MONTREAL, QUEBEC--(Marketwire - April 1, 2009) - Canadian Royalties Inc. (the "Company") (TSX:CZZ) announces that it has filed today its financial results for the year ended December 31st, 2008.
For the twelve month period ended December 31st, 2008 the Company reported a net loss of $181 million or $1.79 per share compared to a loss of $5.6 million or $0.07 per share in 2007. The most significant events having had an impact on the financial situation of the Company in 2008 was the issuance of $137.5 million of convertible debentures, and the launching of construction of the Nunavik Nickel Project, followed several months afterwards, by the suspension of construction and all major work programs on-site and subsequent write-down of the carrying value of the Nunavik Nickel Project in the wake of the global financial crisis.
The construction-in-progress asset of its Nunavik Nickel Project was written-down by $143 million. The Corporation determined that there was an impairment in the carrying-value of the Nunavik Nickel Project and consequently adopted the prudent strategy of assuming a write-down in the context of generally unfavourable financial conditions. The decision is in conformity with Canadian GAAP requirements.
Glenn J. Mullan, Chairman of the Board, Interim President and CEO of Canadian Royalties noted that, "Canadian Royalties Inc. was severely impacted during 2008 by the adverse effects that the litigation by Nearctic Nickel Mines Inc. (formerly named Ungava Minerals) has had on the Company's operations, the precipitous decline in the prices of commodities (nickel-copper), and generally unfavourable capital markets. As a result, the Company made the difficult decision during the third quarter of 2008 to suspend all construction and engineering activities related to the Nunavik Nickel Project, and to significantly downsize staffing and contractors. We continue to believe that our focus asset in Nunavik has significant value to all stakeholders and will ultimately be developed under more favourable commodity pricing conditions."
Financial Results Year Ended December 31st, 2008:
The Income Statement Highlights for the periods ending December 31st, 2008
and 2007 are as follows:
2008 ($) 2007 ($)
Restructuring expenses 11,755,000
Write-down of property and equipment 143,133,000
Write-down of assets held for sale 14,531,000
Net loss: (181,213,000) (5,642,000)
Net loss per share: ($1.79) ($0.07)
Balance Sheet Highlights:
December 31st, 2008 December 31st, 2007
Cash : 24,570,000 37,008,000
Working Capital (excl. cash) 19,797,000 6,130,000
Total Assets: 125,644,000 163,301,000
Long term debt: 96,892,000 7,776,000
Asset retirement obligation 9,870,000
Shareholders Equity: 15,029,000 141,290,000
The Company's audited financial statements for the year ended December
31st, 2008 and Management's Discussion and Analysis thereon are available
for public viewing via the internet at www.sedar.com
Asset Retirement Obligations
The Company has legal and contractual environmental obligations to provide for the retirement of its mining assets, to return all sites to their approximate initial state and to ensure that there are no significant sources of environmental contamination or danger to humans, to wildlife, and to fish species. The Company has yet to determine the best way and time to fulfill its rehabilitation commitment and to evaluate its cost, but preliminary studies are estimating that the cost of retiring its Nunavik Nickel Project assets and rehabilitating its sites could reach $13 million. A retirement liability of $9.9 million, representing the discounted value of the preliminary estimate of $13 million, was recorded as at December 31, 2008.
Debenture Obligation
Notwithstanding that the Company intends to pursue to its efforts to re-negotiate the terms of its 7% Convertible Senior Unsecured Debentures due March 31, 2015 (in the principal amount of $137,500,000), it has met its semi-annual obligation to pay an aggregate $4,812,500 in interest, that is due and payable March 31, 2009.
About Canadian Royalties and the Nunavik Nickel Project
Canadian Royalties had initiated the development of an independent, stand-alone nickel-copper mine on its Nunavik Nickel Project, located 20 kilometres south of Xstrata Nickel's Raglan Mine in Nunavik, Quebec. Canadian Royalties has received its Environmental Certificate of Authorization and Mine Leases for the Expo, Mesamax, Ivakkak and Mequillon sites.
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