Primary Corp.
TSX : PYC

Primary Corp.

November 14, 2011 21:01 ET

Primary Corp. Announces Q3 Financial Results

TORONTO, ONTARIO--(Marketwire - Nov. 14, 2011) - Primary Corp. (TSX:PYC) ("Primary" or the "Company") announces that it has reported a total comprehensive loss for the third quarter of $9.6 million. The loss was due primarily to a reduction in the value of the Company's investment portfolio. The financial statements along with management's discussion and analysis can be found on SEDAR (www.sedar.com) or on Primary's website (www.primarycorp.ca).

Third quarter 2011 was a transformational period for the Company's investment portfolio. Gross proceeds of the new equity raise of approximately $75.1 million were received on June 30, 2011 and of the over allotment of approximately $8.6 million on July 15, 2011. The Company's investment strategy was primarily focused on liquidating the legacy public equity positions and transitioning the portfolio to a hedged, yield oriented portfolio of debt and equity resource securities. This was an unusually difficult task as market conditions were dominated by high volatility and poor liquidity, especially in the smaller cap resource sector. Accordingly, the Company proceeded relatively slowly in this process and took advantage of periods of temporary stability.

The net asset value per share ("NAV") of the Corporation declined from $6.662 to $6.033 ($6.114 prior to the dividend declared September 30, 2011) during the quarter, or 9.45% (8.22% prior to dividend). For comparison the broad S&P TSX Composite Index declined 12.02%, the S&P TSX Energy Sub Index declined 20.46% and the S&P TSX Materials Sub Index declined 8.76%. As is often the case when markets experience declines of this magnitude, volatility also rises dramatically. The volatility endured in Q3 was exceptional, reaching levels similar to Q4 of 2008, the recessionary period of 2001 and 2002, the Asian crisis, the Russian default of 1998 and the crash of October 1987.

The causes of the recent market declines and concurrent bouts of high volatility were centered upon the extremely high levels of sovereign debt in the world. Specifically, Greece, Portugal, Ireland, Italy and Spain in Europe and also the U.S., which displayed extraordinary levels of political polarization in dealing with its debt ceiling measures. The Company believes that the world entered the first stage of a global sovereign debt crisis during the quarter and we expect this to dominate markets and economic growth for at least the next 12 to 24 months.

Given this view, the Company retained a significant portion of the Corporation's assets in cash as of the quarter end (47%). One of the themes that we enacted during the quarter was to reduce exposure to the energy and materials sector and add to our precious metals positions.

Despite enduring very high market volatility, the portfolio performed reasonably well. The Company expects volatility to remain for some time and accordingly plans to maintain a defensive stance.

About Primary Corp.

Primary trades on the Toronto Stock Exchange under the symbol PYC. Primary is focused on natural resource lending. Primary's business is primarily directed to investing in public and private debt securities of and making term loans (including bridge and mezzanine debt) to issuers in a broad range of natural resource sectors, including energy, base and precious metals and other commodities, and issuers involved in exploration and development, and may also include financing other resource-related businesses and investing in public and private equity and quasi-equity securities. Primary seeks to generate income primarily from its lending activities, while taking advantage of additional upside through equity participation in the companies which it finances.

Marret Asset Management Inc. is responsible for implementing Primary's investment strategy and managing Primary's investment portfolio.

About Marret Asset Management Inc.

Marret is an employee-owned firm based in Toronto and has over $6 billion of assets under management. Marret and its experienced team of investment professionals led by Barry Allan specialize exclusively in fixed income and, particularly, in high yield debt strategies.

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Forward-Looking Information

This news release includes certain information that may constitute "forward-looking information" under applicable Canadian securities legislation. Forward-looking information includes, but is not limited to, the anticipated use of the net proceeds of the Offering. Forward-looking information is necessarily based upon a number of assumptions that, while considered reasonable, are subject to known and unknown risks, uncertainties, and other factors which may cause the actual results and future events to differ materially from those expressed or implied by such forward-looking information. Such risks include, but are not limited to, market conditions and the other risks identified in the short form prospectus dated June 23, 2011 and the Company's annual information form, in both cases under the heading "Risk Factors". There can be no assurance that forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information. Accordingly, readers should not place undue reliance on forward-looking information. All forward-looking information contained in this press release is given as of the date hereof and is based upon the opinions and estimates of management and information available to management as at the date hereof. The Company disclaims any intention or obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

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