Geomark Exploration Ltd.
TSX VENTURE : GME

Geomark Exploration Ltd.

August 18, 2011 17:00 ET

Geomark Announces Second Quarter 2011 Results

CALGARY, ALBERTA--(Marketwire - Aug. 18, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES

Geomark Exploration Ltd. (TSX VENTURE:GME) (Geomark or the Company) is pleased to announce its operating and financial results for the second quarter ended June 30, 2011. The quarterly report is summarized in this release, with the complete version of the related condensed consolidated financial statements and notes, as well as management's discussion and analysis, available on the System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on Geomark's website at www.geomark.ca

Highlights
As at and for the periods ended Three months ended Six months ended
June 30, 2011 June 30, 2010 Restated (1 ) June 30, 2011 June 30, 2010 Restated (1 )
Financial ($ 000s, except $ per share)
Revenue
Mineral Division 177 73 352 143
Oil and Gas Division 547 686 961 1,259
Funds Flow (2) 270 (41 ) 392 163
Per Share Basic (3) 0.01 (0.00 ) 0.01 0.00
Per Share Diluted (3) 0.01 (0.00 ) 0.01 0.00
Cash Flow (Deficiency) from Operations (24 ) (239 ) (186 ) (216 )
Per Share Basic (3) (0.00 ) (0.00 ) (0.00 ) (0.00 )
Per Share Diluted (3) (0.00 ) (0.00 ) (0.00 ) (0.00 )
Net Earnings (Loss) 141 (12 ) 114 (178 )
Per Share Basic (3) 0.00 (0.00 ) 0.00 (0.00 )
Per Share Diluted (3) 0.00 (0.00 ) 0.00 (0.00 )
Capital Expenditures
Mineral Division 616 - 1,292 -
Oil and Gas Division 10 - 15 157
Total Assets
Mineral Division 41,170 26,684
Oil and Gas Division 13,589 9,474
Oil and Gas Operations
Barrels of Oil Equivalent (BOE) per day (4) 124 148 131 154
(1) The comparative highlights have been restated with the adoption of International Financial Reporting Standards (IFRS).
(2) Funds flow is not a recognized measure under IFRS. For these purposes, the Company defines funds flow as cash flow provided by operations after including investment dividend and interest income and the changes in non-cash investing working capital related to these sources of investment income.
(3) Geomark issued one common share upon incorporation on April 20, 2010, and on July 6, 2010 issued 52,039,760 common shares as consideration for the net investment in Geomark Operations with an ascribed net book value of $21,152,000 as at December 31, 2009 and cancelled the original common share. For purposes of the per share calculations, it was assumed that all 52,039,760 shares issued have been outstanding since January 1, 2010.
(4) Barrels of Oil Equivalent (BOE) are calculated using a conversion ratio of 6 MCF to 1 barrel of oil. The conversion is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead and as such may be misleading if used in isolation.

Operations

  • Diamond drilling continues on two of the Company's eight gold properties in the Timmins area of Ontario. Due to positive results from the first phase of drilling, the drill program was extended to approximately 6,700 meters from an initial 4,000 meters.
  • A total of 2,659 meters were completed in four drill holes on the 100 percent owned and operated Thornloe gold property. All samples from this program have been in the lab for some time. Despite strong pressure from Geomark, the turnaround of results from the lab has been unacceptably slow and every effort is being made to receive them in the near future.
  • On the operated Carr-Wilkie property, the first pass drill program of 1,687 meters in three drill holes produced low grade gold values (1.3gmt gold over 10.8 meters, 2.2 gmt over 3.23 meters, and 7.4 gmt gold over 0.4 meters; all in the same drill hole CW19-11) in an area of interesting geology and alteration (For further information, please see the Company's press release dated June 27, 2011).
  • Follow-up drilling of the target at Carr-Wilkie commenced in July and a total of three additional drill holes (approximately 2,300 meters) was completed in mid August. A different assay lab has been engaged to do the sample work for the follow-up drill program. Results will be reported when received.

Business Development

  • The Company's business strategy is to acquire early stage mineral properties and to conduct exploration programs on them to advance the prospects to advanced exploration property status or into defined economic deposits.
  • Despite record high precious metal prices, recent market uncertainty is having an impact on the mineral exploration business. The readily available financing that junior exploration companies enjoyed previously appears to be tightening. While this is obviously not preferable to the industry as a whole, Geomark's large cash position of approximately $39 million and cash flow derived from its oil and gas properties, dividends and interest income (approximately $2.5 million annually) provides it with a strong competitive advantage over its peers.
  • Geomark personnel have been actively searching for new mineral exploration projects and are encouraged by some of the potentially available properties. Several hundred properties have been examined in the last nine months, with over 25 of these advancing to the Confidentiality Agreement stage and followed up with detailed analysis. Property visits have been undertaken to various projects in North and South America and will continue to be made in various locations in the United States and Canada. The Company's main focus is precious metals (gold and/or silver), but other commodities are being considered on a property by property basis. The Company remains optimistic that additional opportunities will develop in the near-term.

Financial

  • Geomark's working capital position at June 30, 2011 was approximately $50.7 million, including the value of liquid investments of $11.7 million. The current working capital, anticipated cash flow from oil and gas operations and interest and investment income are more than adequate to cover all planned expenditures for the remainder of the year. The Company's strong financial position provides the Company with flexibility and the means to act quickly in transacting potential property acquisitions.

Cautionary Statement

This summarized news release should not be considered a suitable source of information for readers who are unfamiliar with Geomark Exploration Ltd. and should not be considered in any way as a substitute for reading the full report.

For the full report, please go to www.geomark.ca

Use of non-IFRS financial measures

Included in this press release we use the term "funds flow" to analyze the Company's operating performance. Funds flow is not a standardized measure recognized under IFRS and does not have a standardized meaning prescribed by IFRS. This funds flow calculation is considered by management to be informative for shareholders and analysts. This measure may differ from those made by other companies and accordingly may not be comparable to such measures as reported by other companies.

Geomark's funds flow is calculated by adding investment dividend and interest income and the changes in non-cash investing working capital related to these sources of investment income to cash flow (deficiency) from operating activities.

Forward-Looking Statements

Certain statements contained in this press release include statements which contain words such as "anticipate", "could", "should", "expect", "seek", "may", "intend", "likely", "will", "believe" and similar expressions, statements relating to matters that are not historical facts, and such statements of our beliefs, intentions and expectations about development, results and events which will or may occur in the future, constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and are based on certain assumptions and analysis made by us derived from our experience and perceptions. Forward-looking information in this press release includes, but is not limited to: expected cash provided by continuing operations; future capital expenditures, including the amount and nature thereof; mineral prices and demand, oil and natural gas prices and demand; expansion and other development trends of the mineral and oil and gas industry; business strategy and outlook; expansion and growth of our business and operations; and maintenance of existing customer, supplier and partner relationships; supply channels; accounting policies; credit risks; and other such matters.

All such forward-looking information is based on certain assumptions and analyses made by us in light of our experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate in the circumstances. The risks, uncertainties, and assumptions are difficult to predict and may affect operations, and may include, without limitation: foreign exchange fluctuations; equipment and labour shortages and inflationary costs; general economic conditions; industry conditions; changes in applicable environmental, taxation and other laws and regulations as well as how such laws and regulations are interpreted and enforced; the ability of mineral companies to raise capital; the effect of weather conditions on operations and facilities; the existence of operating risks; volatility of oil and natural gas prices; oil and gas product supply and demand; risks inherent in the ability to generate sufficient cash flow from operations to meet current and future obligations; increased competition; stock market volatility; opportunities available to or pursued by us; and other factors, many of which are beyond our control. The foregoing factors are not exhaustive.

Actual results, performance or achievements could differ materially from those expressed in, or implied by, this forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do, what benefits will be derived therefrom. Except as required by law, Geomark disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise.

The forward-looking information contained herein is expressly qualified by this cautionary statement.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Geomark Exploration Ltd.
    George F. Fink
    CEO and Chairman of the Board
    403-262-1400
    403-232-1421 (FAX)

    Geomark Exploration Ltd.
    Mark J. Balog
    President and COO
    403-262-1400
    403-232-1421 (FAX)

    Geomark Exploration Ltd.
    Robb D. Thompson
    CFO and Secretary
    403-262-1400
    403-232-1421 (FAX)

    Geomark Exploration Ltd.
    Kirsten Lankester
    Manager, Investor Relations
    403-262-1400
    403-232-1421 (FAX)
    info@geomark.ca
    www.geomark.ca