WGI Heavy Minerals Announces Revaluation of Certain Long-lived Assets and Reduction of Board of Directors



    COEUR D'ALENE, ID, Feb. 27 /CNW/ - WGI Heavy Minerals, Incorporated (WGI)
(TSE: WG) today announced that it is nearing the completion of an internal
review which has resulted in the revaluation of certain assets with respect to
the operations of two of its subsidiaries, Emerald Creek Garnet ("ECG") and
International Waterjet Parts ("IWP").
    The Company tested the value of its assets using current information and
determined the carrying value of its long-lived assets at ECG and IWP exceeded
the discounted cash flows expected from each specific operation. The Company
intends to write down ECG and IWP's long-lived assets to their estimated fair
value which the Company currently anticipates being close to US$1 million
each. The current total fair value reductions of these operations, which
reflect significant adverse fourth quarter 2008 market developments, are
expected to have an estimated net income impact of approximately US $2.75
million in the fourth quarter of 2008. There will be no negative impact to
working capital.
    2008 saw a change in the strategic direction of WGI. The second half of
the year will be remembered for turmoil across world markets, and
deteriorating economic conditions continuing into 2009. Some of the
significant events and activities that occurred at WGI over the past year
were:

    
    Sale of Transworld Garnet India Pvt. Ltd ("TGI")
    ------------------------------------------------
    
    WGI sold its production assets in India to VV Minerals for net proceeds
of US$15.56 million. The Company subsequently reported a gain of US$10.69
million in the third quarter. As part of the VV sale, WGI negotiated and
entered into a three-year distribution agreement with VV Minerals for the sale
of garnet, ilmenite and other industrial minerals. WGI has repatriated from
India US$4.85 million in cash for its 74% equity interest in TGI. In addition,
WGI has repatriated US $10.22 million in debt financing by obtaining repayment
of certain external commercial borrowings ("ECB loans") from TGI. Rs 17.67
million of the net proceeds remain in a special purpose account with the
Central Bank of India ("CBI") to be repatriated pending CBI's receipt of the
Reserve Bank of India's approval to repatriate the funds. The relationship
between the two organizations is developing well, with both parties meeting
their obligations and looking for additional ways to collaborate on future
business.

    
    Board and Management Restructuring
    ----------------------------------
    
    During the year, WGI announced the separation of the roles of Chairman of
the Board of Directors and Chief Executive Officer. Greg Emerson was appointed
CEO in May 2008 and Gordon Fear, formerly Chairman of WGI's Special Committee,
was appointed Chairman of the Board in October 2008. Effective February 23,
2009 Covell Brown has resigned from the Board of Directors. With the
resignation of Covell Brown, the Board was reduced from seven members to six.
The continuing Directors are Michael Burns, Robert Ackerman, Gordon Fear,
Kitson Vincent, Mark Curry and Greg Emerson. The Board will continue to play
an active role in the management of WGI.

    
    Special Distribution Paid
    -------------------------
    
    In early January 2009, WGI paid out a special cash distribution of
US$0.80 per share and as of January 31, 2009, WGI had a total of US$8.9
million on deposit with reputable banks in Canada, the U.S. and Germany. In
this current global business climate it is extremely important that WGI
maintain adequate cash reserves. The Company is looking for opportunities to
invest part of this cash, however it will be prudent and conservative in its
decision making in this regard.

    
    Risk Management and Cost Containment
    ------------------------------------
    
    Starting during the summer of 2008, management has been reviewing all
operational costs, including credit policies, pay for performance and
administrative costs. One result of managements' review was the suspension of
operations at Emerald Creek for the first three months of 2009. WGI has
engaged an independent consultant, with significant waterjet expertise, to
advise both management and the Board on options with respect to WGI's existing
waterjet operations. It is expected that this review will be completed by the
middle of April 2009. The Company is also taking a close look at its credit
exposure and is taking measures to minimize its risk while maintaining
customer relationships. At the same time, WGI is working with vendors to
reduce transportation costs. In most cases, these cost savings are being
passed onto customers to protect market share. WGI has adjusted 2009 budgets
where appropriate. Effective November 1, 2008, the Company froze all salaries
and wages, until June 30, 2009. WGI is also in the process of finalizing a
short-term incentive program for employees. It will be based on performance
against specific targets, including Company increases in revenue, gross margin
and net income before income taxes.

    
    Shareholder Communication
    -------------------------
    
    WGI intends to increase the frequency of our communications to ensure
that our shareholders are kept apprised of WGI's activities and value-creation
efforts, in a timely manner. This press release is part of that effort. All of
our efforts at WGI Heavy Minerals are aligned to support our new direction.
The challenging economic conditions will not deter us from our commitment to
work hard to create value for our shareholders. For further information, we
refer you to an investor presentation that has been recently posted to our
website at www.wgiheavyminerals.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 cutting systems in the U.S. 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.





For further information:

For further information: Ed Kok, Investor Relations, 810 Sherman Ave.,
Coeur d'Alene, ID, 83814 U.S.A., Phone (208) 770-2208, E-mail edkok@mac.com,
www.wgiheavyminerals.com

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WGI Heavy Minerals, Incorporated

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