Ivernia Inc.
TSX : IVW

Ivernia Inc.

August 13, 2007 21:28 ET

Ivernia Inc. Reports Second Quarter 2007 Results

TORONTO, ONTARIO--(Marketwire - Aug. 13, 2007) -

All Dollar Amounts are in U.S. Dollars Unless Otherwise Indicated

Ivernia Inc. ("Ivernia" or the "Company") (TSX:IVW) today reported an operating loss of $4.0 million and a net loss of $8.5 million, or $(0.06) per common share for the second quarter of 2007. Results for the quarter were adversely impacted by the temporary suspension of lead concentrate shipments from the Magellan mine pending regulatory approval for containerized shipments through the Port of Fremantle in Western Australia and non-recurring costs to transition the mine to care and maintenance. During the quarter, costs associated with the care and maintenance program were $2.6 million and costs related to the Parliamentary Inquiry were $1 million.

SECOND QUARTER HIGHLIGHTS

- Placed Magellan operations on care and maintenance

- Advanced proposal for containerized shipments of lead concentrate from the Magellan mine site through the Port of Fremantle for export

- Advanced proposal for the shipment in sealed bags of the 8,000 dry tonnes of stranded lead concentrate at the Port of Esperance

- Restructured the balance sheet with a $50 million secured convertible debt facility ("Secured Facility") to refinance existing debt and provide funding during the temporary suspension of shipments

- Lead concentrate inventory, of 27,000 dry tonnes, with an approximate sales value of $50 million, at current lead prices, currently stockpiled at the Magellan mine site and a storage shed at the Port of Esperance

Events subsequent to June 30, 2007

- Initiated a comprehensive consultation and information program on containerized shipments with the communities along the proposed transport route to the Port of Fremantle and in the Fremantle area (ongoing)

- Delivered closing submission to the Western Australian Parliamentary Committee Inquiry into the cause and extent of lead contamination in Esperance (July 31)

- Secured additional financing through a C$20 million equity issue (Closed August 1)

Commentary

"We made good progress towards completing the proposal for containerized shipments of lead concentrate through the Port of Fremantle. The finalization of the proposal, which incorporates feedback from discussions with various regulators, is near completion. The fact that this is a benchmark proposal means that it is a learning experience for all parties and therefore the process is somewhat more protracted than normal. Nevertheless, we are determined to create new best practices in the standard of lead concentrate handling and transport going forward and take control of critical aspects in the handling of our product," commented Alan De'ath, Ivernia's Chief Executive Officer.

"We await the Parliamentary Inquiry's report in the hope that its recommendations will lead to improved systems and processes for the handling of metal concentrates which will have the confidence of all stakeholders and provide a clear path forward."

"Our proposal for containerized shipment shows that Magellan has taken the initiative - we have moved away from bulk handling and incorporated double containment measures and an independent certification mechanism. This is a thorough, safe and practical proposal for the transport of lead concentrate and our team is confident of its integrity."

"With the new financial arrangements and the core management team in place, Magellan is well positioned for an orderly restart of operations once the approvals are received," he concluded.

Suspension of lead concentrate shipments

Effective April 6, 2007, the Company's Magellan operation was placed on temporary care and maintenance following the March 12, 2007 suspension of lead concentrate shipments through the Port of Esperance.

Update on progress toward the resumption of lead concentrate shipments

Proposal for containerized shipments through the Port of Fremantle for export

During the quarter, the Company advanced its proposal for future containerized lead concentrate shipments through the Port of Fremantle for export. A draft proposal was submitted to the government regulators for comment in mid-June, 2007 as a preliminary step prior to the formal submission of the final proposal.

The Company believes that its proposal raises the bar and creates new best practice in the standard of lead concentrate handling and transport going forward. It is a complete departure from the current industry standard of bulk transport with a move to sealed and containerized transport.

Under the proposal, lead concentrate would be loaded into UN-approved bulk bags which will be sealed then loaded into steel shipping containers at the Magellan mine. The shipping containers will then be bolt sealed and independently inspected before departing the mine site. From the mine site, the containers would be trucked approximately 400 kilometres to a designated secure holding area in Leonora, Western Australia. The containers would then be transported by train to the Port of Fremantle for export to customers overseas. The proposal includes a number of risk identification, minimization and avoidance measures to ensure that the concentrate is handled and transported in a safe, efficient manner at every stage of the process.

Containerization gives the Company control over critical aspects of the handling system, for which it previously relied on contractors, and ensures a clear line of responsibility for the handling and transport of its lead concentrate.

The finalization of the proposal, incorporating comments received from stakeholders on the draft submission and feedback from the consultation process, is near completion. Final submission, expected in the next few weeks, will follow a further round of draft review with the regulators. In recent discussions with Western Australian government officials, the Company was advised that the review and approval process could take approximately three to four months from the date of the final submission before Ministerial consent. However, there is no fixed or guaranteed timeline.

Consultation program

On July 7, 2007, the Company initiated a consultation and information program with communities along the proposed transport route to the Port of Fremantle and in the Fremantle area. The program's objective is to explain and seek comment on its proposal to export lead concentrate in sealed shipping containers through the Port of Fremantle. To date, the Company has contacted, or delivered information to a number of individuals and groups including elected representatives, local government officials, businesses and residents in the communities along the transport route.

The program is part of the Company's submission to the Western Australian government for approval to ship its product through the Port of Fremantle.

Shipment of lead concentrate stockpile at the Port of Esperance

In mid-May, 2007, Magellan submitted a written proposal to the Department of Environment and Conservation ("DEC") and the Esperance Port Authority for the removal of the approximately 8,000 dry tonnes of Magellan's lead concentrate currently being held in a storage shed at the port.

This proposal has been developed with, and will form part of, the Esperance Port Authority's application to the DEC for authorization to proceed with the shipment. To date, the Esperance Port Authority has not submitted its application. As the application to resume shipment of lead through the Port of Esperance is not within Magellan's control, the anticipated timing for and costs involved in that operation cannot be determined at this time.

A full community consultation and information program regarding the proposal has been conducted by Magellan in the Esperance community. Management believes that all stakeholders, including the Esperance Port Authority, the community of Esperance and the Company will benefit from the timely and safe removal of the stranded lead concentrate. Going forward, Ivernia does not intend to seek (other than the removal of the stranded lead) approval for any further shipments through the Port of Esperance.

Western Australian Parliamentary Inquiry

On June 7, 2007, members of Magellan's management appeared, for a second time, before the Committee to assist in their Inquiry into the cause and extent of lead pollution in Esperance. In addition, the Company provided relevant documents and a written submission to the Committee. The key areas of clarification were summarized in a news release issued by Ivernia on June 7, 2007. Magellan first appeared before the Committee on May 2, 2007.

On June 29, 2007, Magellan provided a series of written answers to written questions posed by the Committee following management's second appearance at the Inquiry.

In a closing submission to the Committee on July 31, 2007, the Company reiterated that its proposal for future shipments of lead concentrate raises the bar and creates new best practice in the standard of lead concentrate handling and transport going forward. The submission summarized the key issues covered in the Inquiry which pertained to Magellan.

Copies of the above-mentioned submissions are available on the Ivernia website at www.ivernia.com. Additional Information relating to the Inquiry can also be obtained from the Parliament of Western Australia's website at www.parliament.wa.gov.au.

The Committee is currently scheduled to table its report to the Western Australian government on August 16, 2007. There is a possibility that the tabling of the report will be delayed, however any extension of time for the delivery of the report is a decision to be made by the Western Australian Parliament and is likely to be considered during the resumption of parliamentary sittings on August 14 2007. The Company awaits the report in the hope that its recommendations will lead to improved systems and processes for the handling of metal concentrates which will have the confidence of all stakeholders and provide a clear path forward.

Other developments

On July 5, 2007, the Department of Industry and Resources submitted its report from two environmental inspections of the Magellan site conducted on February 14, 2007 and June 27, 2007. While the report did not contain any major deficiencies, the storage and containment of stockpiled lead concentrate on mine site was identified as an actionable item. This has since been addressed with the use of tarpaulin covers.

On July 30, 2007, Magellan was advised by the DEC that it will initially be issuing a three-month, short-term environmental license to replace the previous two-year license which expired on August 7, 2007. The DEC advised that it would be issuing this short-term license to allow for its completion of the necessary review process. This will involve the DEC liasing with other decision-making authorities, and addressing any community concerns. The DEC further advised that the review is currently underway and that it will ensure the regulatory license delivered to Magellan takes into consideration the various concerns of lead mining and export.

Financial and Operating Summary



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Three months Six months
ended ended
($ millions, except earnings per share) June 30, 2007 June 30, 2007
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(unaudited)

Revenue - 20.0
Operating loss (4.0) (1.8)
Net loss (8.5) (8.7)
Basic loss per share (0.06) (0.06)
Cash used in operating activities before
changes in working capital (10.1) (7.2)
Changes in working capital (7.1) (14.8)
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Ore mined - 000's dry tonnes 82 413
Ore milled - 000's dry tonnes 25 393
Average head grade - % lead 6.4% 7.3%
Recovery - % lead 75.5% 74.6%
Concentrate produced - 000's dry tonnes 1.9 32.8
Lead metal in concentrate produced
- 000's tonnes 1.2 21.4
Concentrate sold - 000's dry tonnes - 18.8
Lead metal in concentrate sold
- 000's tonnes - 12.0
Concentrate inventory - 000's dry tonnes 27.0 27.0
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Prior to the temporary suspension of operations effective April 6, 2007, the mill recorded its highest single day throughput of 6,128 tonnes.

Financial Results

The Company recorded a net loss of $8.5 million or $(0.06) per common share for the second quarter. Results for the quarter were adversely impacted by the temporary suspension of lead concentrate shipments from the Magellan mine pending regulatory approval for containerized shipments through the Port of Fremantle in Western Australia and non-recurring costs to transition the mine to care and maintenance. During the quarter, costs associated with the care and maintenance program were $2.6 million and costs related to the Parliamentary Inquiry were $1 million.

Restructuring the balance sheet

On April 27, 2007, the Company closed a one-year, $50 million Secured Facility with a syndicate of lenders. The terms of the arrangement provide for the conversion of the principal drawn to be converted into common shares of the Company at US$1.08 per share. These terms and the grant of the Conversion Rights were approved by independent shareholders at the Company's Annual and Special Meeting of Shareholders held on June 28, 2007. To date, a total of $40 million has been drawn principally for repayment of the BNP credit facility and Sentient Promissory Note and other working capital requirements.

On August 1, 2007, the Company's cash resources and liquidity were further strengthened with proceeds from the closing of a C$20 million bought deal financing. The Underwriters of the financing purchased 12,125,000 common shares ("Common Shares") of the Company at a price of C$1.65 per Common Share for gross proceeds of C$20 million. Ivernia has granted the Underwriters an over-allotment option to purchase up to an additional 15% of the purchased Common Shares at the same price, exercisable by the Underwriters for a period of 30 days from Closing. The increasingly positive outlook for the lead market provided good conditions for the financing to be undertaken. Ivernia is expected to be one of the world's leading suppliers of lead concentrate following the resumption of operations.

Lead market fundamentals

The record-breaking trend for the lead price continues as the long-term fundamentals become increasingly evident. The lead price has been the best performer among the base metals in 2007, increasing over 250% in the first six months of the year. On the supply side, the lead market is experiencing several disruptions at various mines, smelters and refineries, including Ivernia's Magellan mine. Such disruptions usually have an immediate impact on the market balance since there are few suppliers of mined lead. On a longer term basis, there is limited new lead mine supply in the production pipeline which further strengthens the fundamentals.

On the demand side, world-wide consumption continues to rise mainly as a result of the growing vehicle sales - particularly in China where vehicle output has grown by over 20% annually for the past five years. All indications point to this trend continuing for some time yet as disposable incomes rise and car ownership becomes more affordable with better access to credit financing and lower entry-level car prices. In one market analyst's estimate, China's lead consumption is projected to double from current levels to 4.2 million tonnes per annum by 2011 assuming a conservative annual 14% growth in vehicle output.

The 3-month lead price averaged $0.99 per pound in the second quarter - including a high of $1.22 per pound. This level has since been exceeded with transactions at $1.58 per pound on July 23, 2007. The average for the first six months of 2007 was $0.89. This compares to $0.53 in 2006 - an increase of almost 70%.

About Ivernia

Ivernia is an international base metals operating, development and exploration company. The Company is the sole owner and operator of the Magellan lead mine in Western Australia. Upon recommencement of production Magellan will be the world's largest pure lead mine accounting for approximately 3% of total world lead mine production.

Ivernia trades under the symbol "IVW" on the Toronto Stock Exchange. Additional information on Ivernia is available on the Company's website at www.ivernia.com and at SEDAR at www.sedar.com.

Forward-Looking Statements

This document contains certain ''forward-looking statements''. All statements included in this document (other than statements of historical facts) which address activities, events or developments that management anticipates will or may occur in the future are forward-looking statements, including statements as to the following: the duration of the suspension of the Company's mining and milling operations, the proposal to ship lead concentrate through the Port of Fremantle, the results of the government of Western Australia's continuing investigations into the matters resulting in the suspension of mining operations, the possibility of legal or regulatory action (and any resulting costs or liabilities) which may be taken in connection with the matters being investigated, the estimated timing of the receipt of required regulatory approvals to resume shipment of the stranded lead concentrate at the Port of Esperance and further lead shipments from the Magellan Mine (such approvals will not be received until well after the presentation of the Parliamentary Inquiry report has been delivered, the timing of which is uncertain), future targets and estimates for production, capital expenditures, operating costs, cash costs, mineral resources and ore reserves, recovery rates, grades and prices; business strategies and measures to implement such strategies; competitive strengths; estimated goals and plans for Ivernia's future business operations; and other such matters.

Forward-looking statements are often, but not always, identified by the use of words such as ''seek'', ''anticipate'', ''contemplate'', ''target'', ''believe'', ''plan'', ''estimate'', ''expect'', and ''intend'' and statements that an event or result ''may'', ''will'', ''can'', ''should'', ''could'' or ''might'' occur or be achieved and other similar expressions. These statements are based upon certain assumptions and analyses made by management in light of its experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances such as the resources and reserves, metal price volatility, lead concentrate treatment charges, exchange rates, single mineral property, metallurgy, environmental factors, mining risks, insurance, labour and employment regulations, health and safety, government regulations, dependence on key personnel, constraints on cash flow and nature of mineral exploration and development. These factors may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements, and there can be no assurance that the actual results or developments anticipated by management will be realized or, even if substantially realized, that they will have the expected results on Ivernia. The reader should not place undue reliance on them. Other risks and factors that could cause actual results to differ are described in Management's Discussion and Analysis ("MD&A") for the quarter ended June 30, 2007 and for the year ended December 31, 2006 under the heading "Risks and Uncertainties" and in the Company's final Short Form Prospectus filed on July 25, 2007 ("Short Form Prospectus") under the heading "Risk Factors". Our MD&A, Short Form Prospectus and additional information on Ivernia are available on the Company's website at www.ivernia.com and on Ivernia's SEDAR profile at www.sedar.com. All of the forward-looking statements made in this document are qualified by the foregoing cautionary statements. The Company expressly disclaims any obligation to update or revise any such forward-looking statements.

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