Crowflight Announces Second Quarter 2009 Financial Results

TORONTO, ONTARIO--(Marketwire - Aug. 13, 2009) - CROWFLIGHT MINERALS INC. ("Crowflight" the "Company") CML today announces its financial results for the second quarter of 2009. Complete interim financial statements and related Management's Discussion and Analysis will be filed under the Company's profile on www.sedar.com. All amounts are in Canadian dollars unless otherwise indicated. Q2 2009 Financial Highlights: - On June 10, 2009, the Company announced that, as of June 1st, commercial production was achieved at the Bucko Lake Nickel Mine (Bucko), commercial production being defined as greater than 60% mill nameplate capacity. Shipments of nickel concentrate continue to be delivered to Xstrata Nickel Plc ("Xstrata"). - The Company reported a net loss of $3,265,507 ($0.01 per share - diluted) for the quarter ended June 30, 2009 compared to a net loss of $1,529,939 (loss of $0.01 per share) for the quarter ended June 30, 2008. - For the quarter ended June 30, 2009, there was 254,139 pounds of commercial production nickel sold as compared to nil in the second quarter of last year as the mine was not yet in production. - Revenue for the quarter ended June 30, 2009 was $2.0 million compared to nil for second quarter last year. - Operating cash flow for the quarter ended June 30, 2009 was $1.5 million compared to operating cash flow of negative $1.1 million in the second quarter last year. - Loss for the quarter ended June 30, 2009 was $3.3 million or ($0.01) per share compared to net loss of $1.5 million or $($0.01) per share in the second quarter last year. - Commercial nickel sales settled during the quarter ended June 30, 2009 were realized at an average price of US$6.62 per pound. Nickel sales not settled as at June 30, 2009 were provisionally valued at the three month forward rate of approximately $6.79 per pound. The Company's performance is highly correlated to nickel metal prices as it continues to sell all its metal production into the spot markets. - Net working capital as at June 30, 2009 was negative $8.8 million (including cash and cash equivalents of $1.6 million) compared to $7.7 million as at December 31, 2008. - In April 2009, the Company closed two private placement financings. The Company raised $7,820,000 through the issuance of 46,000,000 units of the Company. Each Unit consists of one common share of Crowflight (a "Unit Share") and one-half of one common share purchase warrant (each full warrant, a "Warrant"), each full Warrant being exercisable to acquire one common share of Crowflight at a purchase price of $0.20 until April 30, 2011. As well, the Company issued 29,411,765 units for gross proceeds of $5,000,000. Each Unit consists of one common share of Crowflight (a "Unit Share") and one-half of one common share purchase warrant (each full warrant, a "Warrant"), each full Warrant being exercisable to acquire one common share of Crowflight at a purchase price of $0.21 until April 30, 2011. - Subsequent to the quarter's end, in July 2009, the Company announced a private placement financing to raise $15,000,000 through the issuance of 60,000,000 units of the Company with Pala Investments Holdings Limited ("Pala"). Each Unit consists of one common share of the Company and one-half of one common share purchase warrant (each full warrant, a "Warrant"), each whole Warrant being exercisable to acquire one common share of the Company at a price of $0.30 until July 23, 2011. Pursuant to the terms of the Offering, Mike Hoffman and Lewis MacKenzie resigned from the Company's Board of Directors, effective as of closing of the Offering. Pala nominated Michael Barton and Jan Castro to the Company's Board of Directors in their place. Please see the press release dated July 23, 2009 for details of this financing. 2009 Quarterly Bucko Mine Operations Production and Financial Data /T/ ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Q1-2009 Q2-2009 -------------------------------------- -------------------------------------- Pre- Pre- June production production ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Pre-production Operating Statistics: ---------------------------------------------------------------------------- Tonnes ore mined 31,091 42,224 18,377 ---------------------------------------------------------------------------- Average Nickel head grade (%Ni) 0.95% 1.25% 0.93% ---------------------------------------------------------------------------- Tonnes ore milled 29,303 35,490 18,390 ---------------------------------------------------------------------------- Average Recovery 31.97% 61.40% 62.62% ---------------------------------------------------------------------------- Nickel pounds: ---------------------------------------------------------------------------- Produced 138,956 441,200 234,920 ---------------------------------------------------------------------------- Payable sold 65,498 268,636 254,139 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Pre-production Metal Sales Revenue: ---------------------------------------------------------------------------- Average Ni price (US$/lb) $ 4.46 $ 5.73 ---------------------------------------------------------------------------- CAD/US exchange rate 1.26 1.15 ---------------------------------------------------------------------------- Nickel revenue(1) $ 368,318 $ 1,939,400 ---------------------------------------------------------------------------- Other metals revenue(2) $ 5,935 86,700 ---------------------------------------------------------------------------- Total metal revenue $ 374,253 $ 2,026,100 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Commercial Production Metal Sales Revenue: ---------------------------------------------------------------------------- Average Ni price (US$/lb) $ 6.79 ---------------------------------------------------------------------------- CAD/US exchange rate 1.16 ---------------------------------------------------------------------------- Nickel revenue 2,007,450 ---------------------------------------------------------------------------- Total metal revenue 2,007,450 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cost of sales 2,445,213 ---------------------------------------------------------------------------- Accretion - ---------------------------------------------------------------------------- Depreciation, depletion, and amortization 336,093 ---------------------------------------------------------------------------- Gross profit (773,856) ---------------------------------------------------------------------------- Net earnings (loss) (3,193,607) ---------------------------------------------------------------------------- Basic and diluted earnings (loss per share) $ (0.01) ---------------------------------------------------------------------------- Cash flow from operating activities 1,590,159 ---------------------------------------------------------------------------- USD Cash Cost of sales per pound sold(2,3) $ 8.28 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- 1. Includes settlement of Q1 pre-production sales 2. Other metal revenue is recorded as an offset to COGS in the Company's financial statements 3. Non-GAAP Measure This MD&A refers to cash cost per pound which is not a recognized measure under Canadian GAAP. This non-GAAP financial measure does not have any standardized meaning prescribed by Canadian GAAP and is therefore unlikely to be comparable to a similar measure presented by other issuers. Management uses this measure internally. The use of this measure enables management to better assess performance trends. Management understands that a number of investors and others who follow the Company's performance assess performance in this way. Management believes that this is a better indication of its expected performance in future periods. This data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with Canadian GAAP. /T/ Outlook In late June, the mill throughput was negatively affected due to a ground failure in the drift accessing the main ore stope, which necessitated the driving of a new access into the stope containing blasted and broken ore. The mill subsequently started up again on August 4, 2009. As a result of this and slower than anticipated mine ramp and underground development, Crowflight has revised its 2009 guidance from 326,000 tonnes of 1.59% nickel to recover 7.9 million pounds of payable nickel to 144,000 tonnes of 1.65% nickel to recover approximately 4.1 million pounds of payable nickel. Average operating cash cost2 (after declaration of commercial production) is revised to US$4.80 - 5.25 per pound at an exchange rate of 1.10 to 1.00 Canadian to the US dollar. Crowflight currently estimates capital requirements for the remainder of 2009 to be approximately $12.5 million. Mike Kelly commented "Commercial production was achieved in May when the mill throughput averaged just over 600 tonnes per day and was a critical milestone for the operation. However the "ramp up" to full production of 1,000 tonnes per day on a sustainable basis requires additional mine development that is currently ongoing. It is anticipated that by first quarter 2010 the mine will be sufficiently developed and have adequate working places (stopes) available to sustain the full production rate of at least 1,000 - 1,200 tonnes per day." Qualified Person/Quality Control Procedures This press release has been prepared and reviewed by Mr. Greg Collins, P.Geo. (APGO/APEGM) and VP Exploration of Crowflight, a Qualified Person under the National Instrument 43-101 guidelines. Crowflight Minerals -- Canada's Newest Nickel Producer Crowflight Minerals Inc. CML is a Canadian junior mining company that is producing nickel at the Bucko Lake Nickel Mine near Wabowden, Manitoba. Crowflight began full commercial production at Bucko in the second quarter of 2009. The Company is also focused on nickel, copper and Platinum Group Mineral (PGM) projects in the Thompson Nickel Belt and Sudbury Basin. Cautionary Note on Forward-Looking Information This press release contains forward-looking statements under Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the Company's development potential and timetable of the Company's properties, including the Bucko Lake Project; the future price of nickel and other minerals; the estimation of mineral reserves and mineral resources; conclusions of economic evaluations; the realization of mineral reserve estimates; the timing and amount of estimated future production; costs of production; capital expenditures; success of exploration activities; mining or processing issues; currency exchange rates; government regulation of mining operations; and environmental risks. Generally, forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are based on the opinions and estimates of management as of the date such statements are made. Estimates regarding the anticipated timing, amount and cost of mining at the Bucko Lake Project are based on assumptions underlying mineral reserve and mineral resource estimates and the probability of realizing such estimates that are set out herein. Capital and operating cost estimates are based on extensive research of the Company, purchase orders placed by the Company to date, recent estimates of construction and mining costs and other factors that are set out herein. Production estimates are based on mine plans and production schedules, which have been developed by the Company's personnel and independent consultants. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks related to: unexpected events and delays during construction, expansion and start-up; variations in mineral grade and recovery rates; receipt and revocation of government approvals; timing and availability of external financing on acceptable terms; actual results of current exploration activities; changes in project parameters as plans continue to be refined; future prices of minerals, particularly nickel; failure of plant, equipment or processes to operate as anticipated; reliance on joint venture partners; accidents, labour disputes and other risks of the mining industry. Although management of the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company does not undertake to update any forward-looking statements, except in accordance with applicable securities laws. Further information is available on the Company's website at www.crowflight.com. /T/ CONSOLIDATED BALANCE SHEETS As at ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- June 30, December 31, 2009 2008 ASSETS (unaudited) (audited) Current Cash and cash equivalents $ 1,658,745 $ 10,607,543 Restricted cash - 2,999,998 Amounts receivable 2,877,742 607,125 Inventory 1,895,225 268,285 Prepaid expenses and deposits 244,199 138,463 Derivative asset - 8,668,392 ---------------------------------------------------------------------------- 6,675,911 23,289,806 Deposits and advances 534,709 536,709 Property, plant and equipment 157,914,985 109,241 Derivative assets - - Exploration and development property and deferred expenditures 16,736,098 153,939,715 ---------------------------------------------------------------------------- $ 181,861,703 $ 177,875,471 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- LIABILITIES Current Accounts payable and accrued liabilities $ 14,117,234 $ 14,950,385 In-process working capital facility 965,643 - Current portion of long term debt - - Equipment leases 35,730 48,129 Derivative liability 349,085 624,223 ---------------------------------------------------------------------------- 15,467,692 15,622,737 Equipment leases 92,412 107,286 Long term debt - 7,600,000 Asset retirement obligations 918,387 359,000 Future income tax liability 26,757,000 24,139,000 ---------------------------------------------------------------------------- 43,235,491 47,828,023 ---------------------------------------------------------------------------- SHAREHOLDERS' EQUITY Common shares 106,366,145 99,289,864 Warrants 7,528,173 4,944,374 Contributed surplus 14,146,758 13,485,751 Retained Earnings 10,585,136 12,327,459 ---------------------------------------------------------------------------- 138,626,212 130,047,448 ---------------------------------------------------------------------------- $ 181,861,703 $ 177,875,471 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- These financials should be read in conjunction with the Notes and Management's Discussion and Analysis available online at www.sedar.com and on the Company's website at www.crowflight.com. Consolidated Statements of Shareholders' Equity (unaudited) Common Shares Warrants ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- No. $ $ -------------------------------------------- Balance, December 31, 2007 249,978,487 86,671,512 2,025,712 - Private placement 39,680,000 15,251,000 - Value of warrants granted related to debt facility - - 3,719,479 Value of warrants to be granted - - 849,709 Exercise of warrants and broker warrants 1,115,836 446,334 - Valuation allocation on exercise of warrants - 118,742 (118,742) Exercise of stock options 2,530,000 569,531 - Valuation allocation on exercise of stock options - 979,566 - Stock based compensation - - - Flow through share tax effect - (3,563,000) - Value of broker warrants - (375,186) 375,186 Valuation allocation on expiry of warrants and broker warrants - - (1,906,970) Share issue costs - (1,198,635) - Tax effect of cost of issue - 390,000 - Income for the period - - - --------------------------------------------------------------------------- Balance, December 31, 2008 293,304,323 99,289,864 4,944,374 Private placement 75,411,765 12,820,000 - Value of warrants to be granted - (2,174,590) 2,174,590 Value of warrants granted related to debt facility - - 107,597 Stock based compensation - shares 355,812 71,164 - Stock based compensation - options - - - Flow through shares tax effect - (2,982,000) - Value of broker warrants - (301,612) 301,612 Share issue costs - (526,581) Tax effect of cost of issue - 169,900 - Income for the period - - - ---------------------------------------------------------------------------- Balance, June 30, 2009 369,071,900 106,366,145 7,528,173 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Contributed Accumulated Shareholders' Surplus Deficit Equity ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- $ $ $ ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Balance, December 31, 2007 10,193,512 (22,151,940) 76,738,796 Private placement - - 15,251,000 Value of warrants granted related to debt facility - - 3,719,479 Value of warrants to be granted - - 849,709 Exercise of warrants and broker warrants - - 446,334 Valuation allocation on exercise of warrants - - - Exercise of stock options - - 569,531 Valuation allocation on exercise of stock options (979,566) - - Stock based compensation 2,364,835 - 2,364,835 Flow through share tax effect - - (3,563,000) Value of broker warrants - - - Valuation allocation on expiry of warrants and broker warrants 1,906,970 - - Share issue costs - - (1,198,635) Tax effect of cost of issue - - 390,000 Income for the period - 34,479,399 34,479,399 ---------------------------------------------------------------------------- Balance, December 31, 2008 13,485,751 12,327,459 130,047,448 Private placement - - 12,820,000 Value of warrants to be granted - - - Value of warrants granted related to debt facility - - 107,597 Stock based compensation - shares - - 71,164 Stock based compensation - options 661,007 - 661,007 Flow through shares tax effect - (2,982,000) Value of broker warrants - - - Share issue costs (526,581) Tax effect of cost of issue - - 169,900 Income for the period - (1,742,323) (1,742,323) ---------------------------------------------------------------------------- Balance, June 30, 2009 14,146,758 10,585,136 138,626,212 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- These financials should be read in conjunction with the Notes and Management's Discussion and Analysis available online at www.sedar.com and on the Company's website at www.crowflight.com. CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT (unaudited) For the three and six months ended June 30, ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months Six months ended June 30, ended June 30, 2009 2008 2009 2008 ---------------------------------------------------------------------------- Revenue Nickel sales $ 2,007,450 $ - $ 2,007,450 $ - Operating costs and expenses Cost of sales (excludes accretion, depreciation, depletion and amortization) 2,445,213 - 2,445,213 - Depreciation, depletion and amortization 336,093 - 336,093 - ---------------------------------------------------------------------------- (773,856) (773,856) Other expenses Professional, consulting and management fees 707,173 1,218,541 1,291,467 1,937,882 General and office 703,061 127,356 827,527 199,644 Shareholder communications and investor relations 118,320 158,407 204,426 248,247 Travel 68,282 52,688 118,686 110,232 Interest expenses and bank charges 42,006 2,802 76,848 5,209 Amortization 201 1,437 1,154 4,123 ---------------------------------------------------------------------------- 1,639,043 1,561,231 2,520,108 2,505,337 ---------------------------------------------------------------------------- (Loss) before the undernoted (2,412,899) (1,561,231) (3,293,964) (2,505,337) Interest income 2,000 80,835 23,511 132,521 Interest on long term debt (481) (355,761) (48,673) (418,831) General exploration - - (50,000) - Debt facility transaction costs (383,142) (4,297) (383,142) (2,045,202) Write down of exploration property and deferred expenditures (50,000) - (50,000) - Accretion - (482,485) 57,416 (489,485) Recovery of expenditures - - 66,958 - Net gain (loss) on derivative instruments (349,085) - 1,741,471 - ---------------------------------------------------------------------------- Loss before income taxes (3,193,607) (2,322,939) (1,936,423) (5,326,334) Future income taxes (71,900) 793,000 194,100 956,000 ---------------------------------------------------------------------------- Loss for the period (3,265,507) (1,529,939) (1,742,323) (4,370,334) RETAINED EARNINGS/ (DEFICIT), beginning of period 13,850,643 (24,992,335) 12,327,459 (22,151,940) ---------- ---------- ---------- ---------- RETAINED EARNINGS/ (DEFICIT), end of period $ 10,585,136 $(26,522,274) $10,585,136 $(26,522,274) ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------- ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Earnings/(loss) per share - basic & diluted $ (0.01) $ (0.01) $ (0.01) $ (0.02) Weighted average number of shares - basic & diluted 319,225,711 263,221,172 319,225,711 256,914,970 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- These financials should be read in conjunction with the Notes and Management's Discussion and Analysis available online at www.sedar.com and on the Company's website at www.crowflight.com. CONSOLIDATED STATEMENTS OF CASH FLOWS unaudited For the three and six months months ended June 30, ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months Six months ended June 30, ended June 30, 2009 2008 2009 2008 ---------------------------------------------------------------------------- OPERATING ACTIVITIES: Net income/(loss) for the period $(3,265,507) $(1,529,939) $(1,742,323) $(4,370,334) Charges not affecting cash: Amortization 336,294 1,437 337,247 4,123 Stock-based compensation expense 352,374 1,016,030 717,921 1,538,587 Warrants issued on In-process working capital facility 107,597 - 107,597 - Accretion - 482,485 (57,416) 489,485 Debt facility transaction costs - 4,297 - 2,045,202 Capitalized interest - 355,761 - 418,831 Change in value of derivative instruments 349,085 - 8,393,254 - Future income tax recovery 71,900 (793,000) (194,100) (956,000) Net change in non-cash working capital 3,557,416 (604,891) 2,438,453 (1,120,426) ---------------------------------------------------------------------------- 1,509,159 (1,067,820) 10,000,633 (1,950,532) ---------------------------------------------------------------------------- FINANCING ACTIVITIES: Debt facility, net of transaction costs - 7,255,703 (7,600,000) 23,173,352 Common shares issued through private placements 7,293,420 10,184,706 7,293,420 10,184,706 Shares issued from exercise of warrants and options - 569,169 - 1,004,616 Payments on equipment leases (10,508) (20,235) (27,273) (47,344) ---------------------------------------------------------------------------- 7,282,912 17,989,343 (333,853) 34,315,330 ---------------------------------------------------------------------------- INVESTING ACTIVITIES: Exploration and development property, plant and equipment, and deferred expenditures (9,164,180) (19,150,500) (20,308,323) (35,920,758) (Increase) decrease in deposits and prepaid exploraton expenditure - 318,554 - 318,554 (Decrease)/Increase in accounts payable attributable to property development and exploration 420,045 (1,885,577) (1,307,253) 1,604,140 Release of restricted cash - - 2,999,998 - ---------------------------------------------------------------------------- (8,744,135) (20,717,523) (18,615,578) (33,998,064) ---------------------------------------------------------------------------- CHANGE IN CASH AND CASH EQUIVALENTS 47,936 (3,796,000) (8,948,798) (1,633,266) CASH AND CASH EQUIVALENTS, beginning of period $ 1,610,809 $ 11,167,522 10,607,543 9,004,788 ---------------------------------------------------------------------------- CASH AND CASH EQUIVALENTS, end of period $ 1,658,745 $ 7,371,522 $ 1,658,745 $ 7,371,522 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Cash and cash equivalents consist of: Cash 1,350,858 1,903,334 1,350,858 1,903,334 Cash equivalents 307,887 5,468,188 307,887 5,468,188 ---------------------------------------------------------------------------- $ 1,658,745 $ 7,371,522 $ 1,658,745 $ 7,371,522 ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- SUPPLEMENTAL INFORMATION: Warrants granted related to debt facility 107,597 - 107,597 3,719,479 Warrants granted as cost of issue 301,612 244,831 301,612 244,831 Stock based compensation charged to exploration properties - - 14,250 - Amortization of assets deferred to exploration properties 604 7,195 8,833 14,389 Interest received 2,000 80,392 23,511 138,803 Interest paid 9,969 828 60,520 158,221 Income taxes paid - - - - Common shares issued for settlement of accounts payable 5,000,000 - 5,000,000 - These financials should be read in conjunction with the Notes and Management's Discussion and Analysis, available online at www.sedar.com and on the Company's website at www.crowflight.com. TSX Trading Symbol: CML Total Shares Outstanding: 429.1MM Fully Diluted: 542.3MM 52-Week Trading Range: C$0.09 - $0.39 /T/