Liberty Mines reports financial results for second quarter 2012
TORONTO, Aug. 14, 2012 /CNW/ - Liberty Mines Inc. (TSX: LBE) ("Liberty" or the "Company") today reported its financial results for the three- and six-month periods ended June 30, 2012. All amounts are in Canadian currency.
"Our second quarter performance was effectively marked by the re-start of operations and the ramp-up of production," said Chris Stewart, President and CEO of Liberty Mines. "While Q2 results included our highest production of concentrate and our highest revenue total in nearly two years, our progress was impeded by the nickel price declining by more than 25 percent in the past six months and generally unfavorable market conditions. In response to the current market environment, we are undertaking a full review of our strategy and operational activities to reduce costs and improve efficiencies. To maximize the value of our ore for when nickel prices recover, we are temporarily suspending production immediately."
Adverse market conditions, including the declining price of nickel, has resulted in JIIL deciding to re-evaluate the terms of the restructuring and the parties were unable to resolve the outstanding issues prior to the completion of the Company's financial statements for the six months ending June 30, 2012. As a result, approximately $52.6 million in debt that comes due on December 31, 2012 and a further $10 million advanced in 2012 pursuant to promissory notes will continue to be treated as a short term liabilities. The remaining $25.5 million that was to be included in the restructuring continues to have a due date of June 30, 2014. The Company will keep shareholders advised on developments with respect to this matter.
Q2 2012 Financial and Operational Highlights
- Revenue was $5.4 million, representing the Company's largest total since Q3 of 2010.
- Shipped 791,299 pounds of nickel concentrate to the Xstrata smelter in Sudbury.
- Expanded nickel mineralization at the Hart deposit as a result of ongoing drilling and exploration activities, which suggested that significant tonnes can be added to current estimates at depth.
- Received government approval for the closure plan for Hart Mine, which is expected to go into production in 2014.
- Appointed Heather Miree, P.Geo., as Vice President of Exploration effective May 23, 2012.
- Appointed David Birch, CMA as the Company's Chief Financial Officer effective June 1, 2012.
Selected Q2 financial highlights
|All amounts in thousands except share data||June 30, 2012||June 30, 2011|
|Site operational costs||$7,369||$1,423|
|Net (loss) income||$(10,320)||$(4,553)|
|Basic earnings (loss) per share||$(0.05)||$(0.03)|
|June 30, 2012||December 31, 2011|
|Cash and Cash Equivalents||$3,189||$1,304|
Review of Q2 Financial Performance
Revenue for Q2 2012 was $5.4 million, up from negative $117,000 for the corresponding period of 2011. The growth was due to a re-start of mining and milling operations effective March 31, 2012. In Q2 2011, Liberty had suspended mining and milling operations and its revenue total included an adjustment from previous periods. For the six-month period of 2012, Liberty generated revenue of $5.4 million, up 170% from $2.0 million for 2011. In Q2 2012, the average price of nickel was $7.78 per pound.
Liberty generates revenue through the sale of nickel concentrate and related by-products produced from its mining and milling operations in Timmins, Ontario. Liberty has a 100 percent off-take agreement with Xstrata.
Operating expenses for Q2 2012 were $7.4 million, up from $1.4 million last year. The increase in operating expenses is primarily due to the re-start and subsequent ramp-up of production activities throughout Q2 2012. In Q2 2011, Liberty's production activities had been suspended and the Company was chiefly in a maintenance and care-take mode. For the six-month period 2012, operating expenses were $10.7 million, up from $4.8 million.
Net loss for Q2 2012 was $10.3 million or $0.05 per share (basic and fully diluted). The loss included amortization/depletion expenses of $3.2 million, interest on long-term debt of $2.5 million and dividends on preferred shares of $0.3 million. Liberty recorded a net loss of $4.5 million or $0.03 per share for the same period in 2011 when its operations were suspended. For the six month period of 2012, Liberty recorded a net loss of $18.3 million or $0.09 per share. This compares to a net loss of $9.7 million or $0.06 per share for the six-month period of 2011.
At June 30, 2012, Liberty had cash and cash equivalents of $3.2 million. This compares to $1.3 million at year end 2011.
Liberty's financial statements for the period ended June 30, 2012 are available at www.libertymines.com and www.sedar.com. The financial statements should be read in conjunction with the accompanying notes and management's discussion and analysis.
About Liberty Mines Inc.
Liberty Mines Inc. is a mid-tier producer of nickel and is focused on the exploration, development and production of nickel, copper, cobalt and platinum group metals from its properties in Ontario, Canada. It owns and operates the only nickel concentrator in the Shaw Dome, a prospective nickel belt region near Timmins, Ontario. With a new management team in place, Liberty is focused on growth initiatives not only through a more aggressive exploration program on its current properties but also through potential acquisition or partnership opportunities beyond its core Timmins area projects.
No stock exchange, securities commission or other regulatory authority has approved or disapproved the information contained herein. This News Release includes certain "forward looking statements". All statements other than statements of historical fact included in this release, without limitation, statements regarding future plans and objectives of Liberty, are forward looking statements that involve various risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Liberty's expectations are: exploration risks; commodity prices; regulatory approvals; receipt of mining permits and leases; and assumed startup and operating costs detailed herein and from time to time in the filings made by Liberty with securities regulators. Forward-looking statements speak only as of the date on which they are made. The Company undertakes no obligation to publicly update any such statement or reflect new information or the occurrence of future events or circumstances, except where required by securities regulations. Accordingly, readers should not place undue reliance on forward-looking statements.
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