PhosCan Chemical Corp.
TSX : FOS

PhosCan Chemical Corp.

June 10, 2009 17:12 ET

PhosCan Chemical Announces Results for Quarter Ended April 30, 2009

TORONTO, ONTARIO--(Marketwire - June 10, 2009) -

(All dollar amounts are expressed in Canadian currency unless otherwise noted.)

PhosCan Chemical Corp. (TSX:FOS) announces its financial and operating results for the quarter ended April 30, 2009.

Financial Results

PhosCan reported a net loss for the quarter ended April 30, 2009 of $729,595 compared to $1,367,989 during the same period of the previous year. The decrease in net loss of $638,394 was primarily due to a decrease in expenses, which was partly offset by an increase in reported interest income.

Expenses for the quarter ended April 30, 2009 were $816,553, a decrease of $553,107 from expenses of $1,369,660 during the same period of the previous year. The decrease was primarily due to a $958,348 decrease in stock option compensation, partly offset by a $348,761 increase in payroll expenses, which were included in general and administrative. During the quarter ended April 30, 2009, no stock options were granted as compared to the 2,890,000 stock options granted during the same period of the previous year to new and existing directors, new officers, employees and a consultant of the Company. Payroll increased during the quarter ended April 30, 2009 as a result of the President and CEO becoming a salaried employee in May 2008, the hiring of a Chief Financial Officer in March 2008, and the expensing of a portion of the termination benefits paid to the Executive Vice President, Operations and Projects whose employment with the Company terminated on March 31, 2009.

Reported interest income increased by $87,149 to $87,149 for the quarter ended April 30, 2009. Prior to the announcement by the Company on December 8, 2008 that it is deferring several tasks related to the development of the Martison Project, interest income was capitalized to the Martison Project because the Company's cash and cash equivalents were held primarily for the purpose of developing the Martison Project. Subsequent to the December 8, 2008 announcement, a portion of the Company's cash and cash equivalents are not considered to be held primarily for the purpose of developing the Martison Project and interest earned on this cash was therefore reported as income.

Cash and cash equivalents plus short-term investments decreased by $2,054,068 during the quarter ended April 30, 2009 to $70,707,369 while working capital decreased by $1,642,535 to $70,310,077. The decreases were primarily due to expenditures on the Martison Project and general and administrative expenses. Working capital decreased less than cash and cash equivalents plus short-term investments because accounts payable and accrued liabilities decreased by $450,921 as a result of reduced development activity at the Martison Project during the quarter ended April 30, 2009.

Capitalized expenditures on the Martison Project were $85,717,559 at April 30, 2009, an increase of $1,059,571 from January 31, 2009. The increase is primarily due to the ongoing work, as described below, under the reduced development program announced on December 8, 2008.

PhosCan had no long-term debt at April 30, 2009 and has met all of its financial obligations. The Company expects that existing working capital will be sufficient to advance the Martison Project under the reduced development program, as well as enable the Company to review a broad range of corporate development opportunities that have the potential to enhance shareholder value. PhosCan will be required to raise a significant amount of additional funds should it elect in the future to proceed with full-scale development of the Martison Project.

Operating Results

Since the announcement on December 8, 2008 that PhosCan is deferring several tasks related to the development of the Martison Project, management and the Board have continued to be prudent and disciplined and have worked to achieve the right balance between advancing the Martison Project and preserving the Company's cash. In that regard, under a reduced development program, PhosCan continued to advance the following aspects of the feasibility study during the quarter ended April 30, 2009:

- Biological studies

- Taking the Martison Project mine claims to lease

- Bench and pilot plant beneficiation testing of phosphate ore from the Martison Project

- Phosphoric acid pilot plant testing of flotation concentrate produced from the pilot plant beneficiation test program to collect critical data for engineering design

- An investigation into the opportunity to purchase from the Crown land required for the conversion complex

The following corporate developments were also completed during the quarter ended April 30, 2009 and previously disclosed:

- Shareholders' rights plan approved by shareholders

- Reduction in stated capital, in order to enable PhosCan to undertake a normal course issuer bid, approved by shareholders; amount of reduction and effective date to be determined by the Board of Directors

- Listing of the Company's common shares on the Toronto Stock Exchange

- Agreement signed with IAMGOLD Corp. for the evaluation of the niobium at the Martison Project

Outlook

PhosCan believes it has sufficient funds to complete the activities under the reduced development program. The Company will be required to raise a significant amount of additional funds should it elect in the future to proceed with full-scale development of the Martison Project.

Upon completion of the reduced development program, PhosCan expects to have a significant amount of uncommitted cash on hand. The Company has been actively sourcing and reviewing a broad range of corporate development opportunities and is confident it will be able to execute on one or more that have the potential to enhance shareholder value.

About PhosCan

PhosCan is engaged in the development of the Martison Phosphate Project, which consists of the Martison Phosphate Deposit and a planned phosphate mine, beneficiation plant, conversion complex and solid fertilizer production facility. The Martison Deposit is located 70 kilometres north of Hearst, Ontario. The Company's proposed operations will be strategically located in proximity to the fertilizer markets in the agricultural regions of western Canada and mid-western United States with ready access to excellent infrastructure including rail, power and labour.

Cautionary Note Regarding Forward-Looking Statements

This press release contains forward-looking statements with respect to the Martison Phosphate Project, and matters concerning the business, operations, strategy, and financial performance of PhosCan. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe" or "continue" or the negative thereof or similar variations. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the estimates and projections regarding the Martison Project are realized. Forward-looking statements are based on a number of assumptions which may prove to be incorrect. Unless otherwise stated, all forward looking statements speak only as of the date of this press release and PhosCan does not undertake any obligation to update such statements except as required by law.

The TSX has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • PhosCan Chemical Corp.
    Stephen Case
    President & CEO
    (416) 972-9222
    or
    PhosCan Chemical Corp.
    James Pringle
    Vice President Finance & CFO
    (416) 972-9222