CONCORD, NH, July 9, 2014 /CNW/ - Brazilian Resources, Inc. (the "Company") provides an update of its corporate and operational activities, including (i) update on its limestone operation in the state of Mato Grosso, Brazil; (ii) status of 2013 year-end financial statements; (iii) going concern considerations; (iv) management changes and (v) its Secure Foods subsidiary.
Petrocal Limestone Operation Update
The Petrocal limestone mining operation encompasses 995 hectares ("ha") of mining concessions located at the northwestern edge of the Paraná Sedimentary Basin in the state of Mato Grosso, Brazil. It also includes five exploration permits in good standing for areas totaling 4,538 ha located around the mining concessions.
The mining operation and concessions are owned by the Company, Liberty Metals & Mining Holdings, LLC ("Liberty") and the previous owners of the property, through a Brazilian entity, Petrocal Indústria e Comércio de Cal S.A. ("Petrocal").
During the year ended December 31, 2013, Petrocal produced 152,000 tonnes of limestone and sold 98,000 tonnes at an average price of R$50 per tonne. During 2014, 25,000 tonnes of limestone have been sold from stockpiled inventory at an average price of R$49.50 per tonne.
Lower than expected limestone sales during 2013, the first full season of production at Petrocal, resulted in a critical drop in working capital. Several factors significantly delayed and shortened the limestone application season and as result, many farmers reduced lime application in 2013. These factors included an extended rainy season well into the second quarter, and an extensive delay in the corn harvest due to abnormal conditions related to climate, infrastructure and transportation limitations.
With the completion of the agricultural season and in preparation for the rainy season that started in November 2013, the Petrocal operating staff was reduced to one shift from 63 to 19 employees. Also, in an effort to reduce costs, the office in Rondonópolis, Mato Grosso was closed, and administrative staff in Brazil was reduced from 26 to 16 employees. With many multinational lenders and investors taking a 'wait and see' approach to the volatile financial environment in Brazil and elsewhere, the Company was unable to secure adequate funding to recommence operations in April 2014. As a result, most of the remaining staff in Brazil was furloughed and the Company and Liberty's jointly-owned subsidiary, Brasagro Fertilizantes Minerais Ltda. ("Brasagro Ltda.") and Petrocal filed a petition for Judicial Recovery in Brazil on May 26, 2014, which was accepted by the court on May 28.
The Judicial Recovery process, which is expected to last approximately 150 days, provides the Company with the opportunity to stabilize the assets of Petrocal and Brasagro Ltda., find new investors, prepare for the 2015 ramp-up and/or sell the business. During the process, the Company will maintain control of its properties and creditors will remain on hold until a recovery plan is accepted by the court and approved by the creditors. The Company is currently preparing the recovery plan for court submission in late July.
On June 23, 2014, Liberty and Petrocal entered into an agreement whereby Liberty will lend Petrocal up to US$750,000 in order for Petrocal to remain an operational company and to proceed through the Judicial Recovery period. This amount will be a priority credit for Liberty in Brazilian Judicial Recovery Court.
Failure to File Audited Annual Financial Statements for the year ended December 31, 2013 and Cease Trading Orders
Since the 2013 seasonal closing of the limestone operation until the Judicial Recovery filing by Petrocal and Brasagro Ltda., the Company had been negotiating to recapitalize the Company with certain shareholders and lenders, with the expectation that such recapitalization would occur. During this period the Company continued to fund the needs of Petrocal and related entities. As a result, the Company was unable to retain an auditor and complete the filing of its annual audited financial statements, together with management's discussion and analysis and the related CEO and CFO certifications (collectively, the "Required Filings") for the financial year ended December 31, 2013 within the period prescribed for the filing of such documents. Consequently, the Company received Cease Trade Orders issued by the British Columbia and Ontario Securities Commissions on May 9 and May 21, 2014, respectively.
For the reasons explained above, the Company continues to lack the financial resources to complete its statutory filings and it has not completed its interim financial statements and Required Filings for the period ended March 31, 2014. In its filings for the interim period ended September 30, 2013, the Company noted the high degree of risk associated with the business of mining and exploring for minerals, and that there was no assurance that the Company's financing initiatives would be successful or sufficient for the Company to continue to operate as a going concern.
The Company's ability to realize its assets and discharge its liabilities is dependent upon its ability to sell or recapitalize Petrocal to an extent that the Company can continue as a going concern.
Resignation and Appointment of Officers
On June 16, 2014 the Board of Directors accepted the resignation of Robert Lloyd as President and CEO of the Company, and appointed Daniel Titcomb as President and CEO. Mr. Lloyd also resigned his positions in the Company's related entities, but remains a Director of the Company.
On May 15, 2014 the two shareholders of Brasagro Ltda. accepted the resignation of Carlos Augusto Botrel Berto as President of the Company, and on June 6 appointed Daniel Titcomb as President.
On May 15, 2014 the Board of Directors of Petrocal accepted the resignations of Carlos Augusto Botrel Berto as President and Sergio Victor as a Director, and on June 18 appointed Daniel Titcomb as President and Alvaro Brandão as a Director.
Mr. Titcomb was the founder of the Company and was President and CEO from its inception until April 20, 2006. He has been since inception and remains a Director of the Company, and is the Company's largest shareholder, controlling approximately nine per cent of the outstanding common shares.
The Company's food irradiation interests are controlled by Secure Foods, Inc. ("Secure Foods"), a U.S.-based wholly-owned subsidiary that was formed to develop gamma ray ionization facilities in Brazil and export treated food products to North America. Secure Foods' wholly-owned Brazilian subsidiary, Gamma Serviços de Irradiação Ltda ("Gamma"), has secured a property on which to locate the first irradiator facility. The property is located in Feira de Santana in the state of Bahia, Brazil.
Secure Foods and Gamma require additional capital and are considering their options. If no capital is obtained, their permits and approvals will begin to expire in October, 2014.
About Brazilian Resources
Brazilian Resources is a U.S. company with ownership interests in agricultural mining and food irradiation industries in Brazil. Corporate offices are located in Concord, New Hampshire, USA. The Company is a reporting issuer in the Provinces of Alberta, British Columbia and Ontario, Canada.
Further information about the Company is available on SEDAR and on its website www.brazilianresources.com.
This news release contains "forward-looking statements." These statements include, but are not limited to, statements with respect to our exploration and development programs in Brazil, our future financial performance, our anticipated growth strategies and anticipated trends in our industry. In some cases, you can identify these statements by forward-looking words such as "expects," "plans," "will," "believes," "estimates," "potential" or "intends" and the negative of these terms and other comparable terminology. All forward-looking statements speak only as of the date on which they are made. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, these statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions concerning future events that are difficult to predict. Therefore, actual future events or results may differ materially from these statements. We believe that the factors that could cause our actual results to differ materially from those expressed or implied by forward-looking statements in this news release include but are not limited to the following: inability to raise necessary capital for ongoing operations, delays or changes in plans with respect to exploration or development projects or capital expenditures; the uncertainty of reserve and resource estimates; risks inherent in operating in foreign jurisdictions; risks associated with establishing new mining operations; and fluctuations in the price of and demand for limestone. These risks and uncertainties, as well as other risks of which we are not aware or which we currently do not believe to be material, may cause our actual future results, performance or achievements to be materially different than those expressed in our forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. The statements contained herein are made as of the date hereof and the Company disclaims any intent or obligation to update publicly any forward looking statements, whether as a result of new information, future events or results or otherwise, except as required by applicable law.
SOURCE: Brazilian Resources, Inc.
For further information: Jeffrey C. Kirchhoff, Corporate Secretary, Office: 603-224-4800, [email protected]