SWEF TERRAWINDS RESOURCES CORP. Files Second Quarter Financial Results

TORONTO, Aug. 27 /CNW/ - SWEF TERRAWINDS RESOURCES CORP. (the "Company") today has filed with Canadian securities regulators its interim financial statements and Management's Discussion and Analysis ("MD&A") for the three and six month periods ended June 30, 2010 and 2009. These documents will be available at www.sedar.com and www.sweflp.com.

On January 16, 2008, March 10, 2008, April 29, 2008, August 29, 2008, November 13, 2008, December 1, 2008, March 26, 2009 and July 24, 2009 management provided instructions to shareholders regarding the process for submitting tax indemnity claims and the status of the claims process. Distributions of the funds held in trust by the Agent have commenced as the relevant taxation authorities have begun providing individual reassessments for the 2005 tax year allowing shareholders to make their tax indemnity claims. Further information is available at www.sweflp.com and www.terida.com/paymentagent.

Significant Events

On January 4, 2008, the Company entered into a tax indemnity payment agent agreement with a tax indemnity agent (the "Agent") whereby the $24,490,816 tax indemnity fund was paid to the Agent to be held in trust for SWEF Terrawinds. The tax indemnity payment agreement had an original term of 30 months from closing and expires on June 30, 2010. The Board of Directors has extended the tax indemnity payment agreement to July 31, 2012. The agreement is extendible further at the option of the Board of Directors.

Results of Operations

    
    Three Month Comparison
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Net loss for the three month period ended June 30, 2010 was $3.3 million compared to a net loss of $1.0 million for the same period in fiscal 2009. The increase in net loss of $2.3 million is due primarily to higher tax indemnity payments (and higher related future income tax recoveries) in the second quarter of 2010 compared to the second quarter of 2009.

Interest income for the three month periods ended June 30, 2010 and 2009 was insignificant due to low prevailing interest rates in both periods.

Administrative costs for the three month period ended June 30, 2010 were $0.2 million compared to $0.1 million for the same period in fiscal 2009. The increase of $0.1 million is due to higher professional fees incurred in the second quarter of 2010 compared to the second quarter of 2009.

Capital tax expense for the three month periods ended June 30, 2010 and 2009 was insignificant due to the minimal taxable capital of the Company.

Future income tax recovery for the three month period ended June 30, 2010 was $0.9 million, compared to recovery of $0.3 million for the same period in fiscal 2009. The increase of $0.6 million is due to the higher amount of tax indemnity payments made in the second quarter of 2010 compared to the second quarter of 2009.

    
    Six Month Comparison
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Net loss for the six month period ended June 30, 2010 was $4.6 million compared to a net loss of $1.2 million for the same period in fiscal 2009. The increase in net loss of $3.4 million is due primarily to higher tax indemnity payments (and higher related future income tax recoveries) in the first six months of 2010 compared to the same period in 2009.

Interest income for the six month periods ended June 30, 2010 and 2009 was insignificant due to low prevailing interest rates in both periods.

Administrative costs for the six month period ended June 30, 2010 were $0.3 million compared to $0.4 million for the same period in fiscal 2009. The decrease of $0.1 million is due to fewer professional fees incurred in the first six months of 2010 compared to the same period in 2009.

Capital tax expense for the six month periods ended June 30, 2010 and 2009 was insignificant due to the minimal taxable capital of the Company.

Future income tax recovery for the six month period ended June 30, 2010 was $1.3 million, compared to recovery of $0.4 million for the same period in fiscal 2009. The increase of $0.9 million is due to the higher amount of tax indemnity payments made in the first six months of 2010 compared to the same period in 2009.

For further information: W. Judson Martin, Chairman, SWEF Terrawinds Resources Corp., [email protected]