Canico Resource Corp.
TSX : CNI

Canico Resource Corp.

September 27, 2005 19:22 ET

Canico Releases Year End Financial Statements

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Sept. 27, 2005) - (All amounts are in Canadian Dollars unless otherwise noted)

Canico Resource Corp. (TSX:CNI) released its audited annual consolidated financial statements for the year ended July 31, 2005.

Canico reported a loss for the year ended July 31, 2005 of $42,675,000 (loss per share of $1.03), compared to $43,539,000 (loss per share of $1.18) for the comparative year ended July 31, 2004. Expenditures on the Onca Puma property for the year ended July 31, 2005 and 2004 were $34,204,000 and $33,597,000, respectively. Exploration and development expenditures include drilling, assaying, engineering studies including metallurgical studies and feasibility study, environmental studies, costs associated with securing surface access, certain administration costs and, consulting and professional fees. Canico has expensed exploration and development costs associated with Onca Puma until completion of the feasibility study, which took place in August 2005. Corporate general and administrative costs for the year ended July 31, 2005 were $3,146,000, compared to $3,159,000 for the comparative year ended July 31, 2004. The balance of the loss in the current period includes $7,309,000 in "stock-based compensation expense"; the majority of this is the result of Canadian G.A.A.P. accounting policy which requires that stock options granted be valued on the Black-Scholes option pricing model and recognized as current compensation expense; this does not represent a cash distribution. During the year ended July 31, 2005, Canico spent $20,413,000 on road improvements and basic and vendor engineering, which costs have been capitalized to "Construction in Progress" on the balance sheet, as they relate to the construction of the potential mine at Onca Puma. As at July 31, 2005, Canico had working capital of $74,436,000, including cash and cash equivalents of $79,222,000.

This news release should be read in conjunction with Canico's audited annual consolidated financial statements and its management discussion and analysis for the year ended July 31, 2005, which are available on Canico's website at www.canico.com. Additional information about Canico and the Onca Puma project can be found on that website.

Canico is pleased to announce Mark Travers, an Inco Limited nominee, has joined Canico's Board; he will be replacing Mr. Jeffery Zweig, Inco's previous director nominee. "I am extremely pleased to welcome Mr. Travers to our Company. At the same time, on behalf of the board I wish to thank Inco's previous director nominee, Jeffery Zweig, for his service as director," said Roman Shklanka, Chairman of Canico.

During the current year, Canico achieved a number of significant milestones:

- updated resource estimates were released for the Onca and Puma West deposits;

- drilling was completed at Onca Puma and at the conclusion of the drill program, 2,750 holes or 63,133 meters had been drilled on Puma West and 4,546 holes or 108,063 meters had been drilled on Onca;

- the Onca Puma project feasibility study was released;

- a shareholder rights plan was adopted;

- Installation Licence for the Onca Puma project was received, and this licence authorizes Canico's Brazilian subsidiary, Mineracao Onca Puma Ltda., to proceed with construction of a mine and related facilities at the project;

- basic engineering is underway by a major engineering firm to develop a target cost and target schedule which would form the basis of a contract with that major engineering firm for development of the Project.

On September 15, 2005, Companhia Vale do Rio Doce ("CVRD") announced that it intended to proceed with an unsolicited all cash take-over bid for Canico at a price per common share of $17.50. On September 26, 2005, Canico received the bid material. The bid material stated that the bid will be open for acceptance until 8:00 pm (Toronto time) on November 28, 2005. Once Canico's Special Committee and Board of Directors have reviewed the bid materials and considered the bid with its financial and legal advisors, Canico will respond. Canico's shares closed today at Cdn.$19.65 on the TSX, a significant premium to CVRD's offer.

CANICO RESOURCE CORP.

J. Michael Kenyon, President & CEO

Cautionary Notices

This News Release, the Company's audited annual consolidated financial statements for the year ended July 31, 2005 and the accompanying Management Discussion and Analysis ("MD&A") include certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 of the United States. Other than statements of historical fact, all statements in these documents, including, without limitation, statements regarding potential mineralization and resources, estimated or potential future production, potential ranking amongst nickel producers, and future plans and objectives of the Company, are forward-looking statements that involve various known and unknown risks, uncertainties and other factors. There can be no assurance that such statements will prove to be accurate. Actual results and future events could differ materially from those anticipated in such statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their respective dates. Important factors that could cause actual results to differ materially from the Company's expectations include, among others, the ongoing results of current exploration activities, conclusions of, scoping studies, pre-feasibility studies or feasibility studies, ongoing engineering work, changes in project parameters, and future metal prices, as well as those factors discussed under the heading "Risk Factors" and elsewhere in the Company's documents filed from time to time with the Toronto Stock Exchange, the TSX Venture Exchange, Canadian securities regulators and other regulatory authorities. All subsequent written and oral forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by this notice.

The financial information in this news release is taken from the Company's audited annual consolidated financial statements for the year ended July 31, 2005, and the accompanying MD&A, which may be found on the Company's website at www.canico.com. Readers are cautioned to refer to such financial statements and MD&A for complete information, as the information in this release has been selectively drawn from the full documents and is not complete.

The mineral resource estimates referenced in this news release were completed with an effective date of February 21, 2005, according to the requirements of Canadian National Instrument 43-101, for the Onca deposit under the supervision of Hatch Ltd., ("Hatch") and for the Puma West deposit under the supervision of GRD Minproc Limited ("Minproc"), both of whom are independent of Canico. Details of the estimates and the calculation methods employed are set out in the relevant 43-101F Technical Report in respect of the estimates which was filed for Canico at www.sedar.com. The estimates are based on the assumptions and methods, and are subject to the limitations and qualifications, described in such Technical Report. The quality of the information, conclusions and estimates contained in the estimates is consistent with the intended level of accuracy as well as the circumstances and constraints under which the mandates for these estimates were performed. Some of the information on which the estimates were based was generated or provided by sources outside of Hatch and Minproc. Neither Hatch nor Minproc warrant the accuracy or completeness of data supplied by these outside sources. The standards employed by Hatch and Minproc, respectively, in estimating these mineral resources differ significantly from the requirements of the United States Securities and Exchange Commission and the mineral resource information reported may not be comparable to similar information reported by United States companies. The term "resources" does not equate to "reserves" and normally may not be included in documents filed with the United States Securities and Exchange Commission. "Resources" are sometimes referred to as "mineralization" or "mineral deposits". The estimates of reserves described in these materials qualify as reserves in accordance with Canadian National Instrument 43-101. However they do not necessarily qualify as reserves for United States reporting purposes. Readers should not assume that these estimates of reserves are acceptable for United States reporting purposes.

A description of Canico's assaying and analytical techniques and methodology and particulars of its current and previous mineral resource estimates and its current reserve estimate, and other relevant information may all be found on Canico's website at www.canico.com.

The Executive Summary volume of the Feasibility Study referenced in this news release may be found at www.canico.com. It is intended to be read as a whole. Readers should read and review the Executive Summary in its entirety. The Executive Summary reflects the professional opinions of Hatch, based upon information available at the time of preparation. The quality of the information, conclusions and estimates contained in the Executive Summary, is consistent with the intended level of accuracy as set out in the Executive Summary, as well as the circumstances and constraints under which the Executive Summary was completed, as set out in therein.

The Executive Summary and the Feasibility Study are based, in part, upon information believed to be reliable from data supplied by other consultants engaged by Canico, which Hatch has not verified as to accuracy and completeness. Hatch has not made an analysis, verified or rendered an independent judgment as to the validity of the information provided by such other consultants. While it is believed that such information is reliable under the conditions and subject to the limitations under which it was obtained, Hatch cannot guarantee the accuracy thereof.

To the full extent permitted by law, Hatch disclaims responsibility for any indirect or consequential loss arising from any use of the Executive Summary or the information contained therein. While the work results, estimates and projections therein may be considered to be generally indicative of the nature and quality of the Onca Puma Project, they are not definitive. No representations or predictions are intended as to the results of future work, nor can there be any promises that the estimates and projections in the Executive Summary will be sustained in future work.

The Executive Summary and Feasibility Study are intended to be used by Canico subject to the terms and conditions of its contract with Hatch. That contract permits Canico to file certain documents prepared by, or with input from, Hatch, with Canadian Securities Regulatory Authorities pursuant to provincial securities legislation. That contract also provides that any reliance by any third parties on such documents shall be entirely at their own risk. However this does not affect statutory rights arising under provincial securities laws in connection with any distribution of securities under a prospectus.


Contact Information

  • Canico Resource Corp.
    J. Michael Kenyon
    President & CEO
    (604) 669-9446
    (604) 669-9447 (FAX)
    www.canico.com