Geomark Exploration Ltd.
TSX VENTURE : GME

Geomark Exploration Ltd.

August 14, 2012 17:45 ET

Geomark Announces Second Quarter 2012 Results

CALGARY, ALBERTA--(Marketwire - Aug. 14, 2012) -

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 three months and six months ended June 30, 2012. 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

Financial and Operational Highlights

As at and for the periods ended Three Months ended Six Months ended
June 30, 2012 June 30, 2011 June 30, 2012 June 30, 2011
Financial ($ 000s, except $ per share)
Revenue
Mineral Division(1) 170 177 339 352
Oil and Gas Division 893 547 1,419 961
Funds Flow(2) 69 270 320 392
Per Share Basic and Diluted 0.00 0.01 0.01 0.01
Cash Flow (Deficiency) From Operations (227 ) (24 ) (272 ) (186 )
Per Share Basic and Diluted (0.00 ) (0.00 ) (0.01 ) (0.00 )
Net Earnings 629 141 659 114
Per Share Basic and Diluted 0.01 0.00 0.01 0.00
Capital Expenditures
Mineral Division 431 616 458 1,292
Oil and Gas Division 3 10 20 15
Total Assets
Mineral Division 41,091 41,170
Oil and Gas Division 11,617 13,589
Oil and Gas Operations
Barrels of Oil Equivalent (BOE) per day(3) 122 124 123 131
(1) Geomark is a junior mineral exploration company with mineral revenue currently from non-production sources.
(2) Funds flow is not a recognized measure under IFRS. For these purposes, the Company defines funds flow as funds 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) 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.

Business Development

  • Geomark's business strategy continues to be by acquisitions or joint venture arrangement whereby the Company will have majority interests in either early stage or smaller advanced stage precious metal properties. The Company has been selective with regard to the geological potential of the various exploration plays compared to the overall deal terms.
  • During the second quarter, Geomark acquired a 100 percent working interest in the Kings Canyon gold property in southwest Utah. These properties cost Cdn $325,000. They have net smelter royalties on them that range from two to five percent. The purchase includes the right to assume an existing option to acquire a 100 percent interest in a claim block (and historical gold resource) by paying U.S. $1.0 million to the option holder prior to December 6, 2013. The option property carries two net smelter royalties totaling five percent.
  • Geomark's goal with the Kings Canyon property is to develop a critical mass of near surface, low grade gold mineralization of sufficient size to justify a low cost heap leaching operation. Several zones of gold mineralization, located outside of the existing resource, have been identified on the claim block and the property has good exploration potential. As such, the Company initiated a drilling program in late July 2012 which is currently ongoing.
  • The drilling contractor has mobilized a Schramm 450 reverse circulation drill to the Kings Canyon property. A minimum drill program of 5,000 metres is planned for the first phase of drilling. A total of 11 holes (approximately 1,500 metres) has been completed as of August 9, 2012. Samples will be assayed and results for the first batch are expected in September.
  • The main objective of the Phase 1 program is to extend the strike of known mineralization in the two main zones identified on the property; the Crown and Royal Zones. Meterage has also been allocated to screen prospective areas for new mineralized zones. The Phase 1 drilling is expected to be completed by mid to late September and based on those results a second Phase 2 program may be initiated later in the fall.
  • During the quarter, Geomark also conducted a geophysical program on two of its Ontario gold properties, Whitney and Tisdale. After an initial review of the results, no drilling is planned in the near future.

Financial

  • Geomark currently has a positive working capital position of approximately $39.3 million with additional very liquid investments presently valued at approximately $9.9 million (total of $49.2M in cash and investments). Cash flow derived from its oil and gas production, dividends and interest income will cover all general and administrative costs on a yearly basis and as well will be used towards exploration expenses and potential property acquisitions.

Outlook

  • Geomark is a well-financed exploration company with proven management, experienced staff, a large cash position and immediate cash flow from its oil and gas and investment assets. The Company's main focus in the minerals sector is its exploration activities on the Kings Canyon gold property while also continuing to assess additional properties and their potential opportunities.
  • The Company's current focus is in the southwest United States where possible synergies to its Kings Canyon property may be realized. Continued volatility in the world's economies has restricted the flow of equity to junior exploration companies and Geomark's solid financial position remains a highly competitive advantage in the acquisitions marketplace.
  • The Board and management, however, recognize that the Company's share price has gone down over the past year to the point where it is trading well below net asset value. Some of the reduction may be attributable to general market conditions but the Company is also taking a proactive perspective and is evaluating various investment opportunities to assist in maximizing the rate of return from its significant cash balance and investment assets.

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 report 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 report 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 report 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