VANCOUVER, March 10 /CNW/ - Lignol Energy Corporation (TSX-V: LEC) ("Lignol" or "the Company"), a leading technology company in the cellulosic ethanol and biorefining sector, today announced its financial results for the three and nine-month periods ended January 31, 2010. (All figures in Canadian dollars, unless otherwise noted).
Q3 FY10 Highlights and Subsequent Event:
- Completed important enhancements to Lignol's fully integrated
industrial-scale biorefinery pilot plant in Burnaby, British
Columbia. Each of the major unit operations of the pilot plant has
been independently operated under a prescribed number of operating
conditions utilizing wood chips. Fully integrated production runs
commenced February 2010;
- Lignol and PPG Industries, Inc. announced a Joint Development
Agreement for the development of commercial applications using
Lignol's HP-L(TM) lignin and lignin derivatives;
- On January 31, 2010, Lignol had cash, cash equivalents and short-term
investments on hand of $5.50 million plus funds available from
government grants totaling $8.74 million. The total of $14.24 million
in current and potential financial resources available to the Company
is expected to fund operations until at least the end of February
- On Febraury 15, 2010, Lignol and Novozymes, the world's leading
producer of industrial enzymes, announced a Memorandum of
Understanding in which the parties have established the framework of
a multi-year collaboration agreement to optimize the latest
generation of Novozymes' enzymes for use in Lignol's cellulosic
"During the quarter, we completed significant improvements to our pilot plant and successfully achieved major milestones in the development of high purity lignin deriviatives for industrial applications," said Ross MacLachlan, President and CEO of Lignol. "Our goal this quarter is to operate the pilot plant in a fully integrated fashion such that we can begin to optimize the production of cellulosic ethanol as well as the quality and performance of related biochemicals. We will also continue to develop plans for a commercial demonstration project in collaboration with strategic stakeholders and advance the development of commercial applications for our unique biochemicals and biomaterials."
Three Months Ended January 31, 2010
For the three-month period ended January 31, 2010 ("Q3 FY10"), Lignol reported a loss of $2.30 million, or $(0.05) per share (basic and fully diluted) compared to a loss of $1.88 million for the same period in FY09. The increase in loss was primarily due to a increase in Research and Development ("R&D") expenses which was only partially offset by a decrease in General and Administration ("G&A") expenses.
Q3 FY10 total gross R&D related costs (before government and corporate contributions), totaled $2.39 million compared to $1.96 million for the same period in FY09. Of these amounts, $0.26 million and $0.30 million for Q3 FY10 and Q3 FY09 respectively, were capitalized; and $2.13 million and $1.66 million for Q3 FY10 and Q3 FY09 respectively, were expensed. The 44% increase in R&D expenses in the current quarter reflects the increased costs associated with operating Lignol's integrated industrial-scale biorefinery pilot plant. In Q3 FY09 the pilot plant was still under construction.
G&A expenses decreased by 35% to $0.49 million in Q3 FY10 from $0.76 million in the same period in FY09, largely due to a reduction in non-cash stock-based compensation charges.
Government and corporate contributions for the three months ended January 31, 2010 totaled $0.85 million, which was slightly lower than the $1.09 million reported in Q3 FY09. Of these amounts, $0.13 million and $0.44 million for Q3 FY10 and Q3 FY09 respectively were credited against plant and equipment on the balance sheet, and $0.72 million and $0.65 million for Q3 FY10 and Q3 FY09 were credited against the statement of operations. The decrease in total government and corporate contributions of $0.24 million is due to a reduction in activities eligible for reimbursement under current funding programs and the completion of certain funding arrangements during the current and prior periods.
Nine months ended January 31, 2010
For the nine-month period ended January 31, 2010 Lignol reported total expenses before government and corporate contributions of $8.81 million compared to $7.90 million for the same period in FY09. The 36% increase in R&D expenses was partially offset by an increase of 39% in government and corporate contributions and a reduction of 41% in G&A expenses. As a result, Lignol reported a loss of $6.38 million, or $(0.13) per share (basic and fully diluted) compared to a loss of $5.99 million, or $(0.13) per share (basic and fully diluted) for the same period in FY09.
As at March 10, 2010, common shares outstanding totaled 49,297,286 and stock options outstanding totaled 5,404,645.
Liquidity and Capital Resources
As at January 31, 2010, the Company had cash, cash equivalents and short-term investments of $5.50 million and a working capital surplus of $3.43 million compared to $9.51 million and $8.58 million respectively as at April 30, 2009. The decreases reflect cash used in operations and for capital additions incurred in the first nine months of FY10, net of government and corporate contributions. Lignol continues to be eligible to receive a U.S. Department of Energy award of US$30 million to partially fund a proposed commercial demonstration plant. As at January 31, 2010, Lignol was eligible to receive future government funding of $5.34 million from contracted agreements and $3.40 million from awards which have been announced, but have not yet been contracted. These funding awards are intended to be applied against future expenses incurred under various development programs, which are expected to be completed at various times before early 2012. Receipt of this additional funding is conditional upon meeting the obligations of related funding agreements and, in some cases, to completion of the funding agreements. The combination of $5.50 million in cash on hand at January 31, 2010 and such additional government grants brings the total of current and potential resources available to the Company to $14.24 million.
The Company believes that, factoring in the expected timeline of receipt of the funding from the various government agencies, the combination of funding sources noted above should be sufficient to fund its Baseline Operations until at least the end of February 2011, using the definition of "Baseline Operations" as set out in Lignol's Management's Discussion & Analysis of Financial Condition and Results of Operations ("MD&A") for the three and nine-month periods ended January 31, 2010. This is an improvement by two months over the previous forecast disclosed in the Company's MD&A for the three and six months ended October 31, 2009. This improvement is primarily due to an updated projection of expected capital expenditures over the next year. This forecast excludes funds from any potential new government grants or contributions from any potential new corporate partnerships. Lignol is actively seeking funding from additional government and corporate sources which, if obtained, would further extend the Company's projected operating runway for Baseline Operations past February 2011.
Lignol's complete financial statements for the three and nine-month periods ended January 31, 2010 and the related Management's Discussion & Analysis of Financial Condition and Results of Operations are available on the Company's website, www.lignol.ca, or at www.sedar.com under the Company's profile.
Lignol (TSX-V: LEC) is a Canadian company undertaking the development of biorefining technologies for the production of fuel-grade ethanol and other biochemical co-products from non-food cellulosic biomass feedstocks. Lignol's modified solvent based pre-treatment technology facilitates the rapid, high-yield conversion of cellulose to ethanol and the production of value-added biochemical co-products, including high purity HP-L(TM) lignins and lignin derivatives. HP-L(TM) lignin represents a new class of high purity lignin extractives (and their subsequent derivatives) which can be engineered to meet the chemical properties and functional requirements of a range of industrial applications that until now has not been possible with traditional lignin by-products generated from other processes. Lignol is executing on its development plan through strategic partnerships to further develop and integrate its core technologies on a commercial scale. Lignol also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with its biorefining technology. For more information about Lignol, please visit our website at www.lignol.ca.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
Caution concerning forward-looking statements:
Certain statements contained in this document may constitute forward-looking information within the meaning of applicable securities laws. Such forward-looking statements or information include, without limitation, statements or information about our ability to fund our Baseline Operations, the development status of our fully integrated biorefinery pilot plant in Burnaby, British Columbia, the planning and development of our previously proposed cellulosic ethanol commercial demonstration plant, our ability to exploit commercial opportunities and broaden our market opportunities for a range of cellulosic derivatives and environmentally sustainable biochemicals and our ability to pursue these opportunities with strategic partners. Often, but not always, forward-looking statements or information can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes" or variations of such words and phrases or words and phrases that state or indicate that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Such statements or information reflect Lignol's current views with respect to future events and are subject to certain risks, uncertainties and assumptions including, without limitation, our ability to establish the validity of our technology at the fully integrated biorefinery pilot plant scale, our ability to satisfy the conditions of existing government grants and to obtain new additional grants, our ability to finance and complete the development of the commercial demonstration plant, our ability to develop our products, our ability to obtain requisite regulatory approvals and our ability to enter into agreements with strategic partners on terms acceptable to us. Forward-looking statements and information are necessarily based upon a number of estimates and assumptions that, while considered reasonable by management, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Many factors could cause Lignol's actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements or information, including among other things, the technological challenges that remain to be surpassed in obtaining the necessary operating data from our fully integrated biorefinery pilot plant that is required prior to completing the next design scale-up of the technology, the complexity of the development of the commercial demonstration plant, financial market conditions which will effect Lignol's ability to finance its operations, risks relating to the protection of Lignol's core technology from infringement and those risk factors which are discussed elsewhere in documents that Lignol files from time to time with securities regulatory authorities. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements or information prove incorrect, actual results may vary materially from those described herein as intended, planned, anticipated, believed, estimated or expected. Except as required by law, the Company expressly disclaims any intention or obligation to update or revise any forward looking statements and information whether as a result of new information, future events or otherwise. All written and oral forward-looking statements and information attributable to us or persons acting on our behalf are expressly qualified in their entirety by the foregoing cautionary statements.
SOURCE Lignol Energy Corporation
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