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MFC Industrial Ltd. Reports Results For The Third Quarter Of 2012

Date : 11/14/2012 @ 6:00PM
Source : PR Newswire (US)
Stock : Mfc Industrial Ltd. (MIL)
Quote : 6.09  0.03 (0.50%) @ 1:29AM
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MFC Industrial Ltd. Reports Results For The Third Quarter Of 2012

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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.

Copyright 2012 PR Newswire



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