COEUR D'ALENE, ID, Aug. 9 /CNW/ - WGI Heavy Minerals, Inc. (TSX: WG) today announced results for the second quarter and first half ended June 30, 2007. All dollar amounts are in United States dollars unless otherwise indicated. A summary of key financial results for the quarter and first half is as follows:
Highlights - Revenues increased 31.6% for the quarter to $7.3 million from $5.5 million in the same period a year ago. Revenues for the first half of 2007 increased 27% to $13.5 million from $10.7 million in 2006. - Gross margin increased to 19.5% for the quarter from 12.6% in the same period last year. For the first half of 2007 gross margins increased to 22.9% from 9.7% a year ago. - The Company posted a net loss for the first half of $0.3 million or $0.01 per share. This has significantly improved from the year ago period's net loss of $2.8 million or $0.12 per share. - Generated cash flows of $0.3 million or $0.01 per share during the first half of 2007. - At June 30, 2007 the Company had a cash position (including short term investments) of $18.6 million.
Management Overview
Financially, the consolidated balance sheet and the Company's net cash position remain strong, our second quarter builds on the success of the first. Our systems and management performance are improving. We will continue to invest in better processes and systems. One area of growth for the company is its evolution from a pure producer/seller to one that purchases for resale as well as producing. We anticipate further growth from the sale of both minerals and parts sourced from others.
Very recently we have initiated a revised and improved long-range strategic analysis and planning effort throughout the company. All aspects of the business are being reviewed in detail. A template has been provided and we intend to improve both the communications and synergy between the operating portions of the company. As well, we shall look very carefully at our cost structure to determine better ways to gain value from our expenditures or to reduce them.
We do not expect immediate results. We do believe our investment and effort will provide the basis for developing ways of better managing and growing the company and, we expect, highly useful insights into creative ways of enhancing shareholder value in the next fiscal year.
Events In India
The political and legal environment vis-a-vis mining in India continues to evolve. It has been reported that the Indian National Cabinet will approve and, later this year, the Indian Parliament will proclaim the expected changes to the Mining act, including the Beach Sands portions thereof. We have been anticipating that for 18 months now. Should it happen, the position of foreign investors in mining in India should improve significantly. However, there continue to be stresses between the desires of the central government to foster foreign investment and the development of the Indian mining sector and the more parochial interests at the state and local level. It is to be expected that the national interest will prevail. We shall be patient. We intend to stay the course and to do all we can to ensure and benefit from constructive changes as they occur.
Meanwhile, we are vigorously defending our interests and the rule of law in India by taking the State of Andhra Pradesh et al to court to prevent the state, the Andhra Pradesh Minerals Development Corporation and some private companies from unlawfully usurping our position in fact and law and thus our ability to obtain leases applied for and to conduct our mining operations. Thus far, we have been successful in our proceedings and have received several positive judgments.
Outlook
For 2007, the company is targeting a modest sales increase. The Company continues to look for additional land to strengthen its reserves in Tamil Nadu, India 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 expected. The Andhra Pradesh, India project may take the Company several years to sort out the critical issues before the Company.
The Company is making strides in its effort to return to profitability at its Emerald Creek Garnet facility through reinvestment in exploration and in the facility and improved procedures. The Company is seeing continued improvement in volume and profitability from International Waterjet Parts. Sales volumes in Europe and the Far East continue to grow in all product lines.
The focus of the Company continues to be on increasing lease holdings and the efficiency of our operations and improving shareholder value. Progress is being made in areas of opportunity in all business units of the Company to continue this improvement.
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, 2007 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 www.sedar.com.
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
(in thousands, except for per share amounts)
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As at
As at December
June 30, 31,
Consolidated Balance Sheet 2007 2006
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Assets
Cash and Short term deposits 18,613 18,321
Other Current Assets 8,153 8,136
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Total Current Assets 26,766 26,456
Property, plant and equipment 7,916 7,279
Goodwill and Intangible Assets 2,005 2,049
Other Assets - -
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Total Assets 36,688 35,784
Liabilities & Equity
Current Liabilities 5,022 4,226
Long-term debt 825 1,067
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Total Liabilities 5,847 5,293
Capital stock 53,388 53,432
Stock-based compensation 2,309 2,088
Deficit (24,843) (24,510)
Foreign currency translation account (13) (519)
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Total Equity 30,841 30,491
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Total Liabilities & Equity 36,688 35,784
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3 months 3 months 6 months 6 months
ended ended ended ended
Consolidated Statements of June 30, June 30, June 30, June 30,
Operations and Deficit 2007 2006 2007 2006
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Sales 7,287 5,537 13,506 10,674
Operating Costs 5,569 4,213 9,833 8,369
Depreciation, depletion and
amortization 299 629 574 1,268
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Gross Margin 1,419 696 3,099 1,037
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Gross Margin % 19.5% 12.6% 22.9% 9.7%
Expenses
Operating G&A 1,041 1,288 2,094 2,367
Corporate G&A 436 522 679 795
Interest Income (218) (205) (442) (403)
Interest Expense 33 40 76 92
Stock based compensation 120 598 221 728
Development costs 125 28 417 90
Other Expenses/(income) 124 79 187 102
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Total 1,661 2,350 3,232 3,771
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Loss before taxation &
Non-controlling interest (243) (1,654) (134) (2,735)
Taxes & Non-controling loss 108 20 200 98
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Loss for the period (351) (1,675) (334) (2,833)
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Basic and diluted loss per
common share $(0.01) $(0.07) $(0.01) $(0.12)
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3 months 3 months 6 months 6 months
ended ended ended ended
Consolidated Statements of June 30, June 30, June 30, June 30,
Cash Flows 2007 2006 2007 2006
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Cash flows from operating
activities 824 (801) 1,359 (1,577)
Cash flows from investing
activities (684) (280) (960) (768)
Cash flows from financing
activities (283) (466) (138) (635)
Effect of exchange reate on
cash and cash equivalents (32) 24 32 6
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Net increase (decrease) in cash
& ST Investments (174) (1,523) 292 (2,974)
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Cash $ ST Investments
- beginning of period 18,787 21,146 18,321 22,597
Cash & ST Investments
- end of period 18,613 19,623 18,613 19,623
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All figures stated in U.S. dollars unless noted otherwise.