WGI Heavy Minerals Announces 2007 Results

    COEUR D'ALENE, ID, March 31 /CNW/ - WGI Heavy Minerals, Incorporated
(TSX: WG) today announced results for the fourth quarter and year ended
December 31, 2007. Results have been filed and may be viewed at www.sedar.com.
A summary of key financial results for the quarter and year compared to last
year are as follows:


    -   Revenues increased 12.5% for the quarter to $6.3 million and
        increased 20.1% for the year to a record $26.6 million.
    -   Gross margin increased to 17.1% for the quarter from 13.6% in the
        same period last year. Gross margin increased to 21.1% for the year
        from 14.0% last year.
    -   The net loss for the quarter has increased to $0.9 million from last
        year's $0.7 million loss. The net loss for 2007 was $1.5 million or
        $0.06 per share compared to a loss of $4.0 million or $0.17 per share
        in 2006.
    -   At December 31, 2007 the Company had a cash position (including short
        term investments) of $17.3 million.

    "WGI continues to improve its performance operationally and in every
aspect of the business. These improvements are more significant as they come
in the face of changing ore bodies with lower and dirtier concentrations of
garnet, a situation encountered by many of our competitors as well. Further
mining and mineral processing improvements are required and are being
developed, requiring some modest investment. As and when we can open new ore
bodies our improved techniques will be very beneficial. Our waterjet and
European operations have grown nicely and are expected to continue to do so.
The Company continues to confront a political and regulatory context in India
that is actively unwelcoming, notwithstanding the rhetoric of a New India.
However, our positions have been, thus far, supported by the courts and we are
cautiously encouraged that we may yet see positive results for our efforts. We
shall continue to improve," said, Covell D. Brown Chairman and CEO.

    Results of Operations

    Revenues for 2007 increased 20.1 percent to $26.56 million, compared with
$22.11 million for 2006. Despite strengthening demand, garnet shipments, in
tons, increased only 3.6 percent due to production constraints in the U.S. and
India, caused by wet weather and lower production from declining concentration
of garnet in areas mined.
    However, WGI realized modestly higher garnet and abrasives prices, due to
industry-wide price increases. WGI also enjoyed a greater percentage of sales
from aftermarket ultra high pressure waterjet cutting machine replacement
parts. The Company's revenues come from the following products: Garnet (63%),
Waterjet Replacement Parts (18%), and Other Abrasives (19%).
    Gross profit margins increased to 21.1 percent in 2007, compared with
14.0 percent in 2006. Increased garnet prices were principally responsible for
higher gross margins. World-wide there has been a shortage of high quality
garnet in appropriate sizes. WGI has been able to produce desirable grades,
thus improving margins. This benefit was partially offset by increased
production costs in both the U.S. and Indian mining operations. These
increased productions costs in the U.S. operation were due to lower
concentrate of garnet and thus, the need to process more run of mine to
produce finished product. The increased production costs in India were due to
a combination of factors, principally higher energy costs and lower
concentrate of garnet.
    General and administrative expenses in 2007 increased 3.2 percent year
over year.
    The Company posted a net loss of $1.5 million, or $0.06 per share, for
2007, compared with a net loss of $4.0 million, or $0.17 per share, for 2006.

    4th Quarter Results

    For the fourth quarter of 2007, net sales increased 12.5 percent to
$6.36 million, compared with $5.64 million in the fourth quarter of 2006.
Higher garnet/abrasive volume compounded by higher prices and increased
waterjet parts drove the increased result.
    Gross profit margins for the fourth quarter were 17.1 percent in 2007,
compared with 13.6 percent in 2006. While adverse weather and increased fuel
costs increased production costs at both Transworld Garnet (Pvt.) Ltd. ("TGI"
or "Transworld") and ECG, these were partially offset by increased sales
prices of finished product in both operations for the quarter and continued
growth by Kominex.
    Operating expenses increased by 22 percent during the fourth quarter 2007
from 2006. Increased expenses are primarily due to increased costs of
$0.17 million for board fees, $0.04 million exploration, $0.05 million
maintenance cost at Andhra Pradesh.
    The Company recorded a foreign exchange gain of $0.04 in the fourth
quarter of 2007 compared to a foreign exchange gain of $nil in 2006.
    The resulting net loss was $0.8 million, or $0.03 per share for the
fourth quarter of 2007, compared to a net loss of $0.7 million, or $0.03 per
share, for the fourth quarter of 2006.

    Segmented Results

    Net sales of the Company's Indian operations distributed through the
Company's North American subsidiary increased 10 percent in 2007 to
$8.12 million. This was despite slightly decreased production. Profitability
was positively affected by higher selling prices. This was offset by higher
operating costs per unit, higher labour and transportation costs, and the
on-going development expense at Andhra Pradesh. This segment posted a
$0.31 million profit for the year (2006 - $0.95 million loss).
    The Company's European operation, Kominex Mineralmahlwerk Ermsleben GmbH
(Kominex), generated sales of $9.95 million, an increase of 40 percent from
the prior year. The increase was due to significant increases in volumes
across all product lines, including garnet acquired from WGI's subsidiary
Transworld Garnet India in the amount of $4.38 million. Kominex's earnings
before tax increased to $1.24 million in 2007 compared to $0.41 million in
    Revenue for the Company's U.S. mining operations, ECG, decreased
3 percent to $4.47 million, primarily due to fewer tons produced due to
production constraints stemming from both weather and lower garnet
concentrations. The loss for the year for ECG was $1.18 million, compared to a
loss of $1.03 million in 2006.
    Revenue for the Company's U.S. manufacturing operation, IWP increased to
$4.15 million in 2007 from $3.13 million in 2006. The increase of 32 percent
compared to 2006 was due to improved management and systems including
marketing and sales, strengthening demand and a broader product offering. The
net income for the year for IWP was $.07 million compared to a loss of
$0.19 million in 2006.

    Liquidity and Capital Resources

    Cash and short-term investments were reduced by $1.07 million in 2007.
This compares to a reduction of $4.28 million for the year of 2006. Cash flow
from operating activities was an inflow of $1.1 million for the twelve-month
period ended December 31, 2007. Cash outflows were primarily related to
capital expenditures.
    Working capital, including the current portion of long-term debt, was
$20.89 million at the end of 2007, compared to $22.23 million at year-end
2006, translating into current ratios of 5.52 and 6.26, respectively.
    Working capital decreased $1.34 million in 2007, largely due to a
$1.07 million reduction in cash and short-term deposits, which were used to
fund capital expenditures of $1.57 million, reduce debt of $0.53 million,
repurchase the Company's shares with $0.04 million and maintain operations. As
of the end of 2007, the Company's debt-to-equity ratio was 17.2 percent,
compared with 17.4 percent at year-end 2006.
    Capital expenditures of $1.57 million for 2007 included $0.22 million for
mineral properties and deferred development and $1.35 million for property,
plant and equipment. The Company anticipates budgeting somewhat more for
capital expenditures in 2008. The Company has sufficient resources to fund
these capital expenditures. Only immediately needed or higher return capital
items are budgeted.


    The Company continues to look for additional land and sources of supply
to strengthen its resources and to continue to manufacture in Tamil Nadu.
Recent results have been encouraging. Should this land and necessary mining
leases be obtained on a timely basis, improvements in profitable sales are
    The Andhra Pradesh, India project may take the Company several years to
sort out the critical issues before the Company. If the Company were to obtain
all of the licenses and permits immediately, the Company would perhaps not be
in a position to operate commercially until sometime in 2009. However, earlier
scenarios are also possible. The Company is not in a position to predict the
timing of operations in Andhra Pradesh.
    The Company is making strenuous efforts to return to profitability at ECG
through reinvestment in the facility and improved procedures. Significant
improvements in ECG's performance are not expected in 2008. The Company
expects continued improvement in volume and profitability from IWP.
Performance in Europe has seen increased profitable volumes in most product
lines. Sales in the Far East are growing and the Company anticipates modest
growth in sales and income for 2008.
    China is beginning to be a useful source of mineral supply as well as a
growing market. Strong efforts are being made to source more material from
this area.

    WGI Heavy Minerals, Incorporated is a fully integrated miner, producer,
and marketer of industrial-grade minerals and replacement parts for ultra-high
waterjet cutting systems. The Company's operations include mining and
processing facilities in Idaho, U.S. (Emerald Creek Garnet), Tamil Nadu, India
(Bengal Bay Garnet) and Ermsleben, Germany (Kominex) and a manufacturing
facility in Washington, U.S. (International Waterjet Parts).

    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)

                                                            As at      As at
                                                         December   December
    Consolidated Balance Sheet                           31, 2007   31, 2006
    Cash and Short term deposits                           17,250     18,321
    Other Current Assets                                    8,263      8,136
    Total Current Assets                                   25,513     26,456

    Property, plant and equipment                           8,024      7,279
    Goodwill and Intangible Assets                          1,971      2,049
    Total Assets                                           35,508     35,784

    Liabilities & Equity
    Current Liabilities                                     4,622      4,226
    Long-term debt                                            594      1,067
    Total Liabilities                                       5,216      5,293

    Capital stock                                          53,388     53,432
    Stock-based compensation                                2,497      2,088
    Deficit                                               (25,969)   (24,510)
    Foreign currency translation account                     (376)      (519)
    Total Equity                                           30,292     30,491
    Total Liabilities & Equity                             35,508     35,784

                                                           Twelve     Twelve
                                   3 months   3 months     months     months
                                      ended      ended      ended      ended
    Consolidated Statements of     December   December   December   December
     Operations and Deficit        31, 2007   31, 2006   31, 2007   31, 2006
    Sales                             6,346      5,639     26,560     22,113
    Operating Costs                   5,004      4,281     19,819     16,601
    Depreciation, depletion and
     amortization                       259        593      1,138      2,409
    Gross Margin                      1,083        766      5,603      3,103
    G&A                               1,690      1,488      6,247      6,085
    Interest Income                    (122)      (238)      (797)      (861)
    Interest Expense                     45         53        138        189
    Stock based compensation             40         77        409        897
    Development costs                   180         93        164        227
    Other Expenses/(income)             (17)        19        500        391
    Total                             1,816      1,492      6,661      6,927
    Loss before taxation &
     Non-controlling interest          (733)      (727)    (1,058)    (3,824)
    Taxes & Non-controlling loss         71         11        401        146
    Loss for the period                (804)      (738)    (1,459)    (3,970)
    Basic and diluted loss
     per common share                $(0.03)    $(0.03)    $(0.06)    $(0.17)

                                                           Twelve     Twelve
                                   3 months   3 months     months     months
                                      ended      ended      ended      ended
    Consolidated Statements of     December   December   December   December
     Cash Flows                    31, 2007   31, 2006   31, 2007   31, 2006
    Cash flows from operating
     activities                         (97)       139      1,096     (1,533)
    Cash flows from investing
     activities                       1,509       (680)     6,265     (1,675)
    Cash flows from financing
     activities                        (245)       (69)      (572)    (1,028)
    Effect of exchange rate
     on cash and cash
     equivalents                       (246)       (41)       (65)       (41)
    Net increase (decrease) in
     cash & ST Investments              921       (651)     6,724     (4,277)
    Cash & ST Investments -
     beginning of period             15,852     18,948     10,049     22,597
    Cash & ST Investments -
     end of period                   16,773     18,321     16,773     18,321

         All figures stated in U.S. dollars unless noted otherwise.

For further information:

For further information: Gloria Marks, CFO, 810 Sherman Ave., Coeur
d'Alene, ID 83814, U.S.A., (208) 666-6000 ext. 204, Fax (208) 667-7380,
www.wgiheavyminerals.com, E-Mail gloria@wgiheavyminerals.com; Covell Brown,
Chairman, (208) 699-8470, E-mail covell@wgiheavyminerals.com; Ed Kok, Investor
Relations, (208) 666-6000 ext 39, E-Mail ed@wgiheavyminerals.com

Organization Profile

WGI Heavy Minerals, Incorporated

More on this organization

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890