Now we are getting some positive news from the company that we canfeel more confident that the coming year will finally see the fruition of all the hard work management and its staff has being doing to set the stage for revenue growth and positive cash flow.It tells us that patience will see expansion of their production and gradual increased sales of ALL their products to eventually have a large revenue, money making organization.This is what will drive the stock price higher.
"United Industrial Services Ltd UIS
Shares issued 62,889,884 Apr 25 close $0.34
Wed 26 Apr 2000
Letter to our shareholders
I wish to update our shareholders as to the status of your company today,
and where it is heading in the near future.
Financials for the year ended Dec. 31, 1999, will be published in the next
week or so. Management made a conscious decision back in 1998 to write off
rather than capitalize all start-up expenses. The decision has the effect
of exaggerating the losses for 1998 and 1999. But, for year 2000 and
beyond, it leaves the company with no back-charges from yesterday's
expenses to apply against current and future earnings. Consequently, the
1998 and 1999 financials are negative, but the decision to take an
aggressive accounting approach allows the company to write off losses
immediately and thereby reduce future income taxes for several years out.
The critical Alberta environmental impact assessment review is anticipated
to be complete in May of this year. Alberta Environment (AE) has determined
that the report is complete and the Natural Resources Conservation Board
(NRCB) has deemed that a public hearing is not required (a rare
occurrence). They are proceeding with the various required approvals. As
announced on April 12, 2000, this full-operating permit will coincide with
the major selling season. Furthermore, and most importantly, the expanded
production permit now enables the company to vigorously pursue long-term
contracts and develop a significantly larger customer base.
Sales for year 2000 to the foundry industry in both Western Canada and
northwestern United States are proceeding in earnest. We have procured
standing purchase orders from a number of foundries totalling 10,000 tonnes
per year. We are currently being evaluated by several more and this tonnage
is expected to double during the year 2000.
Sales to the fibreglass insulation industry in Alberta have started. We
have a commitment from one manufacturer that could lead to 8,000 tonnes per
year, starting in May, 2000. The company's sand is also currently under
evaluation by another plant which requires a further 3,000 tonnes per year.
The Peace River sand has specific beneficial application for the fibreglass
market. It offers a high-quality silica sand at competitive prices and at
the same time reduces the need for other high-priced fibreglass batch
components.
A change of season is upon us and the wet plant at Peace River will start
up next week. It is projected to produce at least double last year's
production of frac sand, all of which is to be sold in Western Canada.
The company's Peace River sand is currently under evaluation by major
cement and concrete companies in Western Canada. The potential market for
this application is in excess of 45,000 tonnes per year of silica sand.
The bottom line is this -- the company expects to produce approximately
100,000 tonnes of finished product this year and will adjust operations to
ensure positive cash flow this year.
Our current debenture offering is over 50-per-cent subscribed and we expect
to sign letters of intent for the balance during the next three weeks. We
held back a portion of the offering for the benefit and participation of
existing shareholders. If any shareholder would like to participate, please
contact the company at your earliest convenience. The proceeds will be used
for capital items and working capital. We will be streamlining our sand
shipping terminals and adding process flotation cells to ensure that the
iron content of our glass sand meets the maximum permitted specification
and allows the company entrance into the high-end glass market.
To our shareholders, the development of the company has appeared to be a
long, tedious and expensive journey. However, one must remember that the
development of the Peace River resource from exploration to regulatory
approval to full-scale operation has occupied less than three years. By any
measure, this is an extraordinary record for this type of development.
Unlike mining operations, UIS must market a variety of products to a
variety of industries. We do not ship a concentrate to a single smelter.
Marketing of our products is the current primary focus of the company and
we are greatly encouraged by the success to date. The company is well along
the path to being a premiere North American industrial minerals producer.
Your patience will be rewarded soon in view of the extremely bright outlook
encapsulated in this and other recent reports. On behalf of the management
team, and the board of directors, I want to thank our employees, our
suppliers and our shareholders for their co-operation and continued
commitment over the past three years.
J.K. Norrie
President |
