Nine month results
Highwood Resources Ltd HWD
Shares issued 20,025,748 Dec 7 close $0.58
Tue 8 Dec 98 Company Review
Mr. John Smrke reviews the company
Throughout the third quarter and for the nine months year-to-date, the
company has continued to operate its industrial mineral divisions
profitably. Overall, the production, revenues and costs have come in near
expectations for the period. Looking ahead to the fourth quarter, we are
optimistic that this pace will continue and the company's 1998 budget
expectations will be achieved.
Net earnings for the three months ended Sept. 30, 1998 were $193,372 or 1
cent per share, compared to net earnings of $267,237 or 1 cent per share
for the same period in 1997. Year-to-date net earnings were $550,089
compared to $627,096 for the same nine month period in 1997, a decrease of
$77,007. Earnings per share for the nine months ended Sept. 30, 1998 was
2.5 cents.
Revenues in the third quarter were $3,385,378 compared to $4,223,401 for
the same period in 1997. This sharp decrease is attributable primarily to a
weak oil and gas drilling market which significantly reduced its need for
lower grade barite into drilling fluids. In 1997 the company experienced
near record high volumes in barite drilling fluid sales while, in this
current quarter, the company has experienced near record lows. Increases in
higher grade barite filler sales have helped cover this shortfall from a
gross margin standpoint as the margins from the fillers are substantially
higher than from the drilling fluid material. Expenses have been controlled
diligently in order to address this situation and are tracking to be below
1997 levels for the year. Cash flow from operations was $964,273 compared
to $976,930 for the same nine month period in 1997.
In addition to the industrial mineral operations activity within the
company, efforts continue in obtaining the water licence which would allow
the company to proceed with the Thor Lake beryllium project. In order to
make its best efforts toward expediting the process, the company has
continued regular communications with the government of the Northwest
Territories and the Regional Environmental Resource Committee. The purpose
of these communications has been to identify and address any issues
surrounding the company's environmental applications regarding the project.
Through public involvement, issues and concerns that have been voiced to
various government agencies have promptly been reviewed by the company and
appropriately incorporated in the most recent technical description
submitted.
During the third quarter, the company formally submitted its environmental
assessment plan, which served to deal with any and all aspects of the
project. The final plan will then be reviewed by the government and the
Regional Environmental Resource Committee. The company continues to
maintain optimism that this matter will be recommended to the Water Board
during the fourth quarter. Although the permitting process in the Northwest
Territories has taken somewhat longer than anticipated, the company
continues to take all the action necessary to ensure that any delays are
minimized.
With the arrival of the cold weather in the Northwest Territories, all work
in the project site has been curtailed until spring. The government has
extended the existing work permits until the end of 1999.
The company continues to advance its discussions with the various
governmental authorities within the Province of Alberta regarding the
downstream processing plants which we plan to locate in the
Edmonton/Calgary area. Recent activities have included formal meetings with
the government officials, as well as visits to some of the communities
which are being considered as potential sites for the plants.
CONSOLIDATED STATEMENT OF EARNINGS
Three months ended Sept.30
1998 1997
Revenue
Sales $3,385,378 $4,223,401
Cost of sales 2,600,251 3,271,660
---------- ----------
785,127 951,741
---------- ----------
Expenses
General and
admin 302,450 262,669
Depreciation and
amortization 219,861 250,902
Exploration 79,745 148,914
Interest on
long-term debt 7,260 28,556
---------- ----------
609,316 691,041
---------- ----------
Income from
operations 175,811 260,700
Interest income 44,561 33,537
---------- ----------
Net earnings
before income
taxes 220,372 294,237
Income taxes
Current 12,000 12,000
Deferred 15,000 15,000
---------- ----------
Net earnings $ 193,372 $ 267,237
========== ==========
Earnings
per share .9 cent 1.2 cents
CONSOLIDATED STATEMENT OF EARNINGS
Nine months ended Sept.30
1998 1997
Revenue
Sales $10,246,701 $11,167,548
Cost of sales 7,807,067 8,543,711
---------- ----------
2,439,634 2,623,837
---------- ----------
Expenses
General and
admin 1,024,824 1,028,594
Depreciation and
amortization 637,099 685,867
Exploration 227,170 213,996
Interest on
long-term debt 44,496 88,837
---------- ----------
1,933,589 2,017,294
---------- ----------
Income from
operations 506,045 606,543
Interest income 125,044 101,553
---------- ----------
Net earnings
before income
taxes 681,089 708,096
Income taxes
Current 36,000 36,000
Deferred 45,000 45,000
---------- ----------
Net earnings $ 550,089 $ 627,096
========== ==========
Earnings
per share 2.5 cents 2.9 cents
(c) Copyright 1998 Canjex Publishing Ltd. canada-stockwatch.com
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