MFC Industrial Ltd. Reports Results For The Third Quarter Of 2012
NEW YORK, Nov. 14, 2012 /PRNewswire/ -- MFC Industrial
Ltd. ("MFC" or the "Company") (NYSE: MIL) announces its results for
the nine- and three-months ended September
30, 2012 and provides an update on its recent corporate
developments. The Company's financial statements are prepared
in accordance with International Financial Reporting Standards.
Unless otherwise noted, all dollar amounts are in United States dollars.
We completed the previously announced take-over bid of Compton
Petroleum Corporation ("CPC"), a company that is active in the
production and processing of natural gas, natural gas liquids, and
to a much lesser degree crude oil. This transaction, which was
completed on September 6, 2012,
reflects our strategy to increase our captive commodities sources
and meets our stated investment objectives. With this acquisition
we recognized a gain of $230.1
million on negative goodwill. The gain on negative goodwill
arose as the fair value of the net assets acquired exceeded the
consideration we paid under the transaction. Our total assets as of
September 30, 2012 increased by 58%
to over $1.3 billion and our
shareholders' equity increased by 46% to $800.3 million from December 31, 2011.
HIGHLIGHTS
|
FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2012
|
■ Book value per share increased to
$12.79 as at September 30, 2012 from
$8.74 at the end of
2011.
|
■ We recognized a gain of $230.1
million on negative goodwill from the
acquisition. Total
assets now exceed $1.3 billion.
|
■ We expanded our commodities
platform to include energy with the completion
of the acquisition of
CPC on September 6, 2012.
|
■ Our net earnings for the nine
months ended September 30, 2012
increased to $28.8 million, or $0.46 per share.*
|
|
*Note: Excluding a gain of $230.1 million on
negative goodwill, or $3.68 per share recognized on the CPC
acquisition.
|
We are pleased with the expansion of our commodities platform
into energy, but now we must execute our plans to derive more than
just a basic commodity value from natural gas. We will be
proceeding to add value by utilizing our natural gas processing
plants to facilitate the production of energy and enhance and
create more value-added commodities. We are also working to expand
our global commodities business through further acquisitions, but
will continue to be responsible with our capital.
RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012
Total revenues for the nine-month period ended
September 30, 2012 decreased to
$373.9 million, compared to
$391.3 million in the first nine
months of 2011. Our income for the first nine months of 2012,
including a negative goodwill gain of $230.1
million, increased to $258.9
million, or $4.14 per share on
a diluted basis, from $21.6 million,
or $0.35 per share on a diluted basis
in the same period last year. Excluding the negative goodwill gain,
our income for the first nine months of 2012 was $28.8 million, or $0.46 per share.
We believe that net book value is key in valuing MFC and our net
book value is set forth in the table below:
NET BOOK
VALUE
|
|
September
30, 2012
|
December
31, 2011
|
Net book
value per share
|
$
12.79
|
$
8.74
|
Shares
outstanding
|
62,552,126
|
62,561,421
|
Revenues were slightly down in the first nine months of 2012
because of several factors. During the period, the Euro depreciated
versus the United States dollar by
9%. We also had lower volumes and substantial price reductions on
certain commodities, particularly in plastics. However, we were
able to offset some of the revenue reduction with new products.
Revenues for our commodities and resources
business were $345.8 million
for the nine months ended September 30,
2012, compared to $358.9
million for the same period in 2011. Included in our
commodities and resources business are the gross revenues generated
by our iron ore royalty interest which, for the nine months ended
September 30, 2012, were
approximately $19.7 million, compared
to $24.5 million in the same period
in 2011. A total of 2,295,819 tons of iron ore pellets and 42,484
tons of chips were shipped during the nine months ended
September 30, 2012, compared to
2,687,933 tons of iron ore pellets and 138,359 tons of concentrate
shipped in the same period in 2011. The reductions in pellet
shipments experienced during the nine months ended September 30, 2012, primarily resulted from
equipment failures at the concentrator plant. In light of this, the
mine owner, Cliffs Natural Resources, is now decreasing its
expected production volumes for 2012. Our revenues were also
affected by lower royalty rates due to the current pricing
environment for iron ore.
Revenues for our merchant banking business were
$14.3 million for the nine months
ended September 30, 2012, compared to
$19.5 million for the same period in
2011.
Other revenues, which encompass our corporate and
other investments, were $13.8 million
for the nine months ended September 30,
2012, compared to $12.9
million for the same period in 2011.
Costs of sales decreased to $302.9 million during the nine months ended
September 30, 2012 from $319.2 million for the same period in 2011.
Selling, general and administrative expenses increased
slightly to $32.4 million for
the nine months ended September 30,
2012 from $31.4 million
for the same period in 2011.
OVERVIEW OF OUR RESULTS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 2012
Our total revenues by operating segment for the nine months
ended September 30, 2012 and 2011 are
broken out in the table below:
REVENUES
All
amounts in thousands
|
|
September
30, 2012
nine
months
|
September
30, 2011
nine
months
|
Commodities and resources
|
$
345,822
|
$
358,876
|
Merchant
banking
|
14,290
|
19,468
|
Other
|
13,784
|
12,906
|
Total revenues
|
$ 373,896
|
$ 391,250
|
Our income from operations for each of the nine months ended
September 30, 2012 and 2011 are
broken out in the table below:
INCOME
FROM OPERATIONS
All
amounts in thousands, except per share amounts
|
|
September
30, 2012
nine
months
|
September
30, 2011
nine
months
|
Commodities and resources
|
$
22,830
|
$
25,156
|
Merchant
banking
|
246,691
(1)
|
14,062
|
Other
|
(5,095)
|
(13,868)
|
Income
before income taxes
|
264,426
|
25,350
|
Income tax
expenses
|
(417)
|
(1,089)
|
Resource
property revenue tax expenses
|
(4,010)
|
(3,215)
|
Net
(income) loss attributable to non-controlling interest
|
(1,103)
|
557
|
Net income
attributable to our
shareholders
|
$ 258,896 (1)
|
$ 21,603
|
Earnings per share
|
$
4.14
|
$ 0.35
(2)
|
|
|
Note:
|
(1)
Including a negative goodwill gain of $230.1 million.
|
|
(2) The
first half of 2011 included a one-time expense of $0.14 per
share.
|
FINANCIAL
The following table highlights certain selected key numbers and
ratios in order for our shareholders to better understand our
financial position as at September 30,
2012.
FINANCIAL
HIGHLIGHTS
All
amounts in thousands, except per share amount and
ratios
|
|
September
30, 2012
|
Cash and
cash equivalents
|
$
270,778
|
Short-term
securities
|
7,943
|
Trade
receivables
|
38,247
|
Current
assets
|
608,605
|
Total
assets
|
1,361,123
|
Current
liabilities
|
317,578
|
Working
capital
|
291,027
|
Current
ratio*
|
1.92
|
Acid test
ratio*
|
1.05
|
Total
liabilities
|
557,854
|
Shareholders' equity
|
800,266
|
Equity per
common share
|
12.79
|
|
|
*Note:
|
The
current ratio is calculated as current assets divided by current
liabilities.
|
|
The acid
test ratio is calculated as cash and cash equivalents plus
short-term cash deposits, short-term securities and receivables
less inventories divided by total current liabilities.
|
LIQUIDITY
As at September 30, 2012, we had
cash, short-term deposits and securities of $278.9 million. We monitor our capital on the
basis of our debt-to-adjusted capital ratio and long-term
debt-to-equity ratio.
LIQUIDITY
All
amounts in thousands
|
|
September 30, 2012
|
December
31, 2011
|
Total
debt
|
$
47,281
|
$
47,127
|
Less: cash
and cash equivalents
|
(270,778)
|
(387,052)
|
Net debt
(net cash & cash equivalents)
|
(223,497)
|
(339,925)
|
Shareholders' equity
|
800,266
|
546,623
|
LONG-TERM DEBT
The following table highlights selected key numbers and ratios
as of September 30, 2012 and
December 31, 2011.
LONG-TERM
DEBT
All
amounts in thousands, except ratio
|
|
September
30, 2012
|
December
31, 2011
|
Long-term
debt, less current portion
|
$
30,312
|
$
20,150
|
Shareholders' equity
|
800,266
|
546,623
|
Long-term
debt-to-equity ratio*
|
0.04
|
0.04
|
|
|
*Note:
|
The
long-term debt-to-equity ratio is calculated as long-term debt
divided by shareholders' equity.
|
CREDIT FACILITIES
We maintain various types of credit lines and facilities with
various banks, and most of these are short-term. These
facilities are used for day-to-day business, structured solutions
and various other activities in both the commodities and finance
areas.
As at September 30, 2012, we had
credit facilities aggregating $418.5
million as follows: (i) unsecured revolving credit
facilities aggregating $158.2 million
from banks; (ii) revolving credit facilities aggregating
$84.1 million from banks for
structured solutions, a special type of financing. The margin is
negotiable when the facility is used; (iii) a structured factoring
arrangement with a bank for up to a credit limit of $119.6 million for our commodities activities.
Generally, we may factor our commodity receivables upon invoicing
at the inter-bank rate plus a margin; and (iv) a foreign exchange
credit facility of $56.6 million with
a bank. All of these facilities are renewable on a yearly
basis.
CAPTIVE SOURCE OF FERROUS METALS UPDATE
During the nine months ended September
30, 2012, we and our partner Alberici Group, Inc. continued
to study the re-opening of the Pea Ridge Mine located in
Sullivan, Missouri (the "Mine"),
in which we own a 50% interest. As previously announced, we
completed an updated independent Canadian National Instrument
43-101 compliant technical report (the "Technical Report")
upgrading previously disclosed historic resources estimates to
current resource estimates. Behre
Dolbear and Company (USA),
Inc. ("Behre Dolbear"), our
independent technical consultants, completed the Technical Report.
The estimates include an in situ (originally present)
measured and indicated resource of 248.7 million short tons at
52.87% magnetic iron and 57.82% total iron and an inferred resource
of 15.8 million short tons at 53.67% magnetic iron and 57.64% total
iron based on a cut-off grade of 40% magnetic iron.
In completing the Technical Report, Behre Dolbear conducted, among other things, an
audit of historic drill hole data, a confirmatory re-sampling and
analysis program on the extensive library of drill core maintained
at the Pea Ridge Mine site and core kept at the Missouri Department
of Natural Resources and block modeling of the deposit. Readers
should refer to the full text of the Technical Report for further
information regarding the above resource estimates and the Mine, a
copy of which is available under the Company's profile at
www.SEDAR.com.
In addition to completion of the Technical Report, as part of
the work necessary to evaluate the Pea Ridge Mine for re-opening,
we engaged the consulting firm Geotechnology, Inc. to investigate
the depth and shape of the top and bottom of the subsidence cave
zone which is present above the Pea Ridge Mine deposit. This work
included direct measurements of the size and extent of the cave
zone within existing vertical drill holes. Having received the
results, we are, together with our consultants, considering
additional steps in the evaluation of the cave zone, including
re-drilling several existing holes above the mineralized zone, and
conducting a three-dimensional detailed seismic survey over the Pea
Ridge Mine site. We believe that the results of this work will be
useful in determining the best way to develop and mine the iron
deposit.
A necessary step in completing further analysis, including
feasibility studies and reopening the Pea Ridge Mine is dewatering
the existing underground mine workings. Dewatering activities have
been delayed, while we complete further preliminary analysis and
investigations regarding the reopening of the Mine.
EXPANDING OUR COMMODITIES PLATFORM INTO ENERGY
As a result of our acquisition of CPC on September 6, 2012, our commodities activities
have expanded to include energy through the development, production
and processing of natural gas and other hydrocarbons in
Western Canada. The majority of
such operations are located in the Deep Basin fairway of the
Western Canada Sedimentary Basin.
TRANSACTION
HIGHLIGHTS
|
|
This acquisition expands MFC's global commodities
platform to include energy.
|
Proved and probable natural gas, and natural gas
liquids reserves.
|
Future tax benefits.
|
In addition to developed properties, we have a
substantial undeveloped land bank.
|
We recognized $230.1 million of negative goodwill for
the nine months ended September
30, 2012 in connection with this
acquisition.
|
CPC's properties are principally located in the Deep Basin
fairway of the Western Canada Sedimentary Basin in Alberta and provide multi-zone potential for
future development and exploration.
LAND
POSITION (SELECTED
HIGHLIGHTS)
|
As of
September 30, 2012
|
Southern Plains, Alberta,
Canada:
|
448,000 gross acres with 87% working
interest
|
270 + developed drilling locations
|
Niton, Alberta, Canada:
|
89,600 gross acres with greater than 70% working
interest
|
250 + developed drilling locations
|
An additional 354,993 net
undeveloped acres
|
We have interests in substantial established infrastructure,
which allows flexibility to effectively manage area development and
adjust operations accordingly. Overall, we operate over 50,000
horsepower of compression totaling 200 million cubic feet per
day ("MMcf/d") of available field compression capacity, having over
85 MMcf/d of operated processing capacity with no mid-stream
requirements (not including the Mazeppa Gas Processing Plant), and
over 2,000 km of pipeline infrastructure in place. Key facilities
are as follows:
PROCESSING
FACILITIES AND INFRASTRUCTURE
|
|
Mazeppa Gas Processing Plant
The Plant is located in High River, Alberta, Canada
and processes both sweet and sour gas. It has a
production
capacity of 90 MMcf/d of sour natural gas and 45
MMcf/d of sweet natural gas. In the High River area, there
is
approximately 270 km of pipeline infrastructure in
place and gas compression capacity of 42.5 MMcf/d.
|
Southern Alberta Foothills
The Callum and Cowley Gas Processing Plants with 100%
plant ownership are currently capable of compressing
19 MMcf/d and ultimately processing 50 MMcf/d through
the two existing facilities with the addition of field
and/or
plant compression. There is currently over 60 km of
pipeline infrastructure in the operating area with minimal
third
party infrastructure in place.
|
High River
In the High River area there is 9,150 horsepower
installed with a gas compression capacity of 42.5 MMcf/d
and
270 km of pipeline infrastructure in place. Volumes
are all produced through the Mazeppa gas gathering
system
and sour gas processing plant.
|
Edson, Niton and McLeod Gas Processing
Plants
This foothills area property has compression capacity
of 23 MMcf/d utilizing over 6,400 horsepower, including
the CPC McLeod River Gas Processing Plant with 23
MMcf/d of capacity with 100% plant ownership.
Additionally, there is over 185 km of pipeline
infrastructure in the area.
|
Shallow Gas Property
Our shallow gas infrastructure consists of over 110
MMcf/d of compression capacity utilizing 30,000
horsepower with over 1,200 km of pipeline
infrastructure in place. Final processing gas volumes are through
a
third party in some cases, but in many cases directly
linked into the ATCO and Nova/TransCanada pipeline
systems at multiple sales locations.
|
As at September 30, 2012, these
interests included 909 producing natural gas wells, 36 producing
oil wells and a land position that includes approximately 355,000
net working interest undeveloped acres. Our operations include four
Deep Basin development gas plays: (i) the Rock Creek sands and other zones at Niton in
central Alberta; (ii) the
shallower Southern Plains sand play in southern Alberta; (iii) the Basal Quartz sands at
High River in southern
Alberta; and (iv) an exploratory
play at Callum/Cowley/Todd Creek in the Foothills area of southern
Alberta.
The Niton area includes multi-zone, liquids-rich, tight gas
plays with production to date primarily coming from Rock Creek and Ellerslie sandstones. We have a large number
of mineral agreements that cover specific zonal rights in this
area. We have an average 70% working interest in 89,600 gross acres
of land to the base of the Rock Creek Member of the Fernie Group.
The Niton area has other productive zones that provide
opportunities to expand our development base by moving into other
geological horizons. These zones lie above the Rock Creek and include the Wilrich and
Notikewin sandstones of the Upper Mannville and Spirit River
Group.
The Southern Plains and overlying Edmonton Horseshoe Canyon
shallow gas zones consist of under-pressured, essentially
water-free, multi-sand zones that averages 450 metres in thickness
per zone, totalling over 900 metres in thickness. The entire
section is comprised of multiple Belly River sands, silts, shales,
and coals, overlain by the Edmonton/Horseshoe Canyon coals that similarly
include sands, silts, and shales. With control of 448,000 gross
acres of land at an average 87% working interest, this land base
provides a significant multi-year, low risk natural gas drilling
inventory at two to four wells per section. Ample infrastructure is
in place in the area for future production increases.
Our High River asset is a low
to medium permeability Basal Quartz channel sandstone pool, which
is the southern Alberta extension
of the Lower Cretaceous Deep Basin gas trend.
In addition to its processing and natural gas assets, CPC has
tax benefit pools that we may be able to utilize. The following
table sets forth summary information regarding future tax benefit
pools as of December 31, 2011, along
with corresponding annual allowable utilization rates.
TAX BENEFIT POOLS
As of December 31, 2011, all
Canadian dollar amounts in millions
|
Pools
|
Amounts
|
Utilization rate per year
|
Canadian development expense
|
$
16.8
|
30%
|
Canadian exploration expense
|
331.8
|
100%
|
Capital cost allowance
|
122.9
|
25%
|
Share / debt issuance costs
|
23.1
|
20%
|
Total Pools
|
$
494.6
|
|
The following table summarizes our natural gas and crude oil
wells as of September 30, 2012:
GAS AND OIL WELLS
As of September 30, 2012
|
|
Net
interest
|
Natural
Gas (producing)
|
909
|
Natural
Gas (non-producing)
|
22
|
Crude Oil
(producing)
|
36
|
Crude Oil
(non-producing)
|
9
|
Total Wells
|
976
|
We have over 500 potential well locations and future drilling
may consist primarily of infill drilling. Due to the known
performance of neighbouring wells, the per well development costs,
operating costs and production volumes can be estimated with
reasonable confidence. As such, gas production from new drilling
can be planned in a targeted manner and in light of market
conditions.
We also have the ability to shut-in producing wells during
periods of low market prices, and to re-open such wells during more
favourable market conditions.
We may undertake a program of rationalization of wells,
including potential acquisitions of other distressed companies or
assets by selling or trading individual well interests with other
operators to maximize operating efficiencies in the field.
Since completing the acquisition, we have commenced the
integration of CPC into our global commodities supply chain
business. Our initial goals with this acquisition are, among other
things:
INITIAL
GOALS FOR
CPC
|
|
Utilizing our natural gas reserves to produce
energy.
|
Refinance bank debt to coincide with the actual
economic life of the acquired assets.
|
Sell non-core assets and reduce general and
administrative costs, to bring them into line with our future
plans.
|
Hedge the acquisition price risk to reduce the
exposure to volatility of natural gas prices.
|
Rationalize capital expenditures, well operations,
and processing facilities to maximize the long-term value of
the
assets. Increase volume and reduce costs by
optimizing infrastructure and adding third party
volumes.
|
Implement an opportunity fund, which will allow
strategic investors from Asia to participate in the development
of
long-term projects.
|
UPDATE ON OUR CAPTIVE SOURCES OF FERROUS METALS IN
INDIA
A court in India issued an
interim order on October 5, 2012
prohibiting mining activities in the State of Goa, India. The Order was passed
based on a petition filed by a non-governmental organization,
Goa foundation, in light of a
report which was tabled in Parliament on September 7, 2012, alleging that billions of
dollars were expropriated by illegal mining companies in the
region.
Our Indian subsidiary previously entered into agreements with
third party leaseholders of iron ore mines in Goa, India pursuant to which our subsidiary is
the sole contractor, and the leaseholders agreed to sell iron ore
to our subsidiary at a fixed price per ton based on the extraction
costs. Our subsidiary has provided materials on our activities and
environmental policies to the government and we are optimistic that
such activities are in full compliance.
The Government of Goa is under
strong pressure to expedite reopening all of mines as 75% of
Goa's economy depends on mining
revenue. The mining industry is the largest employer in the state
employing: 52,000 general truckers, 26,000 mining trucks, 7,000
bargemen and another 75,000 people directly employed in the mining
industry.
From a financial point of view, MFC has no debt and no cash flow
obligations associated with its iron sources in Goa. While there can be no assurance as to the
outcome of the proceedings, we view the suspension to be temporary
and are reasonably optimistic that iron deliveries will be resumed
before the mining season ends.
We are continuing the process of obtaining all the necessary
permits respecting the purchase and sale of iron ore from a new
mine owner that has a property located in Goa, India. We have entered into an agreement
with the mine owner. The new property is in very close
proximity to our existing iron ore sources in Goa.
CORPORATE TAXATION
We are a company that strives to be fiscally responsible.
Corporate income taxes paid in cash were approximately $2.6 million for the nine months ended
September 30, 2012.
ANNUAL CASH DIVIDEND
To date, we have completed the payment of our 2012 cash
dividend, having made the following divided payments to our
shareholders: (i) $0.05 per share on
February 10, 2012 to shareholders of
record on January 27, 2012; (ii) $0.05 per share on April
10, 2012 to shareholders of record on March 30, 2012;
(iii) $0.06 per share on July 13, 2012 to shareholders of record on
July 2, 2012; and (iv) $0.06 per share on October
26, 2012 to shareholders of record on October 15, 2012. This represents a 10% increase
over our 2011 dividend.
COMMENTS
Chairman Michael Smith commented:
"The first nine months of 2012 were a time of turning challenges
into opportunities. These opportunities have allowed us to expand
and diversify our commodities platform, which offers opportunities
for growth and the potential for significant contributions to the
economics of the Company in a recovering economy."
Mr. Smith concluded: "Thus far in 2012, we have focused on
increasing our efforts in acquiring undervalued captive resource
assets and operating businesses in the Americas and Asia, as well as streamlining our existing
operations. Our most important overall strategy has been to expand
into higher-margin commodities projects."
Shareholders are encouraged to read the entire Form 6-K, which
includes our unaudited financial statements and management's
discussion and analysis for the three and nine months ended
September 30, 2012 and was filed with
the Securities and Exchange Commission ("SEC") and Canadian
securities regulators today, for a greater understanding of the
Company.
Today at 10:00 a.m. EDT
(7:00 a.m. PDT), a conference call
will be held to review MFC's announcement and results. This call
will be broadcast live over the Internet at
www.mfcindustrial.com. An online archive will be available
immediately following the call and will continue for seven days.
You may also to listen to the audio replay by phone by dialing: 1
(877) 344 7529, using conference number 10020544. International
callers dial: 1 (412) 317 0088.
About MFC Industrial Ltd.
MFC is a global commodity supply chain company and is active in
a broad spectrum of activities related to the integrated
combination of commodities and resources, including commodity and
resource interests, and structured finance, and proprietary
investing. To obtain further information on the Company, please
visit our website at: http://www.mfcindustrial.com.
Cautionary Note on Resource Estimates
As a reporting issuer in Canada, the Company is required by Canadian
law to provide disclosure in accordance with NI 43-101.
Accordingly, you are cautioned that the information contained in
this press release may not be comparable to similar information
made public by U.S. companies under the
United States federal securities laws and the rules and
regulations thereunder. In particular, the terms "measured
resource", "indicated resource" and "inferred resource" as used in
this press release are not defined in SEC Industry Guide 7 and are
normally not permitted to be used in reports and registration
statements filed with the SEC. Investors are cautioned not to
assume that any part or all of mineral deposits in these categories
will ever be converted into mineral reserves with demonstrated
economic viability. In addition, the estimation of inferred
resources involves far greater uncertainty as to their existence
and economic viability than the estimation of other categories of
resources. Under Canadian rules, estimates of inferred mineral
resources may not form the basis of feasibility or pre-feasibility
studies, except in rare cases. U.S. investors are cautioned not to
assume that part or all of an inferred resource exists, or is
economically or legally minable.
Disclaimer for Forward-Looking Information
This document contains statements which are, or may be deemed
to be, "forward-looking statements" which are prospective in
nature, including, without limitation, statements regarding our
future plans, including in respect of CPC, implementation of
current strategies and our plans for our projects and the outcome
of proceedings. Forward-looking statements are not based on
historical facts, but rather on current expectations and
projections about future events, and are therefore subject to risks
and uncertainties which could cause actual results to differ
materially from the future results expressed or implied by the
forward-looking statements. Often, but not always, forward-looking
statements can be identified by the use of forward-looking words
such as "plans", "expects" or "does not expect", "is expected",
"scheduled", "estimates", "forecasts", "projects", "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", "should", "would",
"might" or "will" be taken, occur or be achieved. Such statements
are qualified in their entirety by the inherent risks and
uncertainties surrounding future expectations. Such forward-looking
statements involve known and unknown risks, uncertainties and other
factors which may cause our actual results, revenues, performance
or achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Important factors that could cause our
actual results, revenues, performance or achievements to differ
materially from our expectations include, among other things:
(i) periodic fluctuations in financial results as a result of
the nature of our business; (ii) commodities price volatility;
(iii) economic and market conditions; (iv) competition in our
business segments; (v) decisions and activities of operators of our
resource interests; (vi) the availability of commodities for our
commodities and resources operations; (vii) the availability of
suitable acquisition or merger or other proprietary investment
candidates and the availability of financing necessary to complete
such acquisitions or development plans; (viii) our ability to
realize the anticipated benefits of our acquisitions; (ix)
additional risks and uncertainties resulting from strategic
investments, acquisitions or joint ventures; (x) counterparty risks
related to our trading activities; (xi) unanticipated grade,
geological, metallurgical, processing or other problems experienced
by the operators of our resource interests (xii) delays in
obtaining requisite environmental and other permits or project
approvals; (xiii) potential title and litigation risks inherent
with the acquisition of distressed assets; (xiv) risks related to
exploration, development and construction of a previously shut-down
mine project, including the suitability and integrity of historic
mine structures; (xv) the availability of services and supplies;
(xvi) operating hazards; and (xvii) other factors beyond our
control. Such forward-looking statements should therefore be
construed in light of such factors. Other than in accordance with
its legal or regulatory obligations, the Company is not under any
obligation and the Company expressly disclaims any intention or
obligation to update or revise any forward-looking statements,
whether as a result of new information, future events or
otherwise. Additional information about these and
other assumptions, risks and uncertainties are set out in our
Annual Report on Form 20-F and our Management's Discussion and
Analysis for the three months ended September 30, 2012, filed with the Canadian
securities regulators and on Form 6-K with the SEC.
Corporate
|
Investors
|
MFC
Industrial Ltd.
|
Allen
& Caron Inc.
|
Rene
Randall
|
Joseph
Allen
|
1 (604)
683-8286 ex
224
|
1 (212)
691-8087
|
rrandall@bmgmt.com
|
joe@allencaron.com
|
UNAUDITED FINANCIAL TABLES FOLLOW –
MFC
INDUSTRIAL LTD.
CONSOLIDATED STATEMENTS OF FINANCIAL
POSITION
September 30, 2012 and December 31,
2011
(Unaudited)
(United
States Dollars in Thousands)
|
|
|
|
ASSETS
|
September
30,
|
December
31,
|
Current Assets
|
2012
|
2011
|
Cash and cash equivalents
|
$
270,778
|
$
387,052
|
Short-term deposits
|
177
|
163
|
Securities
|
7,943
|
13,062
|
Restricted cash
|
649
|
623
|
Loan receivable
|
–
|
19,869
|
Bills of exchange
|
–
|
10,545
|
Trade receivables
|
38,247
|
21,154
|
Other receivables
|
17,482
|
9,144
|
Inventories
|
112,805
|
81,223
|
Real estate held for sale
|
11,904
|
12,012
|
Deposits, prepaid and other
|
21,949
|
9,344
|
Assets held for sale
|
126,671
|
–
|
Total current assets
|
608,605
|
564,191
|
|
|
|
|
|
|
Non-current Assets
|
|
|
Securities
|
10,976
|
11,606
|
Equity method investments
|
22,413
|
18,726
|
Investment property
|
33,283
|
33,585
|
Exploration and evaluation assets
|
70,660
|
–
|
Property, plant and equipment
|
394,478
|
3,743
|
Interests in resource properties
|
212,191
|
219,582
|
Deferred income tax assets
|
7,739
|
7,524
|
Other
|
778
|
–
|
Total non-current assets
|
752,518
|
294,766
|
Total assets
|
$ 1,361,123
|
$ 858,957
|
|
|
|
|
|
|
MFC
INDUSTRIAL LTD.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(cont'd)
September 30, 2012 and December 31,
2011
(Unaudited)
(United
States Dollars in Thousands)
|
|
|
|
LIABILITIES AND EQUITY
|
September
30,
2012
|
December
31,
2011
|
Current Liabilities
|
|
|
Short-term bank borrowings
|
$
190,130
|
$
114,239
|
Debt, current portion
|
16,969
|
26,977
|
Account payables and accrued expenses
|
68,609
|
42,226
|
MPP term financing
|
9,584
|
–
|
Provisions for warranty
|
104
|
115
|
Income tax liabilities
|
4,362
|
4,453
|
Deferred sale liabilities
|
12,286
|
14,958
|
Liabilities relating to assets held for
sale
|
15,534
|
–
|
Total current liabilities
|
317,578
|
202,968
|
|
|
|
Long-term Liabilities
|
|
|
Debt, less current portion
|
30,312
|
20,150
|
MPP term financing
|
14,170
|
–
|
Deferred income tax liabilities
|
61,945
|
61,045
|
Provisions for decommissioning obligations
|
116,296
|
–
|
Deferred sale liabilities
|
15,328
|
25,647
|
Accrued pension obligation, net
|
2,225
|
–
|
Total long-term liabilities
|
240,276
|
106,842
|
Total
liabilities
|
557,854
|
309,810
|
|
|
|
|
|
|
EQUITY
|
|
|
Capital stock
|
382,746
|
382,289
|
Treasury stock
|
(68,610)
|
(68,117)
|
Contributed surplus
|
13,037
|
13,028
|
Retained earnings
|
467,010
|
213,200
|
Accumulated other comprehensive income
|
6,083
|
6,223
|
Shareholders' equity
|
800,266
|
546,623
|
Non-controlling interests
|
3,003
|
2,524
|
Total equity
|
803,269
|
549,147
|
|
$ 1,361,123
|
$ 858,957
|
|
|
|
MFC
INDUSTRIAL LTD.
CONSOLIDATED STATEMENTS OF
OPERATIONS
For the
Nine Months Ended September 30, 2012 and 2011
(Unaudited)
(United
States Dollars in Thousands, Except Per Share Amounts)
|
|
|
|
|
2012
|
2011
|
|
|
|
Net
Sales
|
$
369,091
|
$
386,721
|
Equity
income
|
4,805
|
4,529
|
Gross
revenues
|
373,896
|
391,250
|
|
|
|
Costs and
Expenses:
|
|
|
Costs of
sales
|
302,861
|
319,186
|
Selling, general and
administrative
|
32,394
|
31,435
|
Share-based
compensation - selling, general and administrative
|
9
|
7,219
|
Finance
costs
|
7,115
|
6,368
|
Other
recovery
|
(2,037)
|
–
|
|
340,342
|
364,208
|
|
|
|
Income from operations
|
33,554
|
27,042
|
|
|
|
Other items:
|
|
|
Exchange differences
on foreign currency transactions
|
774
|
(1,692)
|
Negative
goodwill
|
230,098
|
–
|
|
|
|
Income before income taxes
|
264,426
|
25,350
|
Income tax expense:
|
|
|
Income
taxes
|
(417)
|
(1,089)
|
Resource
property revenue taxes
|
(4,010)
|
(3,215)
|
|
(4,427)
|
(4,304)
|
|
|
|
Net
income for the period
|
259,999
|
21,046
|
Net
(income) loss attributable to non-controlling interests
|
(1,103)
|
557
|
Net
income attributable to owners of the parent company
|
$ 258,896
|
$ 21,603
|
|
|
|
Basic earnings per share
|
$ 4.14
|
$ 0.35
|
Diluted earnings per share
|
$ 4.14
|
$ 0.35
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding
- basic
- diluted
|
62,556,572
62,556,572
|
62,561,421
62,561,421
|
|
|
|
MFC
INDUSTRIAL LTD.
CONSOLIDATED STATEMENTS OF
OPERATIONS
For the
Three Months Ended September 30, 2012 and 2011
(Unaudited)
(United
States Dollars in Thousands, Except Per Share Amounts)
|
|
|
|
|
2012
|
2011
|
|
|
|
Net
Sales
|
$
118,597
|
$
112,107
|
Equity
income
|
1,515
|
1,621
|
Gross
revenues
|
120,112
|
113,728
|
|
|
|
Costs and
Expenses:
|
|
|
Costs of
sales
|
100,449
|
92,282
|
Selling, general and
administrative
|
11,620
|
9,637
|
Finance
costs
|
2,784
|
2,215
|
Other
recovery
|
(2,037)
|
–
|
|
112,816
|
104,134
|
|
|
|
Income from operations
|
7,296
|
9,594
|
|
|
|
Other items:
|
|
|
Exchange differences
on foreign currency transactions
|
(206)
|
(429)
|
Negative
goodwill
|
230,098
|
–
|
|
|
|
Income before income taxes
|
237,188
|
9,165
|
Income tax (expense) recovery:
|
|
|
Income
taxes
|
(2,019)
|
870
|
Resource
property revenue taxes
|
(1,445)
|
(2,536)
|
|
(3,464)
|
(1,666)
|
|
|
|
Net
income for the period
|
233,724
|
7,499
|
Net
income attributable to non-controlling interests
|
(474)
|
(813)
|
Net
income attributable to owners of the parent company
|
$ 233,250
|
$ 6,686
|
|
|
|
Basic earnings per share:
|
$ 3.73
|
$ 0.11
|
Diluted earnings per share:
|
$ 3.73
|
$ 0.11
|
|
|
|
|
|
|
Weighted average number of common shares
outstanding
- basic
-
diluted
|
62,552,201
62,552,201
|
62,561,421
62,561,421
|
|
|
|
MFC
INDUSTRIAL LTD.
FINANCIAL HIGHLIGHTS
As of
September 30, 2012
(unaudited)
(United
States Dollars in Thousands, Except Per Share Amount and
Ratios)
|
|
|
Cash and cash equivalents
|
$
270,778
|
Short-term Securities
|
7,943
|
Trade receivables
|
38,247
|
Current assets
|
608,605
|
Total assets
|
1,361,123
|
Current liabilities
|
317,578
|
Working capital
|
291,027
|
Current ratio
|
1.92
|
Acid test ratio
|
1.05
|
Long term debt, less current portion
|
30,312
|
Long-term debt-to-shareholders' equity
|
0.04
|
Total Liabilities
|
557,854
|
Shareholders' equity
|
800,266
|
Equity per common share
|
12.79
|
|
|
SOURCE MFC Industrial Ltd.