TORONTO, ONTARIO--(Marketwire - Sept. 10, 2009) - (All dollar amounts are expressed in Canadian currency unless otherwise noted.)
PhosCan Chemical Corp. (TSX: FOS.TO) announces its financial and operating results for the quarter ended July 31, 2009.
Financial Results
PhosCan reported a net loss for the quarter ended July 31, 2009 of $704,661 compared to $832,574 during the same period of the previous year. The decrease in net loss of $127,913 was due to decreases in general and administrative expense and stock-option compensation expense, offset partly by increases in professional and legal fees, a write-off of forfeited advances, and a decrease in other income.
General and administrative expense decreased by $129,114 during the quarter primarily due to cost-cutting measures implemented by management and lower levels of corporate activity related to the reduced level of development of the Martison Phosphate Project. Stock-option compensation expense fell by $214,089 as no new stock options were granted during the quarter.
Professional and legal fees increased by $58,499 during the quarter primarily due to the engagement of professional advisors to help PhosCan source and evaluate corporate development opportunities. The Company wrote-off $118,750 of advances that were forfeited following the termination of certain contracts that were entered into prior to the decision by the Company on December 8, 2008 to defer several tasks related to the development of the Martison Project.
The decrease in other income was primarily due to a $118,733 increase in foreign exchange losses, which consisted of unrealized losses net of realized gains. During the three months ended July 31, 2009, the Company purchased U.S. dollars in part to fund anticipated U.S. dollar-denominated expenditures on the Martison Project and in part because it viewed an opportunity to sell U.S. dollars at a later time for a gain. At quarter-end, the Company held US$9 million to fund the anticipated expenditures and the unrealized foreign exchange losses were due to the effect of an appreciating U.S. dollar on this U.S. dollar cash balance. During the current quarter, the Company realized on the opportunity to sell a portion of its U.S. dollars for a gain, which resulted in the realized foreign exchange gains.
Cash and cash equivalents plus short-term investments decreased by $3,069,648 during the six months ended July 31, 2009 to $69,691,789 while working capital decreased by $2,652,992 to $69,299,620. The decreases were primarily due to expenditures on the Martison Project and general and administrative expenses, both of which included expenditures arising as a result of the slow-down in the development of the Martison Project, such as the termination benefits paid to the Executive Vice President, Operations and Projects during the three months ended April 30, 2009. Working capital decreased less than cash and cash equivalents plus short-term investments because accounts payable and accrued liabilities decreased by $567,763 as a result of reduced development activity at the Martison Project during the six months ended July 31, 2009.
Capitalized expenditures on the Martison Project were $86,200,226 at July 31, 2009, an increase of $1,542,238 from January 31, 2009. The increase is primarily due to the ongoing work, as described below, under the reduced development program announced on December 8, 2008.
PhosCan had no long-term debt at July 31, 2009 and has met all of its financial obligations. The Company expects that existing working capital will be sufficient to advance the Martison Project under the reduced development program, as well as enable the Company to review a broad range of corporate development opportunities that have the potential to enhance shareholder value. PhosCan will be required to raise a significant amount of additional funds should it elect in the future to proceed with full-scale development of the Martison Project.
Operating Results
Under the reduced development program announced by PhosCan on December 8, 2008, the Company continued to advance the following aspects of the Martison Project during the quarter:
- Surveying and other work to take the Martison Project mine claims to lease;
- Bench and pilot plant beneficiation testing of phosphate ore from the Martison Project;
- Phosphoric acid pilot plant testing of flotation concentrate produced from the pilot plant beneficiation test program to collect critical data for engineering design; and
- Under an agreement with IAMGOLD Corp., evaluating the niobium at the Martison Project.
The Company continues to actively source and review a broad range of corporate development opportunities and is confident it will be able to execute on one or more that have the potential to enhance shareholder value.
This press release contains forward-looking statements with respect to the Martison Phosphate Project, and matters concerning the business, operations, strategy, and financial performance of PhosCan. These statements generally can be identified by use of forward-looking words such as "may", "will", "expect", "estimate", "anticipate", "intends", "believe" or "continue" or the negative thereof or similar variations. Such forward-looking statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations, including that the estimates and projections regarding the Martison Project are realized. Forward-looking statements are based on a number of assumptions which may prove to be incorrect. Unless otherwise stated, all forward looking statements speak only as of the date of this press release and PhosCan does not undertake any obligation to update such statements except as required by law.
Contacts
Stephen Case PhosCan Chemical Corp. President & CEO (416) 972-9222
James Pringle PhosCan Chemical Corp. Vice President Finance & CFO (416) 972-9222
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