Ivernia Inc.

Ivernia Inc.

November 14, 2008 08:21 ET

Ivernia Reports Third Quarter 2008 Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 14, 2008) -

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

Ivernia Inc. (TSX:IVW) today reported financial results for the period ended September 30, 2008. Net loss for the third quarter of 2008 was $3.4 million, or $0.02 per share, compared with a net loss of $5.8 million, or $0.04 per share in the third quarter of 2007. Net loss for the nine months ended September 30, 2008 was $15.4 million, or $0.09 per share, compared with a net loss of $14.5 million, or $0.11 per share for the nine months ended September 30, 2007. Results in the quarter were impacted by the continued suspension of operations at the Magellan mine and an inventory write-down in the net realizable value of the inventory held at the Port of Esperance in the amount of $0.8 million, mainly due to decreased lead prices and expected higher shipping and handling costs related to the 8,000 dry metric tonne stockpile at Esperance.

------------------------------------------------------- -------------------
Three months ended Nine months ended
September 30 September 30
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Financial Highlights (unaudited) 2008 2007 2008 2007
(in thousands of United States
dollars except per share amounts) $ $ $ $
Revenue - - - 20,014
Operating loss (care and
maintenance and amortization) (2,579) (2,059) (7,322) (3,884)
Net loss (3,418) (5,820) (15,449) (14,521)
Basic loss per share (0.02) (0.04) (0.09) (0.11)
Cash used in operations before
changes in working capital (4,278) (4,267) (13,754) (11,439)
Changes in working capital (1,220) 966 (4,654) (13,788)
Cash and cash equivalents 15,846 19,833 15,846 19,833
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Resumption of operations, the shipment of stockpiled inventory and a Magellan restart decision is dependent upon receipt of requisite approvals to ship containerized lead concentrate through the Port of Fremantle and acceptable economic conditions for the sale of lead concentrate. During the third quarter 2008, the Company was granted a further extension of its license to operate the Magellan Lead Project under the Environmental Protection Act 1986 (WA). The license was extended for a further three years to August 8, 2011. No comments were received during the 21-day public comment period. The Department of Environment and Conservation did not change any conditions within the license.

Commencing in January 2008 the Company commissioned a concentrate bagging machine on-site carrying out trials to ensure the lead concentrate could be bagged as required by the environmental approvals for export. These trials were brought to a successful conclusion in September 2008. The bagging machine will be relocated to Esperance upon final approval of the Lead Removal Plan whereby the Esperance lead concentrate will be bagged, loaded into containers and exported to China.

While the Company awaits final Ministerial approval to commence containerized shipments from mine-site through the Port of Fremantle, and taking into consideration the current global economic climate and the decline in commodities prices, the Company has taken pro-active measures to reduce costs and conserve cash reserves until such time as the Magellan mine is brought back into production. On October 23, 2008, the Company announced a reduction of personnel. Costs associated with these reductions and other cost saving measures were approximately $0.3 million resulting in future cost savings of approximately $2.0 million per quarter.

Cash balances were $15.8 million at September 30, 2008, compared with $22.0 million at June 30, 2008. As previously announced, during the second quarter of 2008 the Company negotiated an extension of the due dates of the two secured promissory notes totaling $20 million (the "Secured Facility") to April 27, 2009. The delays in restarting the mine as a result of the lengthy approval process will result in the need for a further extension of the maturity date or a refinancing of the Secured Facility. The Company is in discussions with holders of the promissory notes, represented by The Sentient Group and clients of investment advisor Ingalls & Snyder LLC, two of the Company's largest shareholder groups. While the Company is working towards an extension of the maturity date or a refinancing or restructuring of the Secured Facility before its maturity date, there is no assurance that any of these will occur.

Alan De'ath, Ivernia's President and Chief Executive Officer commented, "The dramatic changes in global economic conditions have resulted in significant downward pressure on base metal prices which is creating challenges throughout the global mining industry. Ivernia is certainly not immune from these conditions but the rapid and significant weakening of the Australian dollar in the past few months certainly reduces the impact of lower lead prices on the economics of our Magellan operation. Another encouraging emerging trend is the downward pressure on mining operating costs in Australia and we will keep this development under close review. The Company has been responding quickly and pro-actively to the changing conditions by reducing staff and eliminating non-critical expenditures as we await the final approvals from the new Western Australian Government to resume shipments at Magellan."

Mr. De'ath continued, "Meanwhile, we have seen positive progress on the approval process for containerized shipment through the Port of Fremantle, with the completion of a review by the relevant regulators to determine that Magellan has satisfied the conditions set by the previous Government and the project now sits with the new Government's Minister of Environment to make a final decision. At the same time, we are working with the Department of Environment and Conservation and the Esperance Port Authority to gain final clearance for the Lead Removal Plan to allow our remaining lead concentrate stockpile at the Port of Esperance to be shipped in containers so that the lead clean-up can begin. It is encouraging that the new Premier of the Western Australian Government has publicly announced his firm commitment to a swift start of the Lead Removal Plan. We look forward to resolving these matters expeditiously so that we can focus on resuming the shipments of Magellan's lead concentrate and ultimately restarting the Magellan mining operation."

Update on progress toward the resumption of lead concentrate shipments through Fremantle

On January 17, 2008 the then Western Australian Environment Minister announced his conditional acceptance of the Environmental Protection Authority's ("EPA") recommendations regarding the sealed shipment process for the export of lead concentrate from the Port of Fremantle. In accepting the recommendations, the Minister imposed additional conditions to be met, to his and relevant Government agencies' satisfaction, before final signoff was granted.

The Minister's conditions included:

- the lodgment of an A$5 million bond;

- the appointment of an independent auditor approved by the Minister and funded by Magellan Metals to inspect each bag and container at the mine and the port;

- the completion of a comprehensive Health, Hygiene and Environmental Management plan for the mining and export process to be prepared to the requirement of the Minister, on advice from the Department of Health, the Department of Consumer and Employment Protection, the Department of Industry & Resources and the Department of Environment & Conservation; and

- baseline testing to be conducted along the transport route prior to the first movement of lead and then regularly after that.

Magellan has also committed to:

- implementing a comprehensive information and support program with local authorities and community groups along the transportation route to ensure a thorough understanding of lead concentrate, its transportation process and the Emergency Response Plan for the immediate containment and rapid and complete clean up in the unlikely event of an accident creating a spill;

- transparent communication of monitoring results and compliance reporting in an easily accessible manner; and

- continuing its community information program.

During the third quarter 2008 and also during the fourth quarter, the Company worked through finalization and agency approval of the Ministerial conditions with representatives of the prior and present Government, following the Western Australia State elections on September 6. All conditions to allow export of bagged and containerized lead carbonate concentrate through Fremantle (both the 21,000 dry metric tonne stockpile currently at the mine site and lead concentrate when production re-commences) have now been agreed to by the Company. Those requiring pre-start actions have been complied with to the satisfaction of all regulatory agencies and the project is with the present Minister for Environment to make a final decision on approvals.

Update on the removal of the lead concentrate stockpile at the Port of Esperance

The Lead Removal Plan for Esperance (the "Plan"), was jointly prepared by Magellan and the Esperance Port Authority. The Plan focuses on the safe, secure and environmentally sound removal of the remaining approximate 8,000 dry metric tonne stockpile of lead concentrate secured in a storage shed at the Port of Esperance. The Plan proposes bagging, containerizing and exporting the lead concentrate from Esperance in a very similar manner to that proposed for sealed shipments via Fremantle.

The Plan was submitted by the Esperance Port Authority to the Department of Environment and Conservation (DEC), and publicly released by the DEC on September 8, 2008 for a three week stakeholder consultation period.

Following this review period, the Plan was presented to the Esperance community and other key stakeholders over several days in late September 2008. Meetings were held to discuss the Plan, followed by a community open day. All stakeholders were supportive of the Plan, with only comments received relating to auditing and monitoring of the process. Agency comments were similar and some minor changes to the Plan were incorporated to accommodate comments received.

The Plan has now been approved subject to some further actions to be undertaken by the Esperance Port Authority, and will be able to be implemented once these actions are completed (expected prior to the end of November) and logistics issues are finalized. The Premier of the Western Australian Government has announced his firm commitment to the early execution of the Lead Removal Plan.

Complete Financial Statements and Management's Discussion and Analysis for the period ended September 30, 2008 were filed today and are available on the Ivernia website at www.ivernia.com or SEDAR at: www.sedar.com.

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. 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 document constitute forward-looking information within the meaning of securities laws. 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 implications 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 ship the stranded lead concentrate at the Port of Esperance and 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 results of the Australian government's continuing investigations into lead contamination at the Port of Esperance, the timing of the receipt of final regulatory approvals required to ship lead concentrate through the Port of Fremantle, the duration of the suspension of mining and milling operations, metal price volatility, lead 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. While we consider these assumptions to be reasonable based on information currently available to us, 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. Other risks and factors that could cause actual results to differ are described in Management's Discussion and Analysis ("MD&A") for the most recently completed year end under the heading "Risks and Uncertainties", and in the Company's most recently filed Annual Information Form under the heading "Risk Factors". Our MD&A, Annual Information Form 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 based on our current estimates, expectations and projections, which we believe are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While we may elect to, we are under no obligation and do 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)
    Email: ann@ivernia.ca
    Website: www.ivernia.com