GrowMax Resources Announces Third Quarter 2016 Results, Closing of Sale of Energicon, and 2017 Capital Spending Guidance
CALGARY, ALBERTA--(Marketwired - Nov 25, 2016) -
THIRD QUARTER RESULTS
GrowMax Resources Corp. (the "Company" or "GrowMax Resources") (formerly Americas Petrogas Inc.) (TSX VENTURE:GRO) announces that it has filed its condensed interim consolidated financial statements and Interim MD&A - Quarterly Highlights relating to its third quarter 2016 results. These filings can be accessed on SEDAR's website at www.sedar.com and on the Company's website at www.growmaxcorp.com.
The following Summary of Selected Financial and Operational Highlights have been derived from the condensed interim consolidated financial statements and Interim MD&A - Quarterly Highlights for the third quarter of 2016 as well as the condensed interim consolidated financial statements for the second quarter of 2016. Readers are strongly encouraged to review the entire second and third quarter condensed interim consolidated financial statements, and the Interim MD&A - Quarterly Results for the third quarter.
All amounts are in Canadian dollars unless otherwise stated.
Summary of Selected Financial and Operational Highlights
| ($ in thousands) | September 30, 2016 | June 30, 2016 | December 31, 2015 | ||||||
| Cash and cash equivalents | $ | 43,829 | $ | 38,481 | $ | 56,671 | |||
| Working capital(1) | $ | 50,833 | $ | 53,050 | $ | 62,594 | |||
| Share capital | $ | 222,691 | $ | 222,691 | $ | 241,063 | |||
| Common shares outstanding | 215,925,645 | 215,925,645 | 233,739,106 | ||||||
| Three months ended | ||||||||
| ($ in thousands) | September 30, 2016 | June 30, 2016 | ||||||
| Net income (loss) from continuing operations | $ | (1,801 | ) | $ | (3,011 | ) | ||
| Net income (loss) from discontinued operations, net of income tax expense | $ | (214 | ) | $ | (1,529 | ) | ||
| Net income (loss) for the period | $ | (2,015 | ) | $ | (4,540 | ) | ||
| Other general and administrative expenses | $ | 1,142 | $ | 1,958 | ||||
| Capital expenditures, net | $ | 2,193 | $ | 4,814 | ||||
| Three months ended September 30 | Nine months ended September 30 | |||||||||||||||
| ($ in thousands) | 2016 | 2015 Restated(2) | 2016 | 2015 Restated(2) | ||||||||||||
| Net income (loss) from continuing operations | $ | (1,801 | ) | $ | 1,645 | $ | (10,941 | ) | $ | 406 | ||||||
| Net income (loss) from discontinued operations, net of income tax expense | $ | (214 | ) | $ | (21,547 | ) | $ | (1,674 | ) | $ | (30,663 | ) | ||||
| Net income (loss) for the period | $ | (2,015 | ) | $ | (19,902 | ) | $ | (12,615 | ) | $ | (30,257 | ) | ||||
| Other general and administrative expenses | $ | 1,142 | $ | 819 | $ | 4,071 | $ | 2,736 | ||||||||
| Capital expenditures, net | $ | 2,193 | $ | 1,699 | $ | 8,734 | $ | 9,620 | ||||||||
See Notes below.
Key Items and Recent Activities
Peru
- An "Updated NI 43-101 Mineral Resource Technical Report on the GrowMax Bayóvar Phosphate Project, Piura Region, Peru" was filed on April 28, 2016 and a further update was filed on SEDAR on August 11, 2016. This latter Mineral Resource estimate update was based on substantially all drill holes drilled by the Company up to June 30, 2016.
- On September 12, 2016, the Company announced its strategic plans, which includes investigating the option to generate cash flow from the sale of fertilizer and salt. For further information, refer to the press release entitled "GrowMax Announces Strategic Plans" which is dated September 12, 2016.
- The Company received the results of an independent Preliminary Economic Assessment ("PEA") for its Bayovar 7 phosphate project on its property located in the Sechura Desert, Peru. The results were announced on September 12, 2016 and the PEA report was filed on SEDAR on October 27, 2016. For further information, refer to the press release entitled "GrowMax Announces Results of a Preliminary Economic Assessment for Phosphates on Bayovar 7 Concession, Peru" which is dated September 12, 2016.
- On August 2, 2016, the Company engaged WorleyParsons Canada Services Ltd. to assist the Company with the provision of certain design and engineering consulting services for the potash project at Bayovar. Their work is ongoing and the Company expects to announce the results of WorleyParsons' work by the first quarter of 2017.
Argentina
- On November 10, 2016, the Company accepted an offer from Energy Operations Argentina LLC, a private American company, for the sale of all of the issued and outstanding common shares of Energicon, the Company's wholly-owned Argentine subsidiary. The sale closed on November 24, 2016. See "Sale of Energicon" below.
Abby Badwi, Executive Chairman of GrowMax Resources stated that, "So far in 2016, the Company has achieved and made significant progress towards its strategic plan, including:
1. Completing the sale of the Company's remaining oil and gas assets in Argentina, closing the Buenos Aires office and terminating all future oil and gas commitments so that the Company can focus its financial resources and personnel on growing its fertilizer business at Bayovar in Peru.
2. Completing three National Instrument 43-101 resource evaluation/updates of the phosphate mineral resources at Bayovar. The Company has also completed a NI 43-101 Preliminary Economic Assessment for Bayovar 7.
3. Advancing several studies to develop its brine project and a fertilizer business opportunity with an objective to achieve early cash flow."
SALE OF ENERGICON
Further to the press release of November 10, 2016, the Company announces that it has completed the sale to Energy Operations Argentina LLC (the "Purchaser"), of all of the issued and outstanding common shares of Energicon S.A. ("Energicon"), the Company's wholly-owned Argentine subsidiary and the holder of various working interests in the Vaca Mahuida, Loma Ranqueles, Huacalera and Totoral concessions (the "Transaction").
Highlights of the Transaction
- Cash consideration: US$5.0 million, of which US$1.0 million is now payable on December 12, 2016 pursuant to an amendment to the share purchase agreement made shortly before Closing. The remainder of US$4.0 million is payable in equal instalments of US$1.0 million each, on the 6th, 12th, 18th and 24th month following Closing. Should a hydrocarbon exploitation concession for Vaca Mahuida not be issued within six months of Closing, the cash consideration will be reduced to US$2.0 million and the final three payments will not be payable by the Purchaser.
- Purchaser responsible for commitments: The Purchaser has indirectly assumed all of the future work commitments associated with Energicon's concessions and has obtained the requisite documentation required to release GrowMax's existing performance bonds with Gas Y Petróleo del Neuquén.
Additional Information about the Transaction
The offer from the Purchaser to acquire all of the shares of Energicon was received in response to the Company's formal offering to sell its remaining Argentina assets. Several companies had signed confidentiality agreements and received access to all of the relevant data. Following an extensive review and analysis, the Company determined that the offer from the Purchaser was the most favourable and is in the best interests of GrowMax Resources and its shareholders. No finder's fee has been paid in respect of the Transaction.
2017 CAPITAL SPENDING GUIDANCE
The Company's 2017 capital work program and budget is set at approximately US$10 million, and will focus on:
- advancing the Bayovar project by further investigations and studies of domestic and regional sales of phosphate rock and by progressing on the social, environmental and permitting requirements;
- beginning construction of the solar evaporation ponds for the brine project; and
- completing market studies for domestic and regional sales of different potential fertilizers, including direct application phosphate rock ("DAPR") and Single Super Phosphate ("SSP") fertilizer, prior to initiating construction of a fertilizer plant.
In addition, the Company has budgeted to spend approximately US$3.4 million on general and administrative costs for 2017.
Notes:
- Working capital is calculated as current assets (September 30, 2016 - $54.2 million; June 30, 2016 - $61.1 million; December 31, 2015 - $83.2 million) less current liabilities (September 30, 2016 - $3.4 million; June 30, 2016 - $8.1 million; December 31, 2015 - $20.6 million). The Company's current assets at September 30, 2016 include $3.4 million (June 30, 2016 - $2.5 million; December 31, 2015 - $nil) of assets held for sale and the Company's current liabilities at September 30, 2016 include $1.3 million (June 30, 2016 - $0.7 million; December 31, 2015 - $nil) of liabilities held for sale. Working capital is used to assess liquidity and general financial strength. Working capital does not have a standardized meaning prescribed by IFRS. It is unlikely for non-GAAP measures to be comparable to similar measures presented by other companies. Working capital should not be considered an alternative to, or more meaningful than current assets or current liabilities as determined in accordance with IFRS.
- Restated to reflect discontinued operations. See note 17 of the condensed interim consolidated financial statements for further information.
About GrowMax Resources Corp.
GrowMax Resources Corp. (formerly Americas Petrogas Inc.) is a publicly listed Canadian company (Ticker GRO on TSX-V) focused on exploration and development of phosphate and potassium-rich brine resources on its Bayovar Property, which is located in the Sechura Desert in northwestern Peru. The Company's vision is to become a leading producer of phosphate and potash fertilizer products in Peru.
GrowMax Resources owns approximately 92% of GrowMax Agri Corp., a private company that owns 100% of the Bayovar Property, which currently covers approximately 227,000 gross acres. The Indian Farmers Fertiliser Co-operative Limited (IFFCO) and its affiliates own approximately 8% of GrowMax Agri Corp.
Forward Looking Information
Certain statements contained in this Press Release may constitute "forward-looking information" as such term is used in applicable Canadian and US securities laws. Any information or statements contained herein that express or involve discussions with respect to predictions, expectations, plans, projections, objectives, assumptions or future events should be viewed as forward-looking information. Such information relate to analyses and other information that are based upon forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Such forward-looking information involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different than those results, performance or achievements expressed or implied by such forward-looking information.
In particular, statements (express or implied) contained herein or in the Company's Interim MD&A - Quarterly Highlights regarding the following should be considered as forward-looking information: the Company's goals, plans, strategy and objectives; investigating the option to generate cash flow from the sale of fertilizer and salt; cash payable by the Purchaser for the sale of Energicon; the replacement by Energy Operations Argentina LLC of the performance bonds related to commitments in Argentina; the Company's 2017 capital program and budget, including the anticipated costs thereof; budget general and administrative costs; achieving early cash flow; plans for future commercial production; work related to the Company's potash project at Bayovar; and the potential for phosphates, potash, and other minerals in respect of the land in the Sechura Desert.
Additional forward-looking information is contained in the Company's Interim MD&A - Quarterly Highlights, and reference should be made to the additional disclosures of the assumptions, risks and uncertainties relating to such forward-looking information in that document.
There is no assurance that such forward-looking information will prove to be accurate as actual results and future events could vary or differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements contained in this Press Release. This cautionary statement expressly qualifies the forward-looking statements contained herein and in the Interim MD&A - Quarterly Highlights.
Forward‐looking information is based on management's beliefs, expectations, estimates and opinions on the date statements are made and the Company undertakes no obligation to update forward-looking information and whether the beliefs, expectations, estimates and opinions upon which such forward-looking information is based has changed, except as required by applicable law.
NEITHER THE 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 THE RELEASE.
Contact
GrowMax Resources Corp.
Abby Badwi, P. Geo.
Executive Chairman
+1 587 390 7015
inquiries@growmaxcorp.com
www.growmaxcorp.com
