WGI Heavy Minerals announces second quarter 2008 results


    COEUR D'ALENE, ID, July 29 /CNW/ - WGI Heavy Minerals, Incorporated
(TSX: WG) today announced results for the second quarter and first half ended
June 30, 2008. All dollar amounts are in United States dollars unless
otherwise indicated. Results have been filed and may be viewed at

    Results of Operations

    Revenues for the six-month period ended June 30, 2008 increased 1% to
$13.6 million, compared with $13.5 million for the same period in 2007 due to
higher prices and growth across most product lines, led by 57% revenue growth
in other abrasives and 14% revenue growth in waterjet parts. Garnet revenues
declined 12%, but still make up the majority of sales at 61% of total sales.
Garnet sales volumes declined 28% due to lack of supply due to inclement
weather in India and Idaho. Waterjet replacement parts and other abrasives
each represent 19% of total sales.
    Gross profit margins decreased to 20% in the first six months of 2008
compared with 21% for the same period in 2007 despite the increases in sales
prices in garnet and other abrasives. While the gross profit margin increased
for most product lines during the second quarter of 2008, they were not enough
to offset the problems of the first quarter regarding the extreme cold
temperatures and snow in Idaho and at the same time, unseasonable rainfall and
flooding in India.
    Operating general and administrative expenses increased 15%
year-over-year due to increased foreign travel, professional fees, and
salaries. WGI incurred non-operating general and administrative expenses in
2008 related to the sale of our Indian operations, specifically legal fees of
$0.52 million and special committee fees of $0.16 million. In addition, the
Company incurred $0.34 million related directly to the Company's contested
annual general meeting of shareholders held in June. These one time costs
total $1.02 million. The remaining non-operating general and administrative
expenses increased 4% year over year.
    The Company posted a net loss of $1.40 million, or $0.06 per share, for
the first half of 2008, compared with a net loss of $0.33 million, or $0.01
per share, for the first half of 2007.
    "With the exception of our operations related to India and the costs
associated with the sale of Transworld Garnet India, all of our other
businesses improved over the prior quarter. Kominex improved on its 2008 first
quarter profits by $0.06, reporting a profit of $0.21 million for the second
quarter of 2008. Emerald Creek made a positive turn around posting a net
income of $0.12 million for the second quarter followed by International
Waterjet Parts which recorded a net income of $0.06 million," said President
and Interim CEO, Greg Emerson. "We are looking forward to continued
improvements from all of our operating entities and reduced administrative
costs after the close of the sale of our Indian assets in the third quarter of


    We are progressing with the sale of Transworld Garnet India (Pvt.)
Limited ("TGI"), as disclosed in our press release of June 11, 2008, for a
cash consideration of 836 million Rupees, approximately $19.5 million, to
V.V. Mineral, of Tamil Nadu, India. WGI's share of the proceeds is
approximately $17.3 million consisting of its 74% equity interest and the
repayment of debt financing. The exact amount of the proceeds to be received
by WGI will depend upon exchange rates of the Rupee to the US dollar at the
time of closing which is expected to be in August 2008.
    WGI has also signed a three-year distribution agreement with annual
renewals with V.V. Mineral covering garnet, ilmenite and other minerals that
may be present in the beach sands mined by V.V. Mineral. The distribution
agreement provides WGI with an assured minimum supply of 60,000 metric tons
annually of garnet, which is a significant increase over current production
rates. Garnet grades and quality levels will be consistent with material
currently supplied to WGI by TGI. Additional quantities of garnet will be
supplied as V.V. Mineral's capacity expands. In addition, WGI will act as a
broker for the sale of V.V. Mineral's ilmenite products and will have first
opportunity to negotiate contractual arrangements for other minerals with V.V.
Mineral once production begins.
    The Board of Directors of WGI is currently intending that, following the
closing of the sale to V.V. Mineral, the Board will distribute $0.80 per share
in cash to the Company's shareholders.
    WGI is targeting a modest sales increase for the remaining of 2008. The
Company continues to look for additional property and sources of supply to
strengthen its worldwide resources.
    Management of WGI does not expect to incur further administrative costs
related to the sale of TGI after the closing of the sale, anticipated in the
third quarter of 2008.
    The Company is continuing to make production improvements at its Emerald
Creek Garnet facility through some reinvestment in the facility and improved
operating methods. ECG has planned new exploration activities for the summer
and fall of 2008. The Company is continuing to make production improvements at
IWP to support its expanding sales. Sales from Kominex's product lines are
expected to grow since capacity for these products has increased due to the
installation of new equipment in June.
    WGI's waterjet business has a relatively small market share in an
expanding global waterjet market. The opportunity is significant. Accordingly,
management is currently evaluating several emerging opportunities, including
new waterjet technology, lean manufacturing concepts, and potential

    Management's Discussion and Analysis

    The Company's unaudited consolidated financial statement and the
management's discussion and analysis for the six months ended June 30, 2008
are available on the Company's website at www.wgiheavyminerals.com. Additional
information related to the Company is also available on the SEDAR website at

    WGI Heavy Minerals, Inc. 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

                                                          June 30,   Dec. 31,
    Consolidated Balance Sheet                               2008       2007
    Cash and Short term deposits                           15,195     16,921
    Other Current Assets                                    7,369      7,410
    Assets of discontinued operations                       1,098      1,182
    Total Current Assets                                   23,662     25,513

    Property, plant and equipment                           5,082      4,389
    Goodwill and Intangible Assets                          1,919      1,971
    Other Assets                                                -          -
    Non-Current assets of discontinued operations           3,477      3,635
    Total Assets                                           34,140     35,508

    Liabilities & Equity
    Current Liabilities                                     4,039      3,879
    Curremt Liabilities of discontinued operations            821        743
    Long-term debt                                            391        594
    Total Liabilities                                       5,251      5,216

    Capital stock                                          53,388     53,388
    Stock-based compensation                                2,672      2,497
    Deficit                                               (27,374)   (25,969)
    Foreign currency translation account                      203        376
    Total Equity                                           28,889     30,292
    Total Liabilities & Equity                             34,140     35,508
                 (in thousands, except for per share amounts)

                       WGI Heavy Minerals, Incorporated

                            Financial Information
                 (in thousands, except for per share amounts)

                                          For the               For the
                                    three months ended     six months ended
                                    6/30/08    6/30/07    6/30/08    6/30/07
                                  --------------------- ---------------------
    Consolidated Statements of
     Operations and Deficit
    Sales                             6,821      7,242     13,598     13,453
    Operating Costs                   5,052      5,722     10,521     10,279
    Depreciation, depletion,
     and amortization                   208        172        393        330
                                  --------------------- ---------------------
    Gross Margin                      1,561      1,348      2,684      2,844
                                  --------------------- ---------------------
    Gross Margin %                    22.9%      18.6%      19.7%      21.1%

    Operating G&A                     1,052        944      2,151      1,849
    Corporate G&A                     1,236        549      1,959        850
    Interest Income                     (84)      (212)      (228)      (427)
    Interest Expense                     22         29         43         67
    Stock based compensation             77        120        174        221
    Development costs                     2         27          7        129
    Other Expenses (Income)             (35)       (25)       (50)       (12)
                                  --------------------- ---------------------
    Total                             2,270      1,432      4,056      2,677
                                  --------------------- ---------------------

    Loss from operations before
     taxation                          (709)       (84)    (1,372)       167

    Provision for income taxes           73        108        129        200
                                  --------------------- ---------------------
    Loss from operations for
     the period                        (782)      (192)    (1,501)       (33)

    Loss from discontinued
     operations                          61       (159)        96       (301)
                                  --------------------- ---------------------

    Loss for the period                (721)      (351)    (1,405)      (334)
                                  --------------------- ---------------------
                                  --------------------- ---------------------

    Basic and diluted loss
     per common share                ($0.03)    ($0.01)    ($0.06)    ($0.01)

    Consolidated Statements               For the               For the
     of Cash Flows                  three months ended     six months ended

                                    June 30,   June 30,   June 30,   June 30,
                                       2008       2007       2008       2007
                                    --------   --------   --------   --------
    Cash flows from operating
     activities                    $   (256)  $    862   $   (494)  $  1,403
    Cash flows from investing      $   (766)  $   (684)  $   (985)  $   (960)
    Cash flows from financing      $    391   $   (283)  $    (77)  $   (138)
    Effect of exchange rate
     changes on Cash & Cash Eq.    $   (118)  $    (69)  $   (166)  $    (12)
                                  --------------------- ---------------------
                                  --------------------- ---------------------
    Inc./(Dec.) in Cash and
     ST Inv.                       $   (749)  $   (174)  $ (1,722)  $    293
                                  --------------------- ---------------------
    Beginning Cash & ST
     Investments                   $ 15,800   $ 18,787   $ 16,773   $ 18,321
                                  --------------------- ---------------------
    Ending Cash & ST
     Investments                   $ 15,051   $ 18,613   $ 15,051   $ 18,613
                                  --------------------- ---------------------
                                  --------------------- ---------------------

         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) 770-2204, Fax (208) 667-7380,
www.wgiheavyminerals.com, E-Mail gloria@wgiheavyminerals.com; Greg Emerson,
Interim CEO, (208) 770-2202, E-mail greg@wgiheavyminerals.com; Ed Kok,
Investor Relations, (208) 770-2208, E-Mail info@wgiheavyminerals.com

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WGI Heavy Minerals, Incorporated

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