Opta Minerals Inc.
TSX : OPM

Opta Minerals Inc.

August 14, 2008 16:30 ET

Opta Minerals Inc. Reports Second Quarter Record Results in 2008

WATERDOWN, ONTARIO--(Marketwire - Aug. 14, 2008) - Opta Minerals Inc. (TSX:OPM), a vertically integrated provider of custom process optimization solutions and related materials for use primarily in the steel, foundry, loose abrasive cleaning, roof shingle granules and municipal water filtration industries, today announced results for the three and six months ended June 30, 2008. All figures are reported in U.S. dollars and in accordance with Canadian Generally Accepted Accounting Principles (GAAP), except where otherwise noted.

Opta Minerals reported record second quarter revenue for fiscal 2008 of $25.2 million and year-to-date revenue of $46.6 million, a 34% increase over the first half of 2007. Earnings before interest, income taxes, depreciation and amortization ("EBITDA") was $4.3 million for the quarter and $7.3 million year-to-date, a 45% increase over the $5.0 million reported in the first half of 2007. Results have been positively affected by the inclusion of a full six months of results from the Newco Slovakia division that was acquired in the third quarter of 2007, along with strong demand for steel related products from North American steel producers.

Gross profit for the three months ended June 30, 2008 was $6.6 million and year-to-date gross profit was $12.2 million, a 43% increase over the $8.5 million recorded in the first six months of 2007. Gross profit for the three months ended June 30, 2007 was $4.4 million.

Earnings before income taxes and interest ("EBIT") for the three months ended June 30, 2008 were $3.3 million, bringing year-to-date EBIT to $5.3 million, a 50% increase over the first six months ended June 30, 2007. For the three months ended June 30, 2007 the Company reported EBIT of $2.0 million.

Net earnings for the three months ended June 30, 2008 were $1.9 million or $0.11 per diluted common share, bringing year-to-date net earnings to $3.0 million or $0.17 per diluted common share, a 63% increase compared to the results of first six months ended June 30, 2007. For the three months ended June 30, 2007 the Company reported net earnings of $1.2 million.

The Company continues to maintain a strong balance sheet, with working capital of $19.3 million and total assets of $104.1 million. The debt to equity ratio as at June 30, 2008 was 0.73 to 1.00. The usage of cash from operating activities was $2.8 million for the quarter as compared to cash generated of $400,000 in 2007. Year-to-date the cash generated from operating activities was $1.8 million compared to $200,000 for the six months ended June 30, 2007.

Significant events following the quarter

On July 9, 2008, the Company completed the acquisition of 67% of the outstanding common shares of MCP Mg-Serbien SAS ("MCP") of France. The transaction includes an option to acquire the remaining 33% minority interest on similar terms. For fiscal 2007 MCP recorded revenues of approximately US $6.3 million selling ground magnesium products. Opta has also secured an option to purchase a majority position in an associated company located in Europe, which is focused on the production of magnesium ingots.

David Kruse, President and Chief Executive Officer, said "This has been an excellent year for Opta Minerals. The strong results reported are a direct result of the acquisition in Europe in 2007, along with strong demand for product from our steel mill customers in North America. Despite current economic conditions in the U.S., demand for steel remains strong and domestic producers have benefited from the decline in the value of the U.S. dollar as it has made foreign import steel less competitive.

In July we continued the expansion of our European operations with the acquisition of MCP Mg-Serbien SAS ("MCP"). MCP has a state of the art metal grinding facility located near Valence France, allowing Opta to grind ingots of magnesium or other soft metals, both in its Walkerton Indiana facility as well as at MCP in Europe. This is a natural vertical addition to our existing magnesium business which uses granulated magnesium as its primary component. In addition to MCP, we have negotiated an option to acquire a majority interest in an affiliated company also located in Europe, which is focused on the production of magnesium ingots from both scrap and primary sources. There is enormous demand for magnesium ingots currently and we believe that further vertical integration into ingot production will drive significant shareholder value for Opta in the future".

Opta Minerals' President and CEO, David Kruse, plans to host a conference call at 10:00 AM Eastern Standard Time, on August 15, 2008 to discuss the second quarter 2008 results and recent corporate developments. After opening remarks, there will be a question and answer period. This conference call can be accessed with the toll free dial-in number 1-(866) 321-8231 or (416) 642-5213, quote confirmation code 6142321. If you are unable to listen live, the conference call will be archived and can be accessed at the following replay numbers between August 15 and August 22, 2008, with the toll free dial-in number 1-(888) 203-1112 or (647) 436-0148 followed by pass code: 6142321.

Opta Minerals is a vertically integrated provider of custom process optimization solutions and related materials for use primarily in the steel, foundry, loose abrasive cleaning, roof shingle granules and municipal water filtration industries. The Company currently has production and distribution facilities in Ontario, Quebec, Louisiana, South Carolina, Virginia, Maryland, Indiana, Ohio, Michigan, New York, Kosice Slovakia, and Romans-sur-Isere France and one of the broadest product lines in the industry.

FOOTNOTES:

Earnings before income taxes an interest ("EBIT"); and earnings before interest, income taxes, depreciation and amortization ("EBITDA") as defined below, are both non-GAAP earnings measures that do not have standardized measures prescribed by GAAP, and therefore may not be comparable to similar measures presented by other publicly traded companies.



For the Three Months
(unaudited) Ended June 30
2008 2007
$ $

Net Earnings for the Period 1,930 1,150
Interest Expense 494 384
Provision for Income taxes 853 514
Depreciation and Amortization 1,001 748
--------------------
--------------------
EBITDA(1) 4,278 2,796
Add (subtract):
Depreciation and Amortization (1,001) (748)
--------------------
--------------------
Earnings before income taxes and interest(2) 3,277 2,048

Notes

1) The term "EBITDA" refers to earnings before deducting interest expense,
provision for income taxes, depreciation and amortization. The Company
believes that EBITDA is useful supplemental information as it provides
an indication of the results generated by the Company's main business
activities prior to taking into consideration how those activities are
financed and taxed and also prior to taking into consideration asset
depreciation. EBITDA is not a recognized measure under Canadian GAAP,
and accordingly, investors are cautioned that EBITDA should not be
construed as an alternative to net earnings or loss determined in
accordance with Canadian GAAP as an indicator of the financial
performance of the Company or as a measure of the Company's liquidity
and cash flows. The Company's method of calculating EBITDA may differ
from other issuers and accordingly, EBITDA may not be comparable to
similar measures presented by other issuers.

2) The term "EBIT" refers to earnings before income taxes and interest
expense. The Company believes that EBIT is useful supplemental
information as it provides an indication of the results generated by
the Company's main business activities prior to taking into
consideration how those activities are financed or taxed. EBIT is a
non-GAAP earnings measure that does not have standardized measures
prescribed by GAAP, and therefore may not be comparable to similar
measures presented by other publicly traded companies.


This press release may contain "forward-looking statements" which reflect the current expectations of management of the Company regarding the Company'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", "endeavour", "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 Company. Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors could cause the Company'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'' section of the Company's Annual Information Form 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 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 Company 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 Company 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.



Opta Minerals Inc.
Consolidated Statements of Earnings
For the three month periods ended June 30, 2008 and 2007
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
2008 2007
$ $

Revenue 25,248 18,390

Cost of goods sold 18,650 13,955
------------------

Gross profit 6,598 4,435

Selling, general and administrative expenses 2,824 2,203
------------------

Earnings before the following 3,774 2,232
------------------

Interest expense - net 494 384

Amortization of intangible assets 437 282

Stock compensation expense 56 35

Foreign exchange loss (gain) 4 (133)
------------------

991 568
------------------
Earnings before income taxes 2,783 1,664

Provision for income taxes 853 514
------------------

Net earnings for the period 1,930 1,150
------------------
------------------

Earnings per share for the period
Basic and diluted 0.11 0.07



Opta Minerals Inc.
Consolidated Statements of Earnings
For the six month periods ended June 30, 2008 and 2007
(Expressed in thousands of U.S. dollars, except per share amounts)
(Unaudited)
2008 2007
$ $

Revenue 46,618 34,853

Cost of goods sold 34,465 26,353
------------------

Gross profit 12,153 8,500

Selling, general and administrative expenses 5,732 4,434
------------------

Earnings before the following 6,421 4,066
------------------

Interest expense - net 1,060 755

Amortization of intangible assets 865 586

Stock compensation expense 113 69

Foreign exchange loss (gain) 163 (100)
------------------

2,201 1,310

------------------
Earnings before income taxes 4,220 2,756

Provision for income taxes 1,191 901
------------------

Net earnings for the period 3,029 1,855
------------------
------------------

Earnings per share for the period
Basic and diluted 0.17 0.11



Opta Minerals Inc.
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
(Unaudited)

June 30, December 31, June 30,
2008 2007 2007
$ $ $

Assets

Current assets

Cash and cash equivalents 2,832 2,336 415
Accounts receivable 13,576 10,486 9,888
Inventories 21,303 19,219 16,435
Prepaid expenses and other
current assets 971 1,566 890
Income taxes recoverable - 148 67
---------------------------------
38,682 33,755 27,695

Property, plant and equipment - net 18,607 19,531 18,800

Intangible and other assets - net 34,648 32,871 19,928

Goodwill 10,541 10,606 10,237

Future Income Taxes 1,625 1,469 733
---------------------------------
104,103 98,232 77,393
---------------------------------
---------------------------------

Liabilities

Current liabilities

Bank indebtedness 7,843 5,989 8,446
Accounts payable and accrued liabilities 7,378 5,773 4,464
Income taxes payable 93 - -
Current portion of long-term debt 4,050 7,314 3,348
Current portion of preference shares 45 47 44
---------------------------------
19,409 19,123 16,302

Long-term debt 22,764 23,204 12,353

Other long-term liabilities 1,624 1,624 2,150

Future income taxes 12,937 12,724 10,274
---------------------------------
56,734 56,675 41,079
---------------------------------

Shareholder's Equity

Capital stock

Authorized: Unlimited number of common
shares and preference shares
without par value

Issued
17,992,752 (December 31, 2007 -
17,984,200, June 30, 2007
16,976,627) common shares 17,558 17,528 14,147

Contributed surplus 1,477 1,364 1,263

Retained earnings 22,213 19,184 17,691

Accumulated other comprehensive income 6,121 3,481 3,213
---------------------------------
47,369 41,557 36,314
---------------------------------
104,103 98,232 77,393
---------------------------------
---------------------------------



Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the three month periods ended June 30, 2008 and 2007
(Expressed in thousands of U.S. dollars)
(Unaudited)

2008 2007
$ $
Cash provided by (used in)

Operating activities

Net earnings for the period 1,930 1,150
Items not affecting cash
Amortization of property, plant and equipment 564 466
Amortization of intangible assets 437 282
Stock compensation expense 56 35
Future income taxes 53 (112)
Unrealized foreign exchange gain on long term debt (8) (273)
Net loss on disposal of property, plant and equipment 2 -
------------------
3,034 1,548

Changes in non-cash working capital
Accounts receivable (2,864) 73
Inventories (5,158) (1,465)
Prepaid expenses and other current assets 445 440
Accounts payable and accrued liabilities 1,711 (363)
Income taxes payable 55 165
------------------
(2,777) 398
------------------

Investing activities

Acquisition of property, plant and equipment (196) (610)
Additional consideration paid on acquisitions (4) (12)
------------------
(200) (622)
------------------

Financing Activities

Proceeds from issuance of common shares 18 37
Increase in bank indebtedness 2,363 774
Repayment of long term debt (577) (341)
------------------
1,804 470
------------------

Foreign exchange gain on cash held in foreign currency 101 -
------------------

(Decrease) increase in cash and cash equivalents
during period (1,072) 246

Cash and cash equivalents - Beginning of period 3,094 169
------------------

Cash and cash equivalents - End of period 2,832 415
------------------
------------------

Supplemental cash flow information
Interest paid 451 393
Income taxes paid 719 578



Opta Minerals Inc.
Consolidated Statements of Cash Flows
For the six month periods ended June 30, 2008 and 2007
(Expressed in thousands of U.S. dollars)
(Unaudited)

2008 2007
$ $

Cash provided by (used in)

Operating activities

Net earnings for the period 3,029 1,855
Items not affecting cash
Amortization of property, plant and equipment 1,119 903
Amortization of intangible assets 865 586
Stock compensation expense 113 69
Future income taxes (407) (175)
Unrealized foreign exchange loss (gain)
on long term debt 144 (303)
Realized foreign exchange gain on foreign operations (75) -
Net (gain) loss on disposal of property, plant
and equipment (4) 7
------------------
4,784 2,942

Changes in non-cash working capital
Accounts receivable (2,885) (1,416)
Inventories (2,249) (1,580)
Prepaid expenses and other current assets 576 653
Accounts payable and accrued liabilities 1,335 (573)
Income taxes payable 247 196
------------------
1,808 222
------------------

Investing activities

Acquisition of property, plant and equipment (315) (1,400)
Proceeds on disposal of property, plant and equipment 18 18
Additional consideration paid on acquisitions (11) (24)
------------------
(308) (1,406)
------------------

Financing Activities

Proceeds from issuance of common shares 30 46
Increase in bank indebtedness 2,037 942
Proceeds from long term debt 3,075 1,497
Repayment of long term debt (6,301) (1,740)
------------------
(1,159) 745
------------------

Foreign exchange gain on cash held in foreign currency 155 -
------------------

Increase (decrease) in cash and cash
equivalents during period 496 (439)

Cash and cash equivalents - Beginning of period 2,336 854
------------------

Cash and cash equivalents - End of period 2,832 415
------------------
------------------

Supplemental cash flow information
Interest paid 1,212 954
Income taxes paid 1,368 975



Opta Minerals Inc.
Segmented Information
For the three months ended June 30, 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)

For the three month period ended June 30, 2008

Mill and Abrasive
foundry manufacturing
products and
and services distribution
$ operations Unallocated Total
$ $ $
External revenue
by market
Canada 4,302 1,605 - 5,907
U.S. 12,107 4,669 - 16,776
Europe 2,554 - - 2,554
Other - 11 - 11
-------------------------------------------------
Total revenue from
external customers 18,963 6,285 - 25,248
-------------------------------------------------
-------------------------------------------------

Segment net earnings
before interest expense
and income taxes 3,289 652 (664) 3,277

Interest expense on
long term debt 381
Interest expense 113
Provision for income taxes 853
------

Net earnings 1,930
------
------

Total assets as at
June 30, 2008 70,397 30,739 2,967 104,103
-------------------------------------------------
-------------------------------------------------

Amortization of property
plant and equipment 271 258 35 564
-------------------------------------------------
-------------------------------------------------

Amortization of
intangible assets 425 12 - 437
-------------------------------------------------
-------------------------------------------------

Goodwill and intangible
assets as at June 30, 2008 37,954 7,235 - 45,189
-------------------------------------------------
-------------------------------------------------

Expenditures on property,
plant and equipment 6 169 21 196
-------------------------------------------------
-------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the six months ended June 30, 2008
(Expressed in thousands of U.S. dollars)
(Unaudited)

For the six month period ended June 30, 2008

Mill and Abrasive
foundry manufacturing
products and
and services distribution
$ operations Unallocated Total
$ $ $

External revenue
by market
Canada 7,427 2,877 - 10,304
U.S. 23,106 8,498 - 31,604
Europe 4,662 - - 4,662
Other 30 18 - 48
-------------------------------------------------
Total revenue from
external customers 35,225 11,393 - 46,618
-------------------------------------------------
-------------------------------------------------

Segment net earnings
before interest
expense and income taxes 5,679 1,388 (1,787) 5,280

Interest expense on
long term debt 769
Interest expense 291
Provision for income taxes 1,191
------

Net earnings 3,029
------
------

Amortization of property
plant and equipment 544 507 68 1,119
-------------------------------------------------
-------------------------------------------------

Amortization of
intangible assets 840 25 - 865
-------------------------------------------------
-------------------------------------------------

Expenditures on property,
plant and equipment 11 248 56 315
-------------------------------------------------
-------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the three months ended June 30, 2007
(Expressed in thousands of U.S. dollars)
(Unaudited)

For the three month period ended June 30, 2007

Mill and Abrasive
foundry manufacturing
products and
and services distribution
$ operations Unallocated Total
$ $ $
External revenue
by market
Canada 2,874 1,617 - 4,491
U.S. 9,040 4,685 - 13,725
Europe 74 - - 74
Other 71 29 - 100
-------------------------------------------------

Total revenue from
external customers 12,059 6,331 - 18,390
-------------------------------------------------
-------------------------------------------------

Segment net earnings
before interest
expense and income taxes 1,076 1,282 (310) 2,048

Interest expense on
long term debt 265
Interest expense 119
Provision for income taxes 514
-------

Net earnings 1,150
-------
-------

Total assets as at
December 31, 2007 63,182 32,384 2,666 98,232
-------------------------------------------------
-------------------------------------------------

Amortization of property
plant and equipment 194 267 5 466
-------------------------------------------------
-------------------------------------------------

Amortization of
intangible assets 270 12 - 282
-------------------------------------------------
-------------------------------------------------

Goodwill and intangible
assets as at
December 31, 2007 36,149 7,328 - 43,477
-------------------------------------------------
-------------------------------------------------

Expenditures on property,
plant and equipment 186 404 20 610
-------------------------------------------------
-------------------------------------------------



Opta Minerals Inc.
Segmented Information
For the six months ended June 30, 2007
(Expressed in thousands of U.S. dollars)
(Unaudited)

For the six month period ended June 30, 2007

Mill and Abrasive
foundry manufacturing
products and
and services distribution
$ operations Unallocated Total
$ $ $

External revenue
by market
Canada 5,405 2,771 - 8,176
U.S. 17,886 8,448 - 26,334
Europe 147 - - 147
Other 167 29 - 196
-------------------------------------------------

Total revenue from
external customers 23,605 11,248 - 34,853
-------------------------------------------------
-------------------------------------------------

Segment net earnings
before interest
expense and income taxes 2,441 2,017 (947) 3,511

Interest expense on
long term debt 537
Interest expense 218
Provision for income taxes 901
------

Net earnings 1,855
------
------

Amortization of property
plant and equipment 371 523 9 903
-------------------------------------------------
-------------------------------------------------

Amortization of
intangible assets 562 24 - 586
-------------------------------------------------
-------------------------------------------------

Expenditures on property,
plant and equipment 408 969 23 1,400
-------------------------------------------------
-------------------------------------------------

Contact Information