5N Plus Inc. Reports Results for the Second Quarter Ended June 30, 2012

MONTREAL, Aug. 7, 2012 /CNW Telbec/ - 5N Plus Inc. (TSX: VNP), the leading producer of specialty metal and chemical products, today reported financial results for the second quarter ended June 30, 2012. Numbers for the comparable period ended May 31, 2011 have been restated to reflect changes resulting from the implementation of IFRS and the adoption of the US dollar as the Company's functional and reporting currency.

• Impairment charges of $26.1 million were booked at the end of the quarter as the Company adjusted the value of its inventories to reflect significantly reduced net realizable values for certain products following abrupt declines in the prices of corresponding underlying commodities.
  
  
• Revenues for the second quarter 2012 increased by 15% to $140.1 million compared to $122.0 for the quarter ended May 31, 2011. Revenues for the first semester 2012 increased by 112% to $302.3 million compared to $142.6 million for the six-month period ended May 31, 2011.
  
  
• Net losses attributable to equity holders of 5N Plus the second quarter 2012 and the first semester 2012 were $21.9 million or ($0.29) per share and $17.0 million or ($0.23) per share respectively. Excluding impairment charges, adjusted net earnings¹ yielded a loss of $2.1 million or ($0.03) per share for the second quarter 2012 and earnings of $2.8 million or $0.04 per share for the first semester 2012. This compares with net earnings of $8.5 million or $0.14 per share and net earnings of $14.1 million or $0.26 per share for the three and six-month periods ended May 31, 2011 respectively.
  
  
• Net debt¹ amounted to $175.8 million at June 30, 2012 compared to $260.6 million at December 31, 2011 and decreased by $56.4 million in the second quarter 2012 and by $84.8 million in the first semester 2012. Total debt amounted to $187.6 million at June 30, 2012 compared to $341.9 million at December 31, 2011 and decreased by $90.5 million in the second quarter 2012 and by $154.3 million in first semester 2012.
  
  
• Negative EBITDA¹ of $20.5 million and $3.6 million in the second quarter 2012 and in the first semester 2012 are primarily attributable to impairment charges. AdjustedEBITDA¹ amounted to $5.6 million in the second quarter 2012 and $22.5 million in the first semester 2012. This compares to $20.0 million and $26.0 million in the three and six-month periods ended May 31, 2011 respectively.
  
  
• As at June 30, 2012, the backlog¹ of orders expected to translate into sales over the following twelve months stood at $189.0 million compared to $223.2 million as at December 31, 2011 and $215.6 million as at March 31, 2012.
  
  
• On June 6, 2012, the Company issued 12,903,613 stock units for net proceeds of $37.1 million. This led to an increase in shareholder equity which stood at $358.2 million as at June 30, 2012, up from $344.6 million as at March 31, 2012 and $339.2 million as at December 31, 2011.

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1} Non-IFRS Measures

Jacques L'Ecuyer, President and Chief Executive Officer, said "We saw relatively strong demand for most of our products during the quarter which enabled us to continue reducing working capital and debt levels through significant cash flow generation. In our Electronic Materials business unit, although sales of gallium and indium products were somewhat softer than in the previous quarter, partly because of the relocation of some of the production activities previously located at our Fairfield offices, sales to our main customers for solar products increased and we also made progress in our germanium-related activities. In our Eco-Friendly Materials business unit, we continued to increase market share with strong sales of bismuth-related products in a market which is continuing to grow, as efforts to replace lead accelerate."

Mr. L'Ecuyer continued, "Unfortunately, these positive developments were overshadowed from an earnings and revenue standpoint by two main factors. On the one hand, the quarter was characterized by sharp decreases in the prices of almost all of our underlying commodities, especially in the back-end of the quarter, which led to decreases in average selling prices and further impairment charges on our inventories at the end of the quarter. On the other hand, we also sold to our main customer in the solar market at lower margins than normal, such sales having been made from previously impaired units in accordance with the terms of our new agreement with the customer. Both factors severely impacted our earnings and revenue levels providing a somewhat distorted picture of the Company's overall performance. In this respect, we believe a more appropriate assessment would be that we are holding our ground and doing better than most of our competitors in a challenging environment. We expect earning levels to be more reflective of the Company's actual performance once both the underlying commodity pricing stabilizes and the inventory of impaired units has been used up, especially with respect to our contract with our main customer in the solar market."

Continuing, Mr. L'Ecuyer added, "Our decision to further strengthen our balance sheet through an equity raise of CDN $40 million on June 6, 2012 was largely determined by the relative uncertainty in the global economic environment and the Company's exposure to the solar and European markets. Regardless of its short-term impact, we are confident that this financing will deliver long-term shareholder value by enabling us to execute more effectively on our strategic growth plan which calls for further deleveraging and redeployment of capital into less volatile and higher value-added opportunities. The current year is thus key in many respects as we gradually transition the entire Company towards this business model and complete the full integration of former MCP activities, realigning the Company towards greater sustainability in our commercial practices and greater efficiencies throughout the group."

Mr. L'Ecuyer concluded, "Current outlook for the rest of the year and corresponding financial performance will be largely determined by underlying commodity pricing and the performance of the European economy. We remain committed to a further reduction in our working capital requirements and a corresponding decrease in our debt levels. Although we may continue to experience short-term volatility in our financial performance, we are confident that our Company remains well positioned to continue growing and to deliver increasing shareholder value. I would like to thank our employees for their efforts in these challenging times and for their commitment towards our plan of delivering a more efficient and sustainable organization, the positioning and skill set of which remains both remarkable and truly unique."

Webcast Information
5N Plus will host a conference call on Wednesday, August 8, 2012 at 8:00 am ET with financial analysts to discuss results of the second quarter ended June 30, 2012. All interested parties are invited to participate in the live broadcast on the Company's Web site at www.5nplus.com. A replay of the webcast and a recording of the Q&A will be available until August 31, 2012.

To participate in the conference call:

• Montreal area:  514-807-9895
• Toronto area:   647-427-7450
• Toll-Free :   1- 888-231-8191

Enter access code 17434059.

About 5N Plus Inc.
5N Plus is the leading producer of specialty metal and chemical products. Fully integrated with closed-loop recycling facilities, the Company is headquartered in Montreal, Québec, Canada and operates manufacturing facilities and sales offices in several locations in Europe, the Americas and Asia. 5N Plus deploys a range of proprietary and proven technologies to produce products which are used in a number of advanced pharmaceutical, electronic and industrial applications. Typical products include purified metals such as bismuth, gallium, germanium, indium, selenium and tellurium, inorganic chemicals based on such metals and compound semiconductor wafers. Many of these are critical precursors and key enablers in markets such as solar, light-emitting diodes and eco-friendly materials.

Forward-Looking Statements and Disclaimer
This press release may contain forward-looking information within the meaning of applicable securities laws. All information and statements other than statements of historical facts contained in this press release are forward-looking information. Such statements and information may be identified by words such as "about", "approximately", "may", "believes", "expects", "will", "intends", "should", "plans", "predicts", "potential", "projects", "anticipates", "estimates", "continues" or similar words or the negative thereof or other comparable terminology. Forward-looking statements are based on the best estimates available to 5N Plus at this time and involve known and unknown risks, uncertainties and other factors that may cause 5N Plus' actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. A description of the risks affecting 5N Plus' business and activities appears under the heading "Risks and Uncertainties" in Management's Discussion and Analysis for the fiscal year ended December 31, 2011 available on SEDAR at www.sedar.com. No assurance can be given that any events anticipated by the forward-looking information in this press release will transpire or occur, or if any of them do so, what benefits that 5N Plus will derive therefrom. In particular, no assurance can be given as to the future financial performance of 5N Plus. The forward-looking information contained in this press release is made as of the date hereof and 5N Plus undertakes no obligation to publicly update such forward-looking information to reflect new information, subsequent or otherwise, unless required by applicable securities laws. The reader is warned against placing undue reliance on these forward-looking statements.

SOURCE: 5N PLUS INC.