VANCOUVER, Dec. 27, 2012 /CNW/ - Lignol Energy Corporation (TSXV: LEC) ("LEC" or "the Company"), a
leading technology development company in the advanced biofuels and
renewable chemicals sector, today announced its consolidated financial
results for the three months ended October 31, 2012 ("Q2 FY13"). All
figures in Canadian dollars, unless otherwise noted.
Highlights
-
Closed a $2.46 million private placement and completed the acquisition
of an 11.2% interest in Australian Renewable Fuels Ltd (ASX: ARW)
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Continued to develop a number of strategic opportunities, that
subsequently led to increasing the Company's equity interest in ARW to
14.9% in November 2012
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Completed successful optimization of ethanol production with Novozymes
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Continued development and expansion of intellectual property portfolio
During the quarter, the Company strengthened its balance sheet and
closed a non-brokered financing to raise gross proceeds of $2.46
million. Of the total proceeds, $0.5 million was used as part of the
total consideration for an acquisition of an 11.2% interest in ARW for
a total of $4.26 million. The balance was settled in the form of LEC
shares and the issue of a $2.245 million convertible debenture.
As of the end of the quarter, LIL's growing intellectual property
portfolio consisted of more than ninety patent applications in various
stages of prosecution. Two further patents were awarded during the
quarter, covering inventions made in the field of lignin composition of
matter, bringing to twelve the number of patents awarded to LIL,
including five awarded this calendar year.
LIL pilot plant and research facilities successfully completed a major
body of work with Novozymes, showing performance improvements of up to
35% as compared to previously best achieved results. During the quarter
pilot plant operations were largely dedicated to achieving milestones
for government funded work plans to process different feedstocks to
enhance hemicellulosic sugars recovery and the production of a range of
lignins for ongoing application development activities. These process
optimization activities have the potential to double the amount of
usable hemicellulose sugars produced for subsequent bioconversion. LIL
also successfully produced a sizeable quantity of lignin from wheat
straw for new product development purposes.
Financial Results
For the three months ended October 31, 2012 ("Q2 FY13") LEC reported a
net comprehensive loss of $2.8 million, or ($0.03) per share (basic and
fully diluted). Included in the total comprehensive loss are non-cash
charges relating to the fair market accounting treatment of the
acquired investment in ARW of a total of $1.5 million. After excluding
these $1.6 million non-cash charges, the adjusted loss for Q2 FY12
would have been the same as the $1.3 million loss incurred for the
three months ended October 31, 2011 ("Q2 FY12").
Total research and development expenditures (excluding amortization)
were $0.6 million in the quarter ended Q2 FY13 compared to $1.3 million
in the prior year. The current quarter decrease in operating expenses
of $0.7 million was a result of reductions in headcount and related
expenses of $0.4 million, reductions in pilot plant operating expenses
of $0.2 million, and a reduction in general overheads of $0.1 million.
General and administrative expenses increased by $0.1 million largely
due to increased headcount for corporate development and professional
expenses incurred related to various financing and strategic
transactions under consideration during the quarter.
Total funding from government and corporate contributions were $0.2
million for the current quarter, compared to $0.9 million in the same
quarter of 2011. A certain number of projects which were supported by
various government grant programs during the prior quarter in 2011, had
been completed by the start of the current quarter. Accordingly there
were fewer grants available to contribute to the work completed in the
current quarter, while at the same time, overall grant related research
expenses had also declined by $0.8 million.
Subsequent Events
On November 9, 2012, the Company announced that it had completed the
acquisition of an additional 88,000,000 ordinary shares of ARW for an
aggregate purchase price of CAD$1.10 million. Consideration was
comprised of CAD $0.23 million in cash and 7,000,000 in LEC common
shares issued at $0.125 per share. Upon the closing of the acquisition,
LEC's ownership increased from 11.2% to 14.9% of the issued and
outstanding ordinary shares of ARW.
On November 15, 2012, the Company held its Annual and Special Meeting of
Shareholders, and passed an ordinary resolution to change the stock
option plan to a "rolling" plan allowing for a maximum number of common
shares issuable on the exercise of options granted under the Amended
Plan to be 10% of the number of Common Shares which are issued and
outstanding at the time the options are granted.
On December 17, 2012 the Company announced that it had closed its
previously announced private placement for gross proceeds of $4.52
million (the "Offering"). Included in the Offering was the receipt of
$1.15 million related to the subscription by Difference Capital of
7,666,667 subscription receipts of the Company (the "Subscription
Receipts"). This amount will be retained in escrow until such time as
certain Shareholder approvals have been obtained. Also, in connection
with the Offering, Wasabi Energy Limited converted the $2.246 million
convertible debenture it held resulting in the issuance of 14,971,800
common shares of the Company at an exercise price of $0.15 per share.
Going Concern and Subsequent Events
LEC's consolidated financial statements have been prepared on a going
concern basis which assumes that LEC will continue its operations and
those of LIL for the foreseeable future and contemplates the
realization of assets and the settlement of liabilities in the normal
course of business.
LEC's consolidated financial statements and the accompanying
Management's Discussion and Analysis do not reflect adjustments to the
amounts and classification of assets and liabilities that may be
necessary if the going concern assumptions were not appropriate and
such adjustments could be material should LEC be unable to continue as
a going concern.
LEC has historically financed its working capital requirements and the
research and development activities, capital expenditures and
operations undertaken by its subsidiary LIL, and its acquisition of an
equity interest in ARW, largely through public and private sales of
equity securities, government and corporate contributions, and interest
income.
At October 31, 2012, LEC had $1.4 million in cash and short-term
investments currently available, and up to $1.6 million in future
funding receivable, from contracted government and corporate funding
agreements, and $1.3 million in current liabilities. LEC also had a
$1.5 million surplus in shareholders' equity after taking into account
an accumulated deficit of $32.4 million.
In assessing its cash projections for the next year, LEC has not
factored in the availability of the funding currently held in escrow
related to the issue of Subscription Receipts of $1.15 million, to
Difference Capital, the potential receipt of additional funding from
government awards currently being negotiated by its subsidiary, LIL, or
the impact of its recent acquisitions of shares in ARW. Accordingly,
LEC currently forecasts that its working capital requirements for the
next twelve months may exceed the combination of its current working
capital and those funds which are expected to be received in the future
from LIL's existing government grants and corporate relationships. The
ability of LEC to continue as a going concern is dependent upon its
ability to continue to fund its stated business objectives. There can
be no assurance that LEC will be able to obtain further financing on
favourable terms and in such event, LEC's working capital may not be
sufficient to meet its stated business objectives.
Lignol's complete financial statements for the three months ended
October 31, 2012 and the related Management's Discussion & Analysis of
Financial Condition and Results from Operations are available at the
Company's website, www.lignol.ca, or at www.sedar.com under the Company's profile. These financial statements were prepared
in accordance with the required adoption of International Financial
Reporting Standards.
About Lignol Energy Corporation ("LEC")
LEC (TSXV: LEC) owns 100% of the issued and voting shares of Lignol
Innovations Ltd. ("LIL") and owns an 14.9% stake in Australian
Renewable Fuels Ltd (ASX: ARW). LEC also intends to invest in, or
otherwise obtain, equity interests in energy related projects which
have synergies with its biorefining technology.
LIL is a leading technology company in the advanced biofuels and
renewable chemicals sector undertaking the development of biorefining
technologies for the production of advanced biofuels, including
fuel-grade ethanol, and other renewable chemicals from nonfood
cellulosic biomass feedstocks. LIL's modified solvent based
pretreatment technology facilitates the rapid, high-yield conversion of
cellulose to ethanol and the production of value-added biochemical
co-products, including high purity HP-LTM lignins. HP-LTM lignin represents a new class of high purity lignin extractives (and
their subsequent derivatives) which can be engineered to meet the
chemical properties and functional requirements of a range of
industrial applications that until now has not been possible with
traditional lignin byproducts generated from other processes. LIL is
executing on its development plan through strategic partnerships to
further develop and integrate its core technologies on a commercial
scale. For more information please visit Lignol's website at www.lignol.ca.
ARW is the largest biodiesel producer in Australia owning three plants
with a total nameplate capacity of 150 million litres per annum. ARW's
three plants were built at an aggregate cost of approximately A$150
million. ARW has made significant changes in recent years to become a
cost effective producer of high quality biodiesel to address growing
biofuel demand in the Australian market. More information on ARW can
be found at their website; www.arfuels.com.au
Neither TSX Venture Exchange nor its Regulation Services Provider (as
that term is defined in the policies of the TSX Venture Exchange)
accepts responsibility for the adequacy or accuracy of this release.
Caution concerning forward-looking statements:
Certain statements contained in this document may constitute
forward-looking information within the meaning of applicable securities
laws. Such forward-looking statements or information include, without
limitation, statements or information about the conversion of the
Subscription Receipts into Units through the approval of the
shareholders of the Company of the Release Conditions, the transaction
entered into by ARW and the resulting change to the LEC equity interest
in ARW and to continue as a going concern and to raise additional
financing to fund the operations of LEC and Lignol, the development
status of Lignol's fully integrated pilot scale biorefinery in Burnaby,
British Columbia, the planning and development of a commercial plant,
Lignol's ability to complete project deliverables which are funded in
part by government agencies, obtaining strategic partnership
investments and government funding for initial commercial projects.
Often, but not always, forward looking statements or information can be
identified by the use of words such as "plans", "expects" or "does not
expect", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "anticipates" or "does not anticipate", or
"believes" or variations of such words and phrases or words and phrases
that state or indicate that certain actions, events or results "may",
"could", "would", "might" or "will" be taken, occur or be achieved.
Such statements or information reflect LEC's current views with respect
to future events and are subject to certain risks, uncertainties and
assumptions including, without limitation, our ability to establish the
validity of Lignol's technology at the fully integrated biorefinery
pilot plant scale, Lignol's ability to satisfy the conditions of
existing government grants and to obtain new additional grants, our
ability to continue to finance our operations and to finance and
complete the development of a commercial project, Lignol's ability to
work with Novozymes to produce cellulosic ethanol at production costs
competitive with gasoline and corn ethanol, Lignol's ability to develop
products and to obtain off-take agreements, our ability to obtain
requisite regulatory approvals and our ability to enter into agreements
with strategic partners on terms acceptable to us, the inability to
influence the strategy, operations and financial performance of
Australian Renewable Fuels Limited ("ARW"), the reliance on publically
available information of ARW in the Company's evaluation of its
acquisition of shares in ARW, the potential inability to divest the ARW
ordinary shares due to modest trading volumes, the cost of future ARW
capital investment, the fluctuation of biodiesel and feedstock prices
on ARW, the effect on ARW of changes in government policy relating to
the environment, and incentives for renewable fuels. Many factors could
cause LEC's actual results, performance or achievements to be
materially different from any future results, performance or
achievements that may be expressed or implied by such forward-looking
statements or information, including among other things, the
technological challenges that remain to be surpassed in obtaining the
necessary operating data from Lignol's fully integrated biorefinery
pilot plant that is required prior to completing the next scale-up of
the technology, financial market conditions which will impact our
ability to finance our operations and to finance the construction and
operation of a commercial plant, the price of gasoline and demand for
ethanol, the market pricing and demand for renewable chemicals, risks
relating to the protection of Lignol's core technology from
infringement and those risk factors which are discussed elsewhere in
documents that LEC files from time to time with securities regulatory
authorities. Should one or more of these risks or uncertainties
materialize, or should assumptions underlying the forward-looking
statements or information prove incorrect, actual results may vary
materially from those described herein as intended planned,
anticipated, believed, estimated or expected. Except as required by
law, the Company expressly disclaims any intention or obligation to
update or revise any forward looking statements and information whether
as a result of new information, future events or otherwise. All written
and oral forward-looking statements and information attributable to us
or persons acting on our behalf are expressly qualified in their
entirety by the foregoing cautionary statements.
SOURCE: Lignol Energy Corporation