EARNINGS / Banff Resources Announces First Quarter Results
VSE SYMBOL: BFF
DECEMBER 2, 1998
TORONTO, ONTARIO--Banff Resources Ltd (VSE - BFF) The Company
incurred a consolidated net loss for the three months ended
September 30,1998 of US$90,936, or zero cents per common share,
compared with a net loss of US$257,159, or one cent per common
share for the same period in 1997. The current period's net loss
included an exchange gain of US$47,146 primarily related to the
Company's debt being denominated in French Francs. Excluding the
foreign exchange gain, the net loss would have been US$138,112,
consisting primarily of operating costs.
For the three months ended September 30, 1998, the Company
incurred a net cash flow from operations of US$494,065. The
majority of this source of cash was derived from a decrease of
US$3,454,929 in advances to contractors offset by a US$2,2696,410
decrease in accounts payable and an increase of US$191,522 in
accounts receivable, inventory and prepaid expenses. These
changes are primarily a result of the natural progression of
construction activities.
At the end of the period the company was in a negative working
capital position (US$7,037,532) . This position is due to the
loans from the parent company being classified as a current
liability as there are no fixed terms of repayment and the high
level of construction payables. It is anticipated that the
company will have a positive working capital once production of
cobalt is commenced.
During the period the Company incurred additional expenditures of
US$20.8 million on construction of the Kasese cobalt project.
This brings total development and construction costs to US$78.1
million as at September 30, 1998. The original plan called for a
total capital cost of US$110 million which was to be financed
US$44 million in equity and US$66 million in debt.
The Kasese cobalt project has fallen behind it's scheduled
construction timetable due to a number of factors. These include
unseasonable rains in East Africa at the end of 1997 and beginning
of 1998 and logistical difficulties which had an effect on the
delivery of parts and supplies; the disruptions caused by rebel
activity in the region; and delays cause by unforeseen quantities
of rock in the water diversion canal for the hydro power plant.
The bio-leach mass build up was scheduled to commence on November
4, 1998 but is now scheduled for the last half of January 1999.
The hydro electrical plant is expected to be producing by late
January 1999. The commissioning of the solvent extract circuit is
planned for April 1999 and for the electrowinning circuit, May
1999. The production of cobalt metal is now scheduled for May of
1999 rather than in the first quarter of 1999. Along with the
construction delays, the Company is forecasting a capital overrun
of approximately US$15 million, thus bringing the total capital
cost to US$125 million. The Company is presently developing a
strategy to finance the overrun and plans to have a completed
financing package before the end of December 1998.
A sales and purchase agreement has been finalized with the Ugandan
Electricity Board (UEB) which fixed the price for the purchase and
sale of electricity for 2 years.
Negotiations with marketing agents for the sale of cobalt
continued and separate agents for the Far East, Europe, and the
Americas are scheduled to be appointed in the quarter ending March
1999.
Site operational management and administration have been mobilized
and are in the process of preparing operation start-up plans and
procedures.
The Company does not have any investor relations contracts. Mr.
David Constable, Vice-President Investor Relations is available to
answer shareholder inquiries.
Banff Resources Ltd.
Per:
"David Constable"
Vice President, Investor Relations
/T/
BANFF RESOURCES LTD.
Consolidated Balance Sheets
As at September 30, 1998 and 1997
(in U.S. Dollars)
(unaudited)
1998 1997
---- ----
Assets
Currents assets
Cash $ 2,295,007 $ 1,283,689
Inventory 138,615 -
Accounts receivable 1,420,543 50,208
Contractor advances 3,135,625 1,179,414
Prepaid expenses 32,991 69,599
----------- -----------
Total current assets 7,022,781 2,582,910
Loans and advances receivable 1,408,043 1,288,551
Capital assets 85,133,442 25,016,504
----------- -----------
$ 93,564,266 $ 28,887,965
----------- -----------
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Liabilities and shareholders' equity
Current liabilities
Accounts payable and
accrued liabilities $ 8,029,594 $ 1,267,088
Due to related parties 6,030,719 14,519,504
----------- -----------
Total current liabilities 14,060,313 15,786,592
Long-term loans 39,314,330 1,597,680
Deferred foreign exchange gain 131,937 270,635
----------- -----------
53,506,580 17,654,907
----------- -----------
Non-controlling interest 14,837,018 1,737,018
----------- -----------
Shareholders' equity
Share capital 26,752,284 10,608,258
Deficit (1,531,616) (1,112,218)
----------- -----------
25,220,668 9,496,040
----------- -----------
$ 93,564,266 $ 28,887,965
----------- -----------
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BANFF RESOURCES LTD.
Consolidated Statement of Operations and Deficit
For the three months ended September 30, 1998 and 1997
(in U.S. Dollars)
(unaudited)
1998 1997
---- ----
Administrative Expenses
Salaries and wages $ 58,786 $ 65,050
Professional fees 6,842 20,051
Travel and promotion 27,859 41,244
Consulting fees 15,163 74,648
Office and sundry 5,423 10,412
Depreciation 7,809 23,633
Interest on shareholder loan 10,893 10,614
Rent 7,478 8,548
Capital tax - 1,353
Interest and bank charges 147 1,094
Listing and transfer agent fees 686 739
----------- -----------
Loss before the undernoted 141,086 257,386
Interest and other income (2,974) (1,677)
Translation and foreign
exchange (gains) loss (47,176) 1,450
----------- -----------
Loss for the period 90,936 257,159
Deficit - beginning of period 1,440,680 855,059
----------- -----------
Deficit - end of
period $ 1,531,616 $ 1,112,218
----------- -----------
----------- -----------
Loss per common share $ 0.00 $ 0.01
----------- -----------
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BANFF RESOURCES LTD.
Consolidated Statements of Changes in Financial Position
For the three months ended September 30, 1998 and 1997.
(in U.S. Dollars)
(unaudited)
1998 1997
---- ----
Operating activities
Loss for the period $ (90,936) $ (257,159)
Charges (credits) not affecting cash
Depreciation 7,809 23,633
Foreign exchange gains (80,805) (6,712)
Decrease (increase) in non-cash
working capital related to operations:
Accounts receivable, inventory,
and prepaid expenses (191,522) 174,271
Contractor advances 3,545,929 (1,179,413)
Accounts payable and accruals (2,696,410) 214,597
----------- -----------
494,065 (1,030,783)
----------- -----------
Investing activities
Resource properties (20,808,470) (3,710,364)
Plant, machinery and office equipment 2,159 (1,534)
----------- -----------
(20,806,311) (3,711,898)
----------- -----------
Financing activities
Advances from related parties 496,193 5,232,591
Loans and advances receivable - 18,851
Long-term loans 15,633,205 -
----------- -----------
16,129,398 5,251,442
----------- -----------
Net increase (decrease) in cash (4,182,848) 508,761
Cash position - beginning of period 6,477,855 774,928
----------- -----------
Cash position - end of period $ 2,295,007 $ 1,283,689
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/T/
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