Nordex Explosives Ltd.
TSX VENTURE : NXX

Nordex Explosives Ltd.

December 14, 2011 11:17 ET

Nordex Explosives Ltd. Provides Operational Update

KIRKLAND LAKE, ONTARIO--(Marketwire - Dec. 14, 2011) -

NOT FOR DISTRIBUTION TO THE U.S NEWS WIRES SERVICES, OR DISSEMINATION IN THE UNITED STATES OF AMERICA

NORDEX EXPLOSIVES LTD. ("Nordex" or the "Company") (TSX VENTURE:NXX) today provided an update to summarize operational and financial results to date as 2011 comes to a close.

CEO, Jim Taylor prefaced by saying "As the end of 2011 draws near, the summary of operations for shareholders renders this a year marked by onetime expenses and market volatility but with signs of progress and new opportunities for Nordex. After settling several legal matters we are now able to focus attention on our core business operations. We are moving along well in developing the Johnex line of perimeter control products. We believe this is a premium product which will be used to open doors for us in the underground market. The excitement stirred by high gold prices, burgeoning silver forecasts, rising importance of REE's and government commitment to rebuilding infrastructure and job programs provide reason for optimism in the months ahead. This momentum works in favour of Nordex. Notwithstanding another drastic global economic crisis, next year should see steady organic growth and development through our satellite expansion plans and increased product manufacturing."

2011 Accomplishments YTD

  • Nordex successfully settled several outstanding legal suits that were a major distraction to management as well as a cost drain on resources.
  • The Company signed an agreement with Johnex Explosives (see News Release dated February 7th 2011); and is presently applying for full regulatory approval to manufacture these premium products in Canada.
  • On November 22nd 2011, the Company reported an agreement with Ledcor CMI Ltd., the on-site contractor for AuRico Gold Inc.'s open pit project at its Young Davidson Mine to supply explosives for the open pit project, a separate agreement from the underground mine operations (already supplied by Nordex).
  • The agreement with Ledcor was negotiated with the cooperation of the Matachewan First Nations and the Wabun Tribal Council.
  • The Company is actively pursuing opportunities with potential clients in both Quebec and Southern Ontario.

Sales for the three months ended September 30th 2011 of $3.2 million was comparable to the same three month period in 2010. Although sales decreased as a result of the loss of some client contracts this was offset by the acquisition of several new clients in the second and third quarters. Notably, Q3 revenues were the second highest third quarter sales in the 41-year history of Nordex. This was a result of the Company continuing to supply major mining companies that had previously depended on the large multinational suppliers as well as entry into the quarry and construction markets.

The gross margin for nine months YTD is 19.5% compared to 21.8% for 2010. Reduced margins in 2011 are primarily a result of increases in fuel and raw material prices. Ammonium nitrate prices have fluctuated significantly over the last several years. As the prices of grains grow the worldwide competition with fertilizer sales has led to increased prices for ammonium nitrate.

Outlook

Over the last three years, the global economy has experienced significant volatility and uncertainty which has directly affected Nordex through the impact on some activity in the mining, quarry and construction sectors. Management has been closely assessing the potential outcomes of the global economy and their influences on the Company's key markets. Nordex has been evaluating expansion opportunities in the near to midterm through satellite sites in order to capitalize on rising activity spurred by persistently high commodity prices.

The operational priority continues to be exceptional products and services to retain and attract customers leading to organically increased revenues.

The Company believes the renewed investment in mineral and resource projects due to higher commodity prices overall will continue to increase the demand for explosive products. Demand is expected to increase as manufacturing capabilities and the base of operations continues to expand. Nordex is recognized as an innovator and leader in the field of bulk emulsion products. This includes the development of unique bulk delivery systems for both surface and underground applications. As the market continues to move towards wider acceptance of new technology and product solutions Nordex will focus on acquiring an increased share of the explosives market.

Investment in satellite operations is being developed as a means to expand into larger geographic areas and gain access to a wider client base and market region(s). Negotiations are ongoing with potential clients which together with the technology to manufacture additional new products are reasons for optimism.

Current Financing

The Nordex satellite expansion plan requires new capital. On November 16th 2011, the Company announced its intention to raise additional capital through a non-brokered private placement offering of up to 3,750,000 units at a price of $0.40 per Unit for aggregate gross proceeds of up to $1.5million. Each unit consists of one common share of Nordex and one half of one common share purchase warrant. Each whole warrant is exercisable to acquire one common share at a price of $0.60 for a period of twelve month from the date of issue.

About Nordex Explosives Ltd.

Nordex Explosives Ltd. is a manufacturer and distributor of explosives for the mining, quarry and road construction industries since 1970. Its manufacturing operations and distribution centre is strategically located in one of the world's largest mining regions near Kirkland Lake, Ontario. Nordex trades on the TSX Venture Exchange under the symbol "NXX".

For more information about Nordex please visit our website at www.nordexexplosives.com to receive Company news via email contact lauren@chfir.com and mention "Nordex news" in the subject line.

Forward-Looking Statements - Not for U.S. Distribution

Certain information included herein may contain "forward‐looking statements" which reflect the current expectations of management of the Corporation regarding the Corporation's future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as "may", "would", "could", "should", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavor", "seek", "predict", "potential" and similar expressions have been used to identify these forward‐looking statements. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management of the Corporation. Forward‐looking statements involve significant risks, uncertainties and assumptions. Many factors could cause the Corporation's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward looking statements, including, without limitation, cancellations of or the failure to renew purchase orders; production and delivery issues; quality, pricing and availability of raw materials; compliance with environmental regulations; exchange rate fluctuations as well as the other risks identified in the "Risk Factors" contained in the Corporation's Management Discussion and Analysis and other public filings (copies of which may be obtained at www.sedar.com). Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward‐looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by this press release. These factors should be considered carefully and the reader should not place undue reliance on the forward‐looking statements. Although any forward‐looking statements contained in this press release are based upon what management currently believes to be reasonable assumptions, the Corporation cannot assure readers that actual results, performance or achievements will be consistent with these forward‐looking statements, and management's assumptions may prove to be incorrect. These forward‐looking statements are made as of the date of this press release, and, other than as required by law, the Corporation does not intend, and does not assume any obligation, to update or revise these forward‐looking statements, whether as a result of new information, future events or otherwise.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

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