Crowflight Minerals Inc.
TSX : CML

Crowflight Minerals Inc.

May 17, 2010 19:30 ET

Crowflight Announces First Quarter 2010 Financial Results

TORONTO, ONTARIO--(Marketwire - May 17, 2010) - CROWFLIGHT MINERALS INC. ("Crowflight" or the "Company") (TSX:CML) today announces its financial results for the first 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.

Q1 2010 Financial and Operational Highlights

  • The Bucko Lake Nickel Mine ("Bucko") located in the Thompson Nickel Belt near Wabowden, Manitoba resumed milling operations and shipments of nickel concentrate during the first quarter of 2010. This marks the first shipments of nickel concentrate since milling operations resumed at the Bucko Mine earlier this year. 
  • For the quarter ended March 31, 2010, there were 141,970 pounds of nickel produced, and 117,600 pounds of commercial production nickel sold as compared to 138,956 pounds of nickel produced and 65,498 of pre-production nickel sold in the first quarter of last year when the mine was not yet in production.
  • Total metal revenue for the quarter ended March 31, 2010 was $1.2 million compared to nil for the first quarter last year.
  • Operating cash flow for the quarter ended March 31, 2010 was negative $8,944,040 compared to operating cash flow of $8,491,474 in the first quarter last year.
  • Loss for the quarter ended March 31, 2010 was $6.2 million or ($0.01) per share compared to net income of $1.5 million or $0.01 per share in the first quarter last year (due to a gain on derivative instruments in the first quarter of 2009).
  • Commercial nickel sales settled during the quarter ended March 31, 2010 were realized at an average price of US$9.77 per pound compared with pre-production nickel sales in the first quarter of 2009 which were realized at an average price of US$4.46 per pound.
  • Net working capital as at March 31, 2010 was $4.0 million (including cash and cash equivalents of $9.2 million) compared to $3.2 million as at December 31, 2009.
2010 Quarterly Bucko Mine Operations Production and Financial Data
       
      Q1-2010
Operating Statistics:      
Tonnes ore mined     11,177
Average Nickel head grade (%Ni)     1.02%
Tonnes ore milled     9,431
Average Recovery     66.94%
Nickel pounds:      
  Produced     141,970
  Payable sold(1)     117,600
       
Commercial Production Metal Sales Revenue:      
Average Ni price (US$/lb)   $ 9.77
CAD/US exchange rate   $ 1.04
Nickel revenue     893,266
Pricing adjustments(3)     304,756
Total metal revenue     1,198,022
Cost of sales(2)     3,867,822
Temporary shutdown costs     4,480,891
Depreciation, depletion, and amortization     36,432
Gross profit     (7,187,123)
Net earnings (loss) before tax     (8,935,360)
Basic and diluted earnings (loss per share)   $ (0.01)
Cash flow from operating activities     (8,944,040)
USD Cash Cost of sales per pound sold(1,4)   $ 31.53
(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
 
  • On January 27, 2010, the Company received a non-binding expression of interest from Pala regarding the direct or indirect acquisition of the Bucko Deposit and certain surrounding exploration areas held by the Company in the Thompson Nickel Belt, including the M11A and Apex deposits, collectively the "Bucko Assets". Subsequent to the quarter's end, discussions with Pala were terminated. Please see press releases dated January 27 and 28, 2010 and May 10, 2010.
  • On February 19, 2010, the Company announced it had closed a private placement financing by issuing an aggregate of 72,200,000 common shares of the Company at a price of $0.16 per share for gross proceeds of $11,552,000. Pala purchased 21,356,250 of the 72,200,000 common shares resulting in it holding approximately 25.3% of the issued and outstanding shares of the Company (based on Pala's public disclosure of its security holdings).
  • On February 4, 2010 and March 4, 2010, Crowflight reported assay results from a program of drilling at the Company's M11A North deposit, located 5 kilometres from the Bucko mine site. Drilling results from this program are to be used to update resource calculations later this year. Exploration expenditures made in 2009 entitle Crowflight to vest its initial 35% interest in the combined land package in the Thompson Nickel Belt as per the terms of its option agreement with Xstrata.
  • On March 23, 2010, the Company announced the appointment of Steve Davies, P.Eng. as Chief Operating Officer of Company.
  • Subsequent to the quarter's end, 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 current number of Crowflight common shares outstanding, this Offer equates 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 that have an exercise price of equal to or less than $0.22, the Offer equates to approximately $0.22 per share. On this basis, the Offer represents 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.
  • Subsequent to the quarter's end, the Company announced the resignation of Greg Collins, Vice President of Exploration for Crowflight, effective April 30th.
  • Subsequent to the quarter's end, 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.
  • Subsequent to the quarter's end, the TSX announced that it had completed its review of the listing of the common shares of the Company and determined that Crowflight meets TSX's continued listing requirements.

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.

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.

Qualified Person/Quality Control Procedures

This press release has been prepared and 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 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 and those other 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.

CONSOLIDATED BALANCE SHEETS
(unaudited)
As at
     March 31,     December 31,
    2010     2009
ASSETS          
Current          
  Cash and cash equivalents $ 9,176,773   $ 10,040,475
  Amounts receivable   828,895     1,291,687
  Inventory   1,976,731     1,031,734
  Prepaid expenses and deposits   345,515     135,290
           
    12,327,914     12,499,186
           
Deposits and advances   534,709     534,709
Property, plant and equipment   140,600,300     138,568,967
Exploration and development property and
deferred expenditures
 
14,978,545
   
14,704,437
           
  $  168,441,468   $ 166,307,299
           
           
LIABILITIES          
Current          
  Accounts payable and accrued liabilities $ 8,244,136   $ 9,282,060
  Equipment leases   46,422     45,371
    8,290,558     9,327,431
           
Equipment leases   49,115     61,281
Asset retirement obligations   938,213     918,387
Future income tax liability   3,246,000     6,000,200
    12,523,886     16,307,299
           
SHAREHOLDERS' EQUITY          
Common shares   150,240,172     138,758,903
Warrants   10,195,919     10,195,919
Contributed surplus   16,353,704     15,698,606
Retained Earnings   (20,872,213)     (14,653,428)
           
    155,917,582     150,000,000
           
  $ 168,441,468   $ 166,307,299
           
 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
(unaudited)
  Common Shares Warrants Contributed
Surplus
Accumulated
Deficit
Shareholders'
Equity
  No. $ $ $ $ $
             
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
             
  Private placement 72,200,000 11,552,000 - - - 11,552,000
  Stock based compensation - shares 97,909 16,644 - - - 16,644
  Stock based compensation - options - - - 655,098 - 655,098
  Share issue costs - (125,000) - - - (125,000)
  Tax effect of cost of issue - 37,625 - - - 37,625
  Loss for the period - - - - (6,218,785) (6,218,785)
             
Balance, March 31,
2010

581,821,461

150,240,172

10,195,919

16,353,704

(20,872,213)

155,917,582
             
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
(unaudited)
For the three months ended March 31,
 
    2010     2009
           
Revenue          
Nickel sales $ 893,266   $ -
Pricing adjustments   304,756   $ -
Revenue - after pricing adjustments   1,198,022   $ -
           
Cost of sales (excludes accretion, depreciation, depletion and amortization)   3,867,822     -
Depreciation, depletion and amortization   36,432     -
Gross margin - mining operations   (2,706,232)     -
           
Temporary shutdown costs   4,480,891     -
Loss from mining operations   (7,187,123)     -
           
Other expenses          
Professional, consulting and management fees   1,179,818     584,294
General and office   192,804     123,280
Shareholder communications and investor relations   134,919     86,106
Travel   32,234     50,404
Interest expenses and bank charges   35,847     34,842
Amortization   201     953
           
    1,575,823     879,879
           
(Loss) before the undernoted   (8,762,946)     (879,879)
           
Interest income   9,256     21,511
Interest on long term debt   -     (48,192)
General exploration   -     (50,000)
Write down of exploration property and deferred expenditures   (51,771)     -
Accretion   (19,826)     57,416
Recovery of expenditures   -     66,958
Net gain on derivative instruments   -     2,090,556
Foreign exchange gain/(loss)   (110,073)     (1,186)
           
Income/(loss) before income taxes   (8,935,360)     1,257,184
           
Future income taxes   2,716,575     266,000
           
Income/(loss) for the period   (6,218,785)     1,523,184
           
RETAINED EARNINGS/(DEFICIT), beginning of period   (14,653,428)     12,327,459
           
RETAINED EARNINGS/(DEFICIT), end of period $ (20,872,213)   $ 13,850,643
           
           
Loss per share - basic & diluted $ (0.01)   $ 0.01
           
Weighted average number of shares - basic   544,020,195     293,306,263
Weighted average number of shares - diluted   544,020,195     293,311,875
           
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
unaudited
For the three months ended March 31,
    2010     2009
OPERATING ACTIVITIES:          
Net income/(loss) for the period $ (6,218,785)   $ 1,523,184
Charges not affecting cash:          
  Depreciation, depletion and amortization   36,633     953
  Stock-based compensation expense   671,742     365,547
  Accretion   19,826     (57,416)
  Change in value of derivative instruments   -     8,044,169
  Future income tax (recovery)/expense   (2,716,575)     (266,000)
Net change in non-cash working capital   (736,881)     (1,118,963)
    (8,944,040)     8,491,474
           
FINANCING ACTIVITIES:          
Debt facility, net of transaction costs    -     (7,600,000)
Private placements (net of issue costs)   11,427,000     -
Payments on equipment leases   (11,115)     (16,765)
           
    11,415,885     (7,616,765)
           
INVESTING ACTIVITIES:          
Exploration and development property, plant and equipment, and deferred expenditures   (2,342,074)     (11,144,143)
(Decrease) in accounts payable attributable to property development and exploration   (993,473)     (1,727,298)
Change in restricted cash.   -     2,999,998
           
    (3,335,547)     (9,871,443)
           
CHANGE IN CASH AND CASH EQUIVALENTS   (863,702)     (8,996,734)
           
CASH AND CASH EQUIVALENTS, beginning of period   10,040,475     10,607,543
           
CASH AND CASH EQUIVALENTS, end of period $  9,176,773
  $
1,610,809
           
Cash and cash equivalents consist of:          
  Cash   2,441,273     801,384
  Cash equivalents    6,735,500     809,425
  $
9,176,773   $
1,610,809
SUPPLEMENTAL INFORMATION:          
Stock based compensation charged to exploration properties   -     14,250
Amortization of assets deferred to exploration properties   604     8,229
Interest received   9,256     22,191
Interest paid   30,372     50,551
           
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 Inc.
    Anna M. Ladd
    VP Finance and CFO
    (416) 861-5891
    or
    Crowflight Minerals Inc.
    Heather Colpitts
    Manager, Investor and Public Relations
    (416) 861-5803
    info@crowflight.com
    www.crowflight.com