Terra Nostra Announces Year End Results: Record Revenue of $284.8 Million
Friday October 5, 3:08 pm ET
LOS ANGELES and ZIBO, China, Oct. 5 /PRNewswire-FirstCall/ -- Terra Nostra Resources Corporation (OTCBB: TNRO - News), a majority owner of two joint venture companies in the copper and stainless steel industries in China, is pleased to announce financial results and highlights for the fiscal year ended May 31, 2007.
2007 Year End Highlights
* Record revenue of $284.8 million;
* Operating profits of $1.8 million as compared to an operating loss of
$13.5 million for fiscal 2006;
* Pre-selling production to meet strong market demand;
* Ramping up of stainless steel production facilities; and
* Inauguration of 150,000 metric ton ("MT") stainless steel rolling mill.
Consolidated revenue for the fiscal year ended May 31, 2007 was $284.8 million, compared to $5.1 million in the 2006 fiscal period. The increase in revenue was driven primarily through increased sales in the stainless steel joint venture, and completion of the acquisition of the copper joint venture. Gross profit for the fiscal year was $18.1 million, as compared to a loss of $1.7 million for the same period a year ago. Operating profits were $1.8 million, as compared to a loss of $13.5 million in fiscal year 2006. Cost of sales for the year was $266.7 million as compared to a cost of sales of $6.8 million in 2006.
Additionally, management anticipates significant further improvements in gross margins as:
* Larger volume contracted raw material purchases replace lower volume
non-contracted purchases;
* Continued increases in stainless steel and copper production allow
fixed labor and overhead costs to be more broadly distributed;
* Yield rates increase as a result of continued operating experience; and
* Lower maintenance and facility operating costs ensue from further
optimization of production processes.
"At present, strong market conditions for our products exist in China. Demand for stainless steel and copper remains high, driven by continued economic growth and development in China. This market situation has allowed Terra Nostra to pre-sell certain production at premium contracted prices," stated Mr. Sun Liu James Po, Terra Nostra's Chief Executive Officer. "We expect these strong market conditions to remain for the foreseeable future while the Company continues to ramp up production at current facilities to full capacity to meet market demands."
Terra Nostra operates two majority owned Sino Foreign Joint Venture companies in the stainless steel and copper industries in China.
STAINLESS STEEL JOINT VENTURE
Shandong Quanxin Stainless Steel Co., Ltd. ("SQSS") is a 51% owned subsidiary of Terra Nostra which operates a new integrated stainless steel plant in Zibo City, Shandong Province, PRC. SQSS employs three electric-arc furnaces and two AOD refining furnaces in its casting mill with a peak production capability of 230,000 MT. The downstream strip rolling mill was phased-in over the past fiscal year and has a production capability of 150,000 MT per annum. SQSS also has advanced plans to develop a 30,000 MT capacity welded tube line and a 60,000 MT capacity rod line, subject to further feasibility analysis.
COPPER JOINT VENTURE
Shandong Terra Nostra Jinpeng Metallurgical Co., Ltd. ("STJMC"), also a 51% owned subsidiary of Terra Nostra, is a producer, seller, and distributor of electrolytic copper, value-added copper products, and precious metals with production locations in Changshan town and Dongying city, Shandong Province, PRC, both located one hour from Zibo city. STJMC currently sells approximately 16,000 MT per annum of electrolytic copper, 6,000 MT per annum of low-oxygen copper rod, and 6,000 MT per annum of no-oxygen copper rod. The amount of gold and silver sold varies from year to year based on the mix of scrap and ore used in the production process and precious mineral content of the raw materials.
About Terra Nostra Resources Corporation
Terra Nostra is one of the leading copper producers in China through its 51% interest in Shandong Terra Nostra Jinpeng Metallurgical Co., Ltd., which has an existing and under construction total production capacity of 170,000 MT of electrolytic copper, 20,000 MT of low-oxygen copper, and value-added copper rod and wire facilities. Terra Nostra is also emerging as a leading stainless steel producer in China through its 51% interest in Shandong Quanxin Stainless Steel Co., Ltd., a modern stainless steel production facility with a 230,000 MT capacity casting mill, and a 150,000 MT rolling mill. The two joint venture companies, which Terra Nostra recently entered into an agreement to increase its ownership up to 90%, with total assets of US$180 million and over 1,000 employees, are located in the highly industrialized coastal province of Shandong, midway between Beijing and Shanghai. More information on Terra Nostra can be found at www.tnr-corp.com.
