NOVX21 Inc PORMF

Brutal Quarter

[Intellectual]

TORONTO, Aug. 22 /CNW/ - Novicourt Inc. today reported a loss of $0.1 million (or $0.0 per share) for the second quarter of 2002 compared to earnings of $0.2 million (or $0.0 per share) for the same period last year. For the first half of 2002, earnings were $1.1 million or ($0.03 per share) versus $2.0 million (or $0.05 per share) one year ago. Low prices for copper and zinc continued to negatively impact Novicourt's results. Copper and zinc market prices averaged US$0.73 and $0.35 per pound respectively in the second quarter of 2002 (and $0.72 and $0.36 year to date) compared to US$0.75 and $0.43 in the second quarter of 2001 (and $0.77 and $0.44 for the first half of 2001). Partially offsetting the negative impact of copper and zinc prices was a reduction in the value of the Canadian dollar which averaged $1.58 Canadian per US dollar (compared to $1.54 Canadian in the second quarter of 2001). Reduced copper production, due to a lower copper grade, also contributed negatively to Novicourt's results and was only partially offset by a higher zinc grade. Finally, exploration expenses during the second quarter were high due to the level of exploration activity pursued under the strategic alliance with Virginia Gold Mines Inc., especially in comparison to the particularly low level of exploration expenses incurred in the second quarter of 2001. Net revenues in the second quarter were $10.0 million compared to $9.8 million in the second quarter of 2001. Cash flow from operations, before changes in working capital, was $2.4 million in the second quarter, down from $3.1 million in the second quarter of 2001. Year to date cash flow before changes in working capital amounted to $6.1 million compared to $7.3 million for the same period in 2001. After payment of $4.0 million for dividends of $0.10 per share in June 2002, the Company had cash on hand of $49.0 million at June 30th 2002 compared to $51.6 million at March 31, 2002 and $45.9 million one year ago. Management of the maturing underground mine continues satisfactorily. During the second quarter, a total of 377,278 tonnes of ore was produced at an average rate of 4,146 tonnes per day. This brings total production in the first six months of 2002 to 742,231 tonnes (compared to 759,250 tonnes for the same period in 2001). The grade of ore produced during the quarter averaged 2.9% copper (compared to 3.2% in the second quarter of 2001) and 1.6% zinc (compared to 0.8% for the same period in 2001). Mining schedules have been adjusted as a consequence of the caving of approximately 100,000 tonnes of rock and backfill in one of the active stoping areas in January 2002 and the adverse effects on production and costs are being minimized. Follow-up of the seismic exploration survey of the Louvicourt and Louvaur properties has been completed. During the second quarter Novicourt also participated, through the Louvicourt and Louvaur Joint Ventures, in Aur Resources' geophysical exploration program in the Val d'Or region. No significant results were discovered. Novicourt completed its previously announced acquisition of Noranda Inc.'s 55% interest in the strategic alliance with Virginia Gold Mines Inc. during the quarter. Land acquisition and ground follow-up is now in progress on the first six areas surveyed and over 200 properties, covering more than 250 anomalies, have been acquired and drill testing of selected targets is underway. Novicourt and Virginia have now agreed to extend the megaTEM surveys by Fugro to cover an additional four areas. The cost of these additional surveys (excluding follow-up costs) is $2 million. Novicourt's interest in these additional areas will be 51% and Virginia's 49%. Noranda Inc. is the operator of this exploration program. Novicourt's exploration cost year to date was $1.1 million, the same as in the first half of 2001. Novicourt is pleased to acknowledge the recent announcement of the Government of Quebec regarding the important new changes to encourage exploration for mineral deposits. The improvement to the calculation of tax credits will positively affect Novicourt's results and is further evidence that Quebec is the most favourable jurisdiction in Canada for the mining industry. Novicourt Inc is the owner of a 45% undivided interest in the Louvicourt Mine through its participation in the Novicourt Inc./Aur Resources Inc./Teck Cominco Limited Joint Venture. Novicourt is a copper-based mining Company which receives its revenues principally from the sale of copper as well as zinc concentrates produced by the Louvicourt Mine. The Company's common shares are listed on the Toronto Stock Exchange under the symbol NOV. NOVICOURT INC. FINANCIAL STATEMENTS - UNAUDITED Six months ended $000's Second Quarter June 30 -------------------- -------------------- 2002 2001 2002 2001 -------------------- -------------------- STATEMENT OF EARNINGS Revenue $ 15,158 $ 15,510 $ 33,213 $ 33,839 Less: Treatment charges (5,159) (5,673) (11,511) (11,475) --------- --------- --------- --------- Value of mineral production 9,999 9,837 21,702 22,364 Expenses Production 6,680 7,086 13,897 14,054 Depreciation and amortization 3,148 3,163 6,194 6,223 Exploration 1,025 26 1,125 1,076 Administration 130 311 243 477 Provision for site closure and reclamation 295 241 580 477 --------- --------- --------- --------- Total Expenses 11,278 10,827 22,039 22,307 --------- --------- --------- --------- Operating income (loss) (1,279) (990) (337) 57 Interest income, net 318 573 588 1,202 --------- --------- --------- --------- Earnings (loss) before taxes (961) (417) 251 1,259 Income and production taxes (831) (578) (813) (741) --------- --------- --------- --------- Net earnings (loss) $ (130) $ 161 $ 1,064 $ 2,000 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Earnings per share $ 0.00 $ 0.00 $ 0.03 $ 0.05 ------------------------------------------------------------------------- ------------------------------------------------------------------------- CASH FLOW STATEMENT: Cash from (used for) operations: Net earnings (loss) $ (130) $ 161 $ 1,064 $ 2,000 Depreciation and amortization 3,148 3,163 6,194 6,223 Future taxes (891) (466) (1,782) (1,375) Reclamation, net 295 241 580 477 (Gain) Loss on disposal of capital assets - 4 - 8 --------- --------- --------- --------- Cash flow before changes in working Capital 2,422 3,103 6,056 7,333 Change in operating working capital (51) 1,404 (957) 3,374 --------- --------- --------- --------- 2,371 4,507 5,099 10,707 Cash from (used for) investment activities: Acquisition of strategic alliance (870) (870) - Additions to capital assets (2) (248) 29 (526) --------- --------- --------- --------- (872) (248) (841) (526) --------- --------- --------- --------- Cash flow before financing activities 1,499 4,259 4,258 10,181 Cash from (used for) financing activities: Dividends on common shares (4,025) (4,024) (4,025) (8,049) --------- --------- --------- --------- Increase (decrease) in cash (2,526) 235 233 2,132 --------- --------- --------- --------- Cash at beginning of the period 51,562 45,701 48,803 43,804 Cash at the end of the period $ 49,036 $ 45,936 $ 49,036 $ 45,936 ------------------------------------------------------------------------- Supplemental Cash Flow Information Cash Taxes Paid $ 917 $ 1,255 $ 2,818 $ 3,244 --------- --------- --------- --------- Cash consists of cash and cash equivalents. Novicourt Inc. BALANCE SHEETS - UNAUDITED As at June 30, 2002 ------------------------------------------------------------------------- $000's June 30 December 31 2002 2001 ---------- ---------- ASSETS Current: Cash and cash equivalents 49,036 48,803 Accounts and settlements receivable Due from Noranda 13,855 15,433 Other 1,858 315 Inventories of mineral products 471 501 Materials, supplies and prepaid expenses 1,572 1,657 ---------- ---------- 66,792 66,709 ---------- ---------- Capital assets: Property, plant and equipment, net 16,281 19,976 Deferred development, net 11,075 13,603 ---------- ---------- 27,356 33,579 ---------- ---------- 94,148 100,288 ---------- ---------- ---------- ---------- LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities 3,909 5,420 Provision for site closure and reclamation 5,723 5,143 Future tax liability 3,822 5,604 Shareholders' equity 80,694 84,121 ---------- ---------- 94,148 100,288 ---------- ---------- ---------- ---------- NOVICOURT INC. NOTES TO FINANCIAL STATEMENTS JUNE 30, 2002 (UNAUDITED) ($ thousands except as otherwise indicated) 1. Accounting Policies These unaudited interim financial statements have been prepared in accordance with Canadian generally accepted accounting principles and follow the same accounting principles and methods of application as the recent annual financial statements. These unaudited interim financial statements should be read in conjunction with the Company's audited annual financial statements and the accompanying notes included in the 2001 Annual Report. 2. Shareholders' Equity June 30, 2002 Dec. 31, 2001 ------------- ------------- Issued: Common shares 61,780 61,780 Contributed Surplus 3,115 3,115 ------------- ------------- 64,895 64,895 ------------- ------------- Retained Earnings: Balance, beginning of period 19,226 27,395 Net earnings 1,064 3,905 Adjustment (466) - Dividends on common shares (4,025) (12,074) ------------- ------------- Balance, end of period 15,799 19,226 ------------- ------------- ------------- ------------- 80,694 84,121 ------------- ------------- ------------- ------------- On December 13, 2001, the Company reached an agreement in principle with Noranda Inc. ("Noranda") to acquire Noranda's 55% interest in a strategic alliance with Virginia Gold Mines Inc. During the six-month period ended June 30, 2002, the Company made a payment to Noranda to complete the acquisition of Noranda's interest in the strategic alliance. The value of the acquired interest was recorded at Noranda's historical carrying amount of nil and thus resulted in a charge to retained earnings. The charge of $466 represents the payment of $870 net of income taxes recoverable of $404. Novicourt Inc. PRODUCTION STATISTICS As at June 30, 2002 ------------------------------------------------------------------------- Second Quarter Six Months 2002 2001 2002 2001 ------- ------- ------- ------- Tonnes milled (100%) 377,278 385,969 742,231 759,250 Head grades - % Cu 2.9 3.2 3.2 3.2 - % Zn 1.6 0.8 1.6 1.3 - oz/t Au 0.02 0.03 0.03 0.03 - oz/t Ag 0.70 0.63 0.75 0.72 Mill recoveries - % Cu 96.5 96.7 96.7 96.8 - % Zn 83.5 77.1 83.0 82.9 - % Au 67.9 72.4 69.5 72.5 - % Ag 62.7 72.1 64.4 70.6 Tonnes of copper concentrate (100%) 36,709 42,239 78,879 84,382 Tonnes of zinc concentrate (100%) 8,849 4,466 17,180 15,005 Novicourt's 45% share of net production: Accountable tonnes of copper 4,609 5,141 9,802 10,257 Accountable tonnes of zinc 1,899 944 3,668 3,151 Accountable ounces of gold 2,595 2,898 5,804 6,018 Accountable ounces of silver (000's) 59 60 127 138 Market prices and exchange: Copper - $ U.S. per pound 0.73 0.75 0.72 0.77 Zinc - $ U.S. per pound 0.35 0.43 0.36 0.44 Gold - $ U.S. per ounce 313 267 302 265 Silver - $ U.S. per ounce 4.72 4.39 4.61 4.46 Exchange - $ Cdn. per $ U.S. 1.58 1.54 1.57 1.53 %SEDAR: 00001886EB For further information: Michael Boone, Controller, [phone]; Julie Galloway, Secretary, [phone] -------------------------------------------------------------------------------- Copyright © 2002 Bell Globemedia Interactive Inc.