Junex inc.

Junex inc.

November 30, 2006 09:00 ET

Junex filed its financial results for the third quarter of 2006

MONTREAL, Nov. 30 - Junex filed yesterday its financial
results for the third quarter ended September 30, 2006.

"We are pleased with the company's financial results to date. Our
objective at the beginning of the year was to be close to generating positive
cash flows from our exploitation activities and, after nine months, we are
nearing this goal. In fact, cash flows from our exploitation activities
required liquidities of only $38,626 for the first nine months of 2006, a
significant improvement when compared to liquidities of $1,134,525 for the
same period in 2005. We are particularly satisfied with the fact that we have
generated cash flows of $351,845 from exploitation activities in the third
quarter of 2006. After nine months, sales increased from $1,324,640 in 2005 to
$2,374,805 and the net loss was reduced from $758,084 in 2005 to $683,860 in
2006 despite the fact that two non-recurrent elements, having no impact on the
liquidities, have negatively affected the earnings of the company (i.e. a
charge of over $330,723 for the write-off of certain assets and a charge of
$105,595 registered by way of remuneration based on options)", stated Mr.
Jean-Yves Lavoie, P. Eng., President of Junex.

Financial Highlights

Three-month ended Nine-month ended
September 30 September 30
In thousands $ except for
per share results 2006 2005 2006 2005

Sales 723 754 2,375 1,325
Gross profit 345 296 647 104
Administrative expenses 347 166 1,105 876
Net income (14) 148 (684) (758)
Cash flows from exploitation
activities 352 (296) (39) (1,135)
Deferred exploration cost (1,242) (1,069) (2,209) (1,829)


Junex's sales for the three-month period ended September 30, 2006
totalled $723,274 down 4.1% from $754,151 for the same quarter in the previous
year. The sales result largely from the drilling division which generated
$539,785 sales compared with $645,356 in the September, 2005, quarter
representing a 16 % decrease. Sales from oil and natural gas were $52,206 for
the third quarter compared with $74,385 in September, 2005. The most
improvement came from the brine division which generated sales of $131,283
compared with $34,410 in the quarter of September 2005, representing a 282 %
increase. The gross margin of $345,241 is explained by the brine division
which generated a gross profit of $53,825 compared with a gross loss of
$136,909. The oil and natural gas division generated a $8,661 gross profit.
The rest of the gross margin is attributed to the drilling division. On all
the consolidated sales, the gross margin was 47.7 % compared with 39.2 % in

Net loss and cash flowfrom exploitation

The Company registered during the third quarter of 2006 a net loss of
$14,305 compared to a $147,656 net income for the quarter of September 2005.
The difference being explicable mainly by a decline of 16 % of the external
sales from the drilling services division. During the third quarter of the
year, the company's exploitation activities have generated a positive cash
flow of $351,845 in comparison with a negative cash flow of $295,911 in
September 2005.

Financial position

As at September 30, 2006, Junex's working capital amounted to $5,077,861,
an increase compared to the available $3,330,123 working capital at the end of
the 2005 exercise. The cash and cash equivalents as September 30, 2006 were
$4,067,101, representing a $1,777,337 increase compared with December 31,

Deferred exploration cost

During the third quarter ended in September 2006, Junex has spent
$1,241,668 as deferred exploration expenses compared to $1 069,355 in the same
quarter of 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. In 2006, Junex proceeded to the abandonment of the
well Junex Becancour No. 2. The write-off is $330,723.

The complete financial statements are available on www.sedar.com.

Contact Information

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

    Dave Pépin
    (418) 654-9661