Ivernia Inc.
TSX : IVW

Ivernia Inc.

August 13, 2009 16:36 ET

Ivernia Reports Second Quarter 2009 Financial Results

TORONTO, ONTARIO--(Marketwire - Aug. 13, 2009) -

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

Ivernia Inc. (TSX:IVW) today reported operating income of $1.3 million for the second quarter of 2009 compared with an operating loss of $2.5 million for the same period last year. The net loss of $1.4 million, or $0.01 per common share for the second quarter of 2009 compared with a net loss of $5.1 million, or $0.03 per share for the same period last year. Revenue for the second quarter of 2009 was $7.6 million which resulted from the final shipment and sale of 7,680 dry metric tonnes of lead carbonate concentrate from the Esperance inventory stockpile. The Company did not record revenue in the second quarter of 2008 as the Magellan Mine remained on temporary care and maintenance during the period.



Three months ended Six months ended
June 30 June 30
------------------ ----------------
2009 2008 2009 2008
(in thousands of United States
dollars, unless otherwise
indicated and per share amounts) $ $ $ $
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Financial Highlights
Revenue(1) 7,605 - 8,061 -
Operating costs(1) (5,777) - (6,182) -
Care and maintenance (338) (2,171) (560) (4,214)
Amortization (169) (298) (321) (529)
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1,321 (2,469) 998 (4,743)
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General and administrative (2,257) (1,425) (3,496) (2,910)
Esperance/Fremantle and
related costs(2) (127) (353) (221) (566)
Net interest expense (1,340) (2,316) (3,921) (6,674)
Stock option costs 22 (71) (10) (151)
Inventory recovery 2,498 - 4,148 -
Debt settlement expense - - (753) -
Other (expenses) income (739) 152 (489) (80)
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(1,943) (4,013) (4,742) (10,381)
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Loss before income taxes (622) (6,482) (3,744) (15,124)
Income tax (expense) recovery (745) 1,380 (922) 3,093
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Net loss (1,367) (5,102) (4,666) (12,031)
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Basic and fully diluted loss
per share(3) (0.01) (0.03) (0.03) (0.08)
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Weighted average shares
outstanding - thousands 180,153 175,941 180,153 154,338
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Unrealized (loss) gain on
investment (19) 42 (4) (331)
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Comprehensive loss (1,386) (5,060) (4,670) (12,362)
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Cash used in operations before
changes in non-cash working
capital (2,609) (4,432) (4,806) (9,476)
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Cash flow used in operating
activities (1,471) (8,018) (5,351) (12,910)
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(1) Shipments of lead carbonate concentrate from the Magellan Mine ceased
following the suspension of lead shipments through the Port of Esperance
on March 12, 2007. The suspension was lifted in December 2008. A total
of 590 dry metric tonnes of concentrate was shipped in March 2009,
followed by a second shipment in May 2009 of 7,680 dry metric tonnes.
(2) Costs incurred in the advancement of the application for regulated
shipping approvals through the Port of Fremantle, the removal of the
stranded lead carbonate concentrate stockpile at the Port of Esperance
and other related activities.
(3) Per share data was calculated on the basis of the weighted average
shares outstanding (basic and diluted) for the relevant period.


SECOND QUARTER 2009 HIGHLIGHTS
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- August 13, 2009: Received formal sign off from the Western Australian Minister for Environment on final management plans - expect to commence exports of lead carbonate concentrate through the Port of Fremantle in third quarter 2009

- Esperance Lead Removal Plan successfully completed

- Magellan Mine restart planning process underway for early 2010 restart

- Revenue of $7.6 million

- Positive operating income of $1.3 million

- Received $10 million in new funding

- Cash position at quarter end $20.6 million

Alan De'ath, President and Chief Executive Officer commented, "The past five months has seen significant progress towards meeting our objective of restarting the Magellan Mine in early 2010. Shipment of the Esperance stockpile is now complete and was executed flawlessly, proving that our sealed shipment process is an environmentally sound method of transporting lead carbonate concentrate. With the management plans for export of our product through Fremantle today signed off by the Minister for Environment we have turned our full attention to exporting the 21,000 dry metric tonne stockpile from the Magellan mine site through Fremantle Port. We expect these shipments to begin during the third quarter 2009 and believe they will take approximately five to six months to complete. As the containerized shipments of the stockpiled material progress, we will continue planning for the restart of production at the Magellan Mine, which is currently anticipated early in 2010. Positive income from operations in the second quarter 2009 and a healthy balance sheet position us well for the twelve months ahead including the restart of Magellan operations."

Outlook

Management anticipates that the Companys existing cash balance at June 30, 2009 of $20.6 million will be increased by proceeds from the shipment of the approximately 21,000 dry metric tonne lead carbonate stockpile at the mine site. Based on the closing three month forward LME lead settlement price at June 30, 2009 of $1,690 per tonne, approximately $12.3 million in net proceeds will be realized on the sale of the stockpile. Assuming exchange rates and transportation costs remain constant, each $100 per tonne change in the lead price above and below $1,690 per tonne will impact net proceeds by $1.05 million. Barring unforeseen circumstances, management believes that cash reserves at June 30, 2009 will be sufficient for Ivernia to carry on business in the normal course for not less than one year, which includes: (a) operating costs associated with the containerization and shipment of the 21,000 dry metric tonne stockpile; (b) costs associated with advancing the Magellan Mine restart planning process; (c) ongoing care and maintenance costs of the Magellan Mine; (d) ongoing general and administration costs; and (e) interest payment on Convertible Notes in April 2010.

Management anticipates that first shipments of the approximate 21,000 dry metric tonne stockpile currently on mine site through Fremantle will commence during the third quarter of 2009 and that it will take approximately five to six months to complete dependent on availability of containers and shipping vessels. As the containerized shipments of the stockpiled material progress, management will continue planning the restart of production at the Magellan Mine.

Management currently expects a mine restart in early 2010 and it is anticipated that there will be a four to six month ramp up period before target full production levels are achieved during the third quarter of 2010. The operations management team is substantially in place to complete the extensive mine restart planning process over the second half of 2009.

Completion of the Removal of the Lead Concentrate Stockpile from the Port of Esperance

The Company's principal activities in the second quarter of 2009 focused on bagging, containerizing and exporting the lead carbonate concentrate stockpile at the Port of Esperance in accordance with stringent conditions under the Lead Removal Plan ("LRP").

The Esperance lead removal operation was overseen by an independent auditor who had responsibility for auditing the process for the bagging, containerizing, storage and transport of lead carbonate concentrate from the lead shed through to export from the Port. The Auditor confirmed that the Company complied with the LRP throughout the lead removal operation, as documented in weekly reports to the Department of Environment and Conservation ("DEC"), the Esperance Port Authority ("EsPA"), the LRP Audit Committee and the local Community.

The first shipment to China, consisting of 26 containers carrying 590 dry metric tonnes of lead carbonate concentrate departed Esperance on March 27, 2009 arriving in China on April 8, 2009 without incident, marking the Company's first shipment since March 2007. The second and final shipment of stockpiled lead carbonate concentrate containing 7,680 dry metric tonnes in 329 containers was exported on May 4, 2009. The shipment arrived in China on May 17, 2009 with all containers unloaded the same day, again without incident.

The safe removal and export of the Esperance stockpile is now complete and was achieved without incident in full compliance with stringent conditions imposed on the process. Bagging of lead carbonate concentrate was completed prior to the May 4, 2009 shipment and subsequent activities focused on the safe demobilization and cleaning of equipment and materials for transport back to the Magellan Mine site, and on lead shed cleaning, as described below. Bagging operations were completed on April 29, 2009. Total bagging and containerization to complete the LRP was 4,610 bags, containing 8,270 dry metric tonnes, inside 355 containers.

Lead shed cleaning operations began immediately following the completion of bagging and containerization. This process required that all shed surfaces be vacuumed and free of any lead dust. All material collected was then bagged for return to the Magellan Mine site for reprocessing in accordance with dangerous goods regulations. This operation was completed during the last week of May 2009. A contractor was engaged to complete a wet wash of the internal shed surfaces. During the wet wash set-up the bagging machine and all other ancillary equipment were cleaned and removed from the shed. This process began May 29, 2009 and was completed June 6, 2009. All Magellan Mine operations personnel returned to the mine site on their respective rosters from the week beginning June 8, 2009. An independent auditor was engaged by the EsPA to sign off that the shed had been cleaned to an acceptable standard as per the DEC section s73A prevention notice issued to the EsPA in April 2007. The demolition and disposal of the shed is the responsibility of the EsPA.

On July 16, 2009 the Company announced that the DEC provided final sign-off on all requirements of the Esperance LRP between it, Magellan Metals and the EsPA. The DEC's sign-off, evidenced by the formal revocation of the s73A notice issued to the EsPA in April 2007, confirms that all requirements of the LRP have now been completed by the EsPA and Magellan Metals to the DEC's satisfaction and marks a successful end to Magellan Metals lead removal operations in Esperance.

Esperance Community Fund Update

In February 2009, Magellan Metals committed to an A$1 million obligation to fund community-based projects in Esperance distributed evenly over the next three years. This program is administered by the Shire of Esperance, and funds are disbursed by a five-person committee comprised of one Magellan Metals representative, one Shire representative and three representatives of the local community at large.

Applications for the first year program were called for in early February 2009 and closed on March 16, 2009. In this period, the committee received 49 applications for first year funding totaling A$1.2 million.

Applications were collated by the Shire and a copy of each application was sent individually to each committee member for individual assessment and scoring. The committee evaluated all applications keeping within the A$300,000 first year funding threshold, and selected 10 projects totaling A$298,000 for 2009.

Successful 2009 applicants were announced on June 8, 2009. Successful applicants are required to enter into a contract with Magellan Metals which stipulates an agreed use for the funds and sets a timeline for disbursement before funding is made available.

Final Fremantle Ministerial Approvals and Sign-off to Commence Shipments

On February 2, 2009, the Minister for Environment in Western Australia issued Statement 783 which had the effect of granting final approval for Magellan Metals to commence sealed shipments of lead carbonate concentrate through the Port of Fremantle, subject to a number of conditions being implemented prior to export commencing, including the development of management, monitoring, emergency response and inspector/auditor plans to the Ministers' satisfaction.

Inspectorate Australia Inspection and Assay Pty Limited ("Inspectorate"), one of the world's leading inspection, audit and testing organizations, was appointed during the second quarter of 2009 to act as the independent inspector/auditor of the Fremantle shipping process based on its experience, qualifications, capability and understanding of the roles and responsibilities of the position. Inspectorate is currently undertaking a 'pre-start' audit of the export process through Fremantle, which includes documenting Magellan Metals' compliance with the new conditions on the project. The results of Inspectorate's review are required to be made publicly available prior to the commencement of export through the Port.

Baseline samplings of soil, air, water and sediment along the entire transport route to establish baseline levels of lead, as required prior to commencement of export, were completed during the second quarter of 2009.

Subsequent to quarter end, on July 16, 2009 the DEC formally approved documentation for the A$5 million performance bond, Condition 14 of Ministerial Statement 783, thereby satisfying the Minister's and the DEC requirements.

Subsequent to quarter end, on August 13, 2009 the Minister for Environment formally approved the final management plans, allowing export of Magellan's' lead carbonate concentrate through Fremantle to commence.

The Minister's sign-off is the last stage of the export approvals process. The management plans detail the management, auditing, inspection and monitoring activities to be undertaken by Magellan Metals, as well as the emergency response procedures for the transport route from the mine site to the Port. They have been developed in consultation with a wide range of stakeholders and decision-making authorities including, for the Emergency Response Plan, all 22 local Government authorities along the transport route.

The Company is committed to full compliance with the conditions imposed by the Minister for Environment on the sealed shipment process, including the timely and regular public reporting of monitoring results and other compliance activities through postings on the Ivernia and Magellan websites.

Ivernia and Magellan Metals will publish summaries and full copies of the management plans at www.ivernia.com and www.magellanmetals.com.au as part of its commitment to openness and transparency.

Shipping of the Lead Carbonate Concentrate Stockpile at the Mine Site

Following the completion of the Esperance LRP, the Magellan Metals work force in Esperance was redeployed back to the mine site to prepare for the export of the approximate 21,000 dry metric tonne stockpile. It is expected that initial shipments through the Port of Fremantle will commence in the third quarter of 2009 and will take approximately five to six months to complete dependent on availability of containers and shipping vessels.

Restart Planning

The Company has initiated an extensive Magellan Mine restart planning process. This process is expected to continue until year-end with the objective of working towards restart of operations in early 2010.

Key components to this process moving forward include:

(1) Recruiting key management positions to work alongside the incumbent General Manager - Operations, HSE Manager and Finance Manager. The positions for Logistics and Contracts Manager and Processing Manager each have candidates that have formally accepted offers and will commence employment over the next few weeks. The positions for Executive Vice-President - Operations and Mine Manager are currently in the advanced stages of recruitment. All of these positions will be based in Perth and at mine site;

(2) Upgrading the plant and concentrate facility at site and purchasing key equipment including container handling equipment;

(3) Performing required maintenance on existing plant equipment;

(4) Commissioning the gas pipeline and converting the power station to gas. Commissioning the Metso Pressure Filter;

(5) Restocking supplies inventory, consumables and critical spares;

(6) Employee recruitment and training; and

(7) Negotiating key commercial contracts including road and rail transport, container shipping, mining contractor, and major supplies and consumables.

Conference Call

Management will host a conference call to discuss the Company's results at 10:00 a.m. (Eastern Time) on Friday, August 14, 2009. To participate in the conference call, please call five minutes prior to the scheduled start time. Dial-in information for the call follows:



Canada Toll Free: 1-800-501-6064
U.S. Toll Free: 1-877-737-1669
International Toll: 1-302-709-8008
(i) Passcode: VC76047

For those unable to participate in the conference call at the scheduled
time, a telephone replay will be available until August 21, 2009
by dialing:

Canada Toll Free: 1-888-204-0094
U.S. Toll Free: 1-800-355-2355
International Toll: 1-402-220-2946
(i) Passcode: 76047#


A webcast replay will remain available on the investor relations section of the Companys website at www.ivernia.com.

About Ivernia

Ivernia is an international base metals mining, exploration and development company. The Company is the sole owner and operator of the Magellan lead mine in Western Australia. When operations resume and target production levels are achieved the mine is expected to be a significant pure lead producer accounting for approximately 2% of the total world lead mine production.

Ivernia trades under the symbol "IVW" on the Toronto Stock Exchange.

Forward-Looking Statements

Certain statements contained in this press release constitute forward-looking information within the meaning of securities laws. All statements included herein (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 possibility of legal or regulatory action (and any resulting costs or liabilities) which may be taken in connection with the matters investigated by the government of Western Australia relating to the suspension of mining operations, the estimated timing to recommence lead shipments from the Magellan Mine, 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 reasonable factors, 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. However, whether actual results and developments will conform with management's expectations is subject to a number of risks and uncertainties, including factors underlying management's assumptions such as the duration of the suspension of mining and milling operations, metal price volatility, lead carbonate concentrate treatment charges, exchange rates, regulatory proceeding and litigation, single mineral property, resources and reserves, health and safety, environmental factors, mining risks, metallurgy, labour and employment regulations, government regulations, insurance, refinancing risk, dependence on key personnel, constraints on cash flow and nature of mineral exploration and development. Additional factors and considerations are described in the Company's Annual Information Form dated as of March 31, 2009 under "Description of the Business of the Company - Doing Business in Australia" and elsewhere in this press release and in other documents filed from time to time by Ivernia with Canadian securities regulatory authorities. While Ivernia considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. 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 the Company. Undue importance should not be placed on forward-looking information nor should reliance be placed upon this information as of any other date. Except as required by law, while it may elect to, Ivernia is under no obligation and does not undertake to update this information at any particular time.

Contact Information

  • Ivernia Inc.
    Ann Candelario
    Director Investor Relations & Corporate Communications
    (416) 867-9298
    (416) 867-9384 (FAX)
    E-mail: ann@ivernia.ca