Junex inc.

Junex inc.

August 29, 2006 18:47 ET

Junex filed its financial results for the second quarter

MONTREAL, Aug. 29 - Junex filed today its financial results
for the second quarter ended June 30, 2006.

"The results of the first two quarters of the year are as expected. After
six months we show a 190% increase in sales but expecting to reach sales equal
to the year 2005 which is approximately $3M. What mainly affected the
company's results in 2006 are two non-recurrent elements, having no incidence
on its liquidities: a charge of over $330,000 for the radiation of certain
assets and of a charge of approximately $89,000 registered by way of
remuneration based on options. In spite of these charges having affected
negatively the statement of earnings, we have nevertheless succeeded in
reducing the net loss considerably which passed from $905,740 in 2005 to
$669,555 in 2006. We are equally pleased to see that the exploitation of the
company during the first six months of the year has generated negative cash
flows of $390,471, a good improvement in comparison with the negative cash
flows of $838,614 in 2005." stated Mr. Jean-Yves Lavoie, P. Eng., President of

Financial Highlights
Three-month Six-month
ended June 30 ended June 30
In thousands $ except for per share
results 2006 2005 2006 2005

Sales 471 460 1,652 570
Gross profit (75) (170) 301 (192)
Administrative expenses 428 346 757 710
Net income (702) (528) (670) (906)
EBIDTA (0.017) (0.015) (0.017) (0.025)
Cash flows from exploitation activities (556) (485) (390) (839)
Deferred exploration cost (700) (501) (967) (759)


Junex's sales for the three-month period ended June 30, 2006 totalled
$471,301 up 2.5% from $459,774 for the same quarter in the previous year. The
consolidated sales are essentially coming from the brine division which
totalling $375,761 generated sales compared with $324,132 in the quarter June,
2005, representing a 16% increase. Sales from oil and natural gas were
non-existent for the second quarter compared with $41,971 in June, 2005. For
the drilling, sales are very similar, that is $95,940 in June, 2006 and
$93,671 in June, 2005. The gross margin loss of $74,929 is explained by no
sale of oil and natural gas in the quarter of June, 2006. The gross loss is
$37,139. The rest of the deficit is due to the section drilling which
performed few external sales and some work on the producing brine wells. These
expenses are shown in the results but the sales are cancelled in the

Net income and EBITDA

The net loss for the second quarter of 2006 amounted to $701,845 compared
to net loss $528,303 in the prior year's second quarter. The loss of the
second quarter is explicable by non-recurring elements. The company abandoned
the Junex-Becancour No. 2 well, after which it wrote off exploration costs of
$330,723. The company granted 90,000 stock options for stock-based
compensation of $88,983 which passed in the results. The restated loss would
be $282,139. It would be a good improvement compared with the $528,303 loss of
June, 2005. Operation cash flow has required liquidities of $711,618 in the
second quarter compared to liquidities of $391,932 during the same period of
2005. Operation cash flow must be adjusted to the write-off of exploration
costs and the stock-based compensation. With adjustment, the operation cash
flow went from $711,618 to $292,912. It's an increase of $99,020 with the
quarter of June 2005.

Financial position

As at June 30, 2006, Junex's working capital amounted to $3,817,051, an
increase compared to the available $3,330,123 working capital at the end of
the 2005 exercise. The cash and cash equivalents on June 30, 2006 were
$2,596,779, representing a $301,815 increase with December 31, 2005.

Cash flows from exploitation and Deferred exploration cost

During the second quarter of the year, the company's exploration
activities have generated a negative cash flow of $555,711 in comparison with
a negative cash flow of $485,001 in June 2005.

During the second quarter ended in June 2006, Junex has spent $699,833 as
deferred exploration expenses compared to $500,841 in 2005. These exploration
expenses, less deduction from income taxes credit and partnerships
contribution, are capitalised as investments which will be amortised or
written off depending on the developments which will occur on the different
properties during the coming years. In 2005, Junex has written off an amount
of $113,840 which was directly applied and shown as expenses on the Earnings.
During this quarter, Junex proceeded to the abandonment of the well Junex
Becancour No. 2. The write-off is $330,723.

Contact Information

  • JUNEX:
    Jean-Yves Lavoie, P. Eng.
    (418) 654-9661

    Dave Pépin
    (418) 654-9661