.

Please visit the Company's web site at www.aberdeeninternational.ca or write us at smoore@aberdeeninternational.ca.

Cautionary Notes

Cautionary Note Regarding Forward-Looking Information This press release contains "forward looking information" within the meaning of applicable Canadian securities legislation. Forward looking information includes, but is not limited to, statements with respect to the future financial or operating performance of the Company, valuations of investments, proposed transactions and investments, investment philosophy and liabilities and commitments. Generally, forward looking information 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 state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking information is 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 information, including but not limited to: financing not being available at desired prices; general business, economic, competitive, political and social uncertainties; general other risks of the mining industry and investment industry. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information 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 information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Contact Information

  • Aberdeen International Inc.
    George Faught
    President and CEO
    (416) 861-5887
    Aberdeen International Inc.
    Stan Bharti
    Executive Chairman
    (416) 861-5876
    Website: www.aberdeeninternational.ca