WGI Heavy Minerals Announces First Half 2009 Results and the Extension of Indian Garnet Supply Agreement



    COEUR D'ALENE, ID, Aug. 11 /CNW/ - WGI Heavy Minerals, Incorporated
("WGI") (TSX: WG) today announced results for the quarter and six months ended
June 30, 2009. All dollar amounts are in U.S. dollars unless otherwise
indicated. Results have been filed and may be viewed at www.sedar.com.
    WGI is pleased to report net income for the second quarter of $0.28
million, EPS $0.01 and half year results of $0.14 million, EPS $0.01. In
addition, WGI has signed an extension to its supply agreement with Transworld
Garnet India Pvt. Limited ("TGI") effective August 2009. "We are pleased with
the confidence that TGI has placed in WGI's marketing and sales team by
extending our partnership to December 31, 2016," said Greg Emerson, President
and CEO.

    
    Q2 and First Half 2009 Highlights

    -   Revenues in the second quarter were $7.02 million, up 15% over first
        quarter 2009 revenues of $6.1 million and up 3% over 2008's second
        quarter results of $6.82 million. Revenues for the first half were
        $13.09 million down 4% from the same period in 2008.
    -   Gross margins improved 6 points from 22% in the first quarter of 2009
        to 28% in the second quarter of 2009. Gross margin improved 6 points
        to 28% over 2008's second quarter. Similarly, gross margins improved
        6 points to 26% for the first half of 2009.
    -   General and administrative expenses for the quarter were held to
        $1.58 million compared to the same period year over year of $2.08
        million, a reduction of 24%. General and administrative expenses for
        the first half were $2.96 million and were reduced from the first
        half of 2008 by 20%.
    -   Net income for the quarter was $0.28 million, EPS $0.01 compared to a
        net loss of $0.72 million in the second quarter of 2008, EPS $(0.03).
        Net income for the first six months of 2009 was $0.14 million, EPS
        $0.01 compared to a net loss of $1.4 million for the same period in
        2008, EPS $(0.06).
    -   Cash and cash equivalents decreased for the quarter by $0.68 million
        primarily due to working capital increasing by $0.8 million, capital
        expenditures of $0.22 million and the repayment of debt of $0.15
        million all offset by a positive result from operations of $0.43
        million.
    

    Overview

    "Despite the poor economic conditions WGI's operations have returned
positive results for the second quarter by improving production flows,
managing expenses and continued responsiveness to customer needs," said Greg
Emerson, President and CEO. "The most dramatic change has been with the
Company's mining and processing facilities at Emerald Creek Garnet ("ECG") in
Idaho, U.S.A. ECG prepared a value stream map of its processes, redesigned its
operations to reduce start up times, eliminated waste and has established a
new continuous flow which reduces the number of operators required. These
changes have reduced operating costs and increased gross margins. The
increased efficiency in mining and processing methods will allow the Company
to revisit deposits once thought uneconomical."
    Garnet markets appeared mixed in the second quarter with some new
requests for the supply of garnet but still lower demand from most customers
compared to the same period last year. While the Company is receiving more and
more requests for quotes on projects for later in the fall, we continue to
work with existing distributors and look for new opportunities to expand our
sales in a stagnant market. With pricing under pressure it is even more
important these days to stress quality and on time delivery; qualities the
Company continues to improve on at its operating units and in partnership with
TGI, our garnet supplier in India.
    TGI is working with the Company's Indian liaison office and has brought
the Srikakulam mine on line giving WGI access to new sources of garnet and
ilmenite. During the quarter the Company recognized its first brokered
ilmenite sale, the first for the Company since 2004.
    "Increased garnet supply now available to WGI will require new customers,
which take several months to develop in normal market conditions," stated
William Meyerholtz, Vice President of Sales, and Marketing, International. "We
must do this in a soft market when people are hesitant to take on new supplies
unless they are low cost. We are working with our supply chain to ensure we
are doing all we can to reduce costs and pass these savings onto our customers
while generating a return for our shareholders. We believe our financial
results so far prove that we are succeeding in these goals."

    Outlook

    Market conditions remain unpredictable going into the third quarter of
2009. Prices are still under pressure. Demand for increased credit and
increasing logistics costs are also at the center of discussions by Company
management. Over the last several years the Company has been supplying
customers with long lead times due to the shortage in supply compared to
demand. Those market conditions have now changed. New supplies are entering
the market place while demand and prices are softening. This change in
business is not limited to any one geographic location or business segment; it
is global. Many of our customers are just now showing interest in additional
supply of product. We are seeing more activity in the minerals side of the
business compared to our after market waterjet parts business.
    Modest increases in revenue are planned for the full year of 2009. The
Company is committed to managing costs and operating our current business
units at a profit and within budget. Management continues to take steps to
bring WGI's fixed cost structure into line with revenue from its operations.
Modifications to current operating entities to streamline operations are
continuing. As a case in point, ECG has increased its operating efficiencies
through the adoption of Lean principles. In addition, the Company has hired a
contractor to assist ECG in moving forward on significantly reducing its asset
retirement obligation at ECG in 2009 which frees operating personnel to
concentrate on producing product.
    The Company continues to look for additional industrial mineral deposits
around the world. In July 2009 the Company hired a full time geologist in
North America to work with the existing management team to identify mineral
deposits and evaluate those deposits through drilling programs and other means
deemed necessary to understand the geological characteristics and economics of
those deposits.
    Also in July, Karla Wright Hayden has rejoined the Company as CFO. Mrs.
Wright Hayden has over twenty-five years experience and has held senior
financial and operations positions with Pyrotek, Inc., Tidyman's LLC and
Honeywell Electronic Materials. Mrs. Wright Hayden was CFO of the Company in
2006 and 2007 and is well positioned to reassume this role.

    Management's Discussion and Analysis

    The Company's unaudited consolidated financial statement and the
management's discussion and analysis for the six months ended June 30, 2009
are available on the Company's website at www.wgiheavyminerals.com. Additional
information related to the Company is also available on the SEDAR website at
www.sedar.com.

    About WGI

    WGI Heavy Minerals, Inc. is a marketer of industrial grade minerals
sourced primarily out of India, producer of industrial-grade garnet out of
Idaho and Germany and manufacturer of replacement parts for ultra-high
pressure waterjet machine tool systems around the world. The Company's shares
are listed on the Toronto Stock Exchange under the symbol WG.

    This press release contains forward-looking statements concerning the
business, operations, and financial performance and condition of WGI Heavy
Minerals, Incorporated. A number of the matters discussed and statements made
in the press release contain forward-looking statements reflecting current
expectations regarding future assets. When used in this press release, the
words "believe", "anticipate", "intend", "estimate", "expect", "project", and
similar expressions are intended to identify forward-looking statements,
although not all forward-looking statements contain such words. These
forward-looking statements are based on current expectations and are naturally
subject to risks, uncertainties, and changes in circumstances beyond
management's control that may cause actual results to differ materially from
those expressed or implied by such forward-looking statements. Factors that
may cause such differences include but are not limited to: exploration and
development risks; risks related to permits and title to property; risks
related to foreign countries and regulatory requirements; operating hazards;
foreign currency fluctuations; competition; fluctuations in the market price
of mineral commodities and transportation costs; uncertainty as to
calculations of mineral deposit estimates; uninsured risks; and dependence
upon key management personnel and executives. Actual results may differ
materially from those expressed here. You should not place undue reliance on
such forward-looking statements. The Company is under no obligation to update
or alter such forward-looking statements, whether as a result of new
information, future events, or otherwise.

    
                       WGI Heavy Minerals, Incorporated
                            Financial Information
                 (in thousands, except for per share amounts)

    Consolidated Balance Sheet                 June 30, 2009   Dec. 31, 2008
                                              -------------------------------
    Assets
    Cash and Short term deposits                       8,343          28,201
    Other Current Assets                               9,547           8,250
                                              -------------------------------
    Total Current Assets                              17,890          36,451
                                              -------------------------------

    Property, plant and equipment                      3,718           3,758
    Goodwill and Intangible Assets                       517             543
    Other Assets                                           -               -
                                              -------------------------------
    Total Assets                                      22,125          40,752
                                              -------------------------------
                                              -------------------------------

    Liabilities & Equity
    Current Liabilities                                4,732          23,618
    Long-term debt                                       466             488
    Liabilities of discontinued operations                 -               -
                                              -------------------------------
    Total Liabilities                                  5,198          24,106
                                              -------------------------------

    Capital Stock                                     38,468          38,456
    Stock-based compensation                           2,249           2,215
    Deficit                                          (24,043)        (24,186)
    Foreign currency translation account                 253             161
                                              -------------------------------
    Total Equity                                      16,927          16,646
                                              -------------------------------
    Total Liabilities & Equity                        22,125          40,752
                                              -------------------------------
                                              -------------------------------



    Consolidated Statements of Operations and Deficit

                                For the three months      For the six months
                                        ended                   ended
                                 June 30,    June 30,    June 30,    June 30,
                                    2009        2008        2009        2008
                               ----------------------  ----------------------
    Sales                       $  7,024    $  6,821    $ 13,090    $ 13,598
    Operating Costs                4,887       5,053       9,444      10,521
    Depreciation, depletion,
     and amortization                156         230         308         438
                               ----------------------  ----------------------
    Gross Profit                   1,981       1,538       3,338       2,639
                               ----------------------  ----------------------
    Gross Margin %                  28.2%       22.5%       25.5%       19.4%

    Expenses
    G&A                           1,584        2,082       2,961       3,702
    Interest Income                 (15)         (84)        (52)       (228)
    Interest Expense                 17           22          38          43
    Stock based compensation         25           77          34         174
    Development costs                 9            2          11           7
    Other Expenses (Income)           6          149          52         312
                               ----------------------  ----------------------
                                  1,626        2,248       3,044       4,010
                               ----------------------  ----------------------

    Loss before taxes               355         (710)        294      (1,371)
    Provision for taxes              71           73         152         129
                               ----------------------  ----------------------
    (Loss) from operations
     for the year                   284         (783)        142      (1,500)
                               ----------------------  ----------------------
    Net gain from
     discontinued operations          -           61           -          96
                               ----------------------  ----------------------
                                $   284      $  (722)   $    142    $ (1,404)
                               ----------------------  ----------------------
                               ----------------------  ----------------------
    Basic and diluted loss
     per common share           $  0.01      $ (0.03)   $   0.01    $  (0.06)

    Expressed in U.S. dollars unless otherwise stated



    Consolidated Statement of Cash Flows

                                For the three months      For the six months
                                        ended                   ended
                                 June 30,    June 30,    June 30,    June 30,
    $(000's)                        2009        2008        2009        2008
                               ----------------------  ----------------------
    Cash flows from
     operating activities       $   (536)   $   (115)   $   (140)   $   (425)
    Cash flows from
     operating activities of
     discontinued operations    $      -    $   (141)   $      -    $    (69)
    Cash flows from investing   $    (96)   $   (766)   $   (105)   $   (985)
    Cash flows from financing   $   (148)   $    391    $   (466)   $    (77)
    Payment of cash
     distribution               $      -           -    $(19,245)   $      -
    Effect of exchange rate
     changes on Cash & Cash Eq. $    105    $   (118)   $     98    $   (166)
                               ----------------------  ----------------------
                               ----------------------  ----------------------
    Inc./(dec.) in Cash and
     ST Inv.                    $   (675)   $   (749)   $(19,858)   $ (1,722)
                               ----------------------  ----------------------
    Beginning Cash & ST
     Investments                $  9,018    $ 15,800    $ 28,201    $ 16,773
    Ending Cash & ST
     Investments                $  8,343    $ 15,051    $  8,343    $ 15,051

    Expressed in U.S. dollars unless otherwise stated.
    





For further information:

For further information: Karla Wright Hayden, CFO, 810 Sherman Ave.,
Coeur d'Alene, ID, 83814, U.S.A., Phone (208) 770-2204, E-mail
Karla@wgiheavyminerals.com, www.wgiheavyminerals.com

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