2nd Qt. resultsFortune Minerals announces second quarter financial results
Monday August 16, 8:30 am ET
Listing: TSX, symbol "FT"
LONDON, ON, Aug. 16 /CNW/ - Fortune Minerals Limited ("Fortune" or the "Company") is pleased to present its 2004 second quarter report of financial results. Full financial statements for the quarter and additional information relating to the Company are available on SEDAR at www.sedar.com.
OVERVIEW
Fortune is engaged in the exploration and development of coal, specialty, base and precious metals and industrial mineral properties in Canada. These activities are carried out directly, indirectly through subsidiaries and through joint ventures with other companies, typically with Fortune as the operator. Advanced projects include a 100% interest in the Mount Klappan coal deposits, an 81% interest in the NICO gold-cobalt-bismuth deposit and a 100% interest in the Sue-Dianne copper-silver deposit. The Company has a number of additional exploration projects that are less advanced. Fortune also holds a 30% interest in Formosa Environmental Aggregates Ltd. ("Formosa"), which owns lands proposed for development of a high calcium limestone deposit, and manages the operations of Formosa.
Fortune incurred a net loss of $80,222 in the three months ended June 30, 2004, compared to a net loss of $133,224 in the comparable period of 2003. The reduction in the net loss in 2004 resulted principally from a combination of greater interest income stemming from higher cash balances and the non-recurrence of stock compensation expenses incurred in the prior period. The loss in the prior period was reduced by a recovery of future income taxes resulting from a reduction in corporate tax rates introduced in that period.
The net loss for the six months ended June 30, 2004 was $585,962, compared to a net loss of $476,998 in the six months ended June 30, 2003. The higher loss in the current year principally reflects the recovery of future income taxes in 2003.
Selected Financial Information
The following tables provide selected consolidated financial information that should be read in conjunction with the consolidated financial statements of the Company.
Financial and Operating Data
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3 months 3 months 6 months 6 months Year ended
ended June ended June ended June ended June Dec. 31,
30, 2004 30, 2003 30, 2004 30, 2003 2003
(unaudited) (unaudited) (unaudited) (unaudited) (audited)
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Revenue 67,544 19,510 96,842 23,688 46,677
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Net income
(loss) (80,222) (133,224) (585,962) (476,998) (601,494)
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Net income
(loss) per share - - (0.02) (0.02) (0.03)
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Balance Sheet Data
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6 months Year ended
ended June Dec. 31,
30, 2004 2003
(unaudited) (audited)
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Cumulative
deferred
exploration
expenditures 9,629,695 9,156,715
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Working capital 4,578,216 4,588,129
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Total Assets 18,027,730 17,663,062
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RESULTS OF OPERATIONS
Revenues
Fortune's primary source of revenue is interest income, which increased
to $67,544 and $96,842 in the three and six months, respectively, ended
June 30, 2004 from $19,510 and $23,688 in the corresponding periods in 2003.
The increases principally resulted from increased cash balances generated by
financing activity in 2003.
Expenses
Expenses for the three months ended June 30, 2004 were $147,776, down
from $274,734 in the corresponding period in 2003. Administrative and public
relations expenses were higher in 2004 but were more than offset by a $189,450
charge for stock compensation expenses in 2003 related to the granting of
stock options.
Expenses for the six months ended June 30, 2004 were $682,804, a slight
increase over expenses of $622,686 incurred in the first six months of 2003.
The increase in total expenses reflects moderate increases in administrative
and public relations expenses.
Cash Flow
Cash used in operating activities in the three months ended June 30, 2004
was $206,842, almost unchanged from the cash used in the three months ended
June 30, 2003. For the six month period ended June 30, 2004 cash used in
operating activities was $303,137, compared to $117,726 in the corresponding
period in 2003. The additional use of cash in 2004 principally reflects
changes in non-cash working capital items.
Cash used in investing activities in the three months ended June 30, 2004
was $187,940, consistent with the amount of $199,136 in the prior year. For
the six months ended June 30, 2004, cash used in investing activities was
$326,868, down from $427,593 in the same period in 2003. The reduction
reflects somewhat lower exploration expenditures in the first six months of
2004.
LIQUIDITY AND CAPITAL RESOURCES
As at June 30, 2004, Fortune had cash and cash equivalents of $3,170,292,
short-term investments of $1,269,154 and working capital of $4,578,216,
compared with $3,348,384, $1,269,154 and $4,588,129, respectively, as at
December 31, 2003. Subsequent to June 30, 2004, Fortune raised gross proceeds
of $3,003,000 through the sale of flow-through shares. The Company's principal
operational objectives for 2004 are to complete full feasibility studies on
the Mount Klappan and NICO properties, with a view to developing those
properties in the following two years. Budgeted expenditures for 2004 to
complete the studies are approximately $1 million for Mount Klappan and
$1.6 million for NICO. The Company currently has sufficient resources to
complete the studies and otherwise fund its operations. Additional financing
will be required by the Company in order to pursue further exploration and
development of its major projects or acquire additional projects.
SHARE DATA
As at the date hereof, the Company has 26,736,730 common shares issued
and outstanding, as well as: (a) warrants to purchase an aggregate of
1,758,723 common shares expiring at various dates between October 6, 2004 and
May 30, 2005 and exercisable at various prices between $0.71 and $1.50 per
share; (b) broker warrants exercisable at a price of $1.50 until May 30, 2005
to purchase an aggregate of 190,080 units, each unit consisting of one common
share and one-half of one warrant to purchase a common share at a price of
$1.50 until May 30, 2005;, (c) broker warrants exercisable at a price of $3.25
until January 31, 2006 to purchase an aggregate of 46,200 common shares; and
(d) options to purchase an aggregate of 1,472,400 common shares expiring at
various dates between June 23, 2006 and March 17, 2009 and exercisable at
various prices between $0.69 and $3.45 per share.