TORONTO, Nov. 13, 2012 /PRNewswire/ -- Global Alumina
Corporation (TSX: GLA.U) (the "Company" or "Global Alumina"), a
corporation participating in a joint venture to develop an alumina
refinery, mine and associated infrastructure in the bauxite-rich
region of the Republic of Guinea
(the "Project"), announced today its financial and operating
results for the three and nine month periods ended September 30, 2012. The text of the
quarterly unaudited financial statements and management's
discussion and analysis can be viewed or printed from the Company's
SEDAR reference page at www.sedar.com. All dollar amounts are
in U.S. dollars.
Third Quarter 2012 Financial Highlights
- In the first nine months of 2012 the joint venture partners
contributed capital of $40.2 million
towards the approved Project budget with the Company contributing
its $13.4 million one-third
share.
- At September 30, 2012, Guinea
Alumina Corporation, Ltd. ("Guinea Alumina", the joint venture
company) had capitalized into construction in progress
approximately $729.5 million, of
which approximately $9.6 million
relates to the third quarter of 2012.
- As of September 30, 2012, the
Company had unrestricted cash of $3.4
million and escrowed cash totalling $3.3 million in its escrow account to fund future
Project capital calls.
- During the third quarter, Guinea Alumina's board of directors
approved additional Project funding of $15.2
million for the period from October
2012 through March 2013. Global Alumina will be
responsible for its one-third share.
- As announced on November 1, 2012,
the Company and the Broken Hill Proprietary Company Limited ("BHP
Billiton") entered into a sale and purchase agreement (the "SPA")
which is described in the Subsequent Events section below.
The Company considers the BHP Billiton transaction to be a
unique opportunity for it to reacquire additional Project interests
for nominal consideration and to continue developing the Project
with the other joint venture partners whose strategic interests in
forwarding the Project remain closely aligned with that of the
Company. As a result of the nominal consideration agreed to
in the SPA for BHP Billiton's interests, accounting standards
require the Company to record a non-cash impairment charge of
$132.1 million in the third quarter
of 2012 and reduce the carrying value of its one-third interest in
Guinea Alumina to $20.0 million, to reflect the amount
contractually agreed between the Company and BHP Billiton for BHP
Billiton's one-third share of Guinea Alumina.
- For the three and nine months ended September 30, 2012, respectively, the Company
reported a net loss of $95,526,060
million ($0.50 per share) and
$98,826,992 ($0.54 per share), compared to a net loss of
$10,750,757 ($0.06 per share) and $25,716,539 ($0.14
per share) for the same periods in 2011.
- Excluding the non-cash impacts of the impairment charge and the
changes to the derivative valuation, the Company would have
reported a net loss for the three and nine months ended
September 30, 2012 of $0.4 million ($0.00
per share) and $2.8 million
($0.02 per share), respectively,
compared to a net loss of $1.1
million ($0.01 per share) and
$3.3 million ($0.02 per share) for the same periods in
2011.
At usage rates that the Company currently expects in 2012, funds
in escrow will be sufficient to meet its one-third share of Project
equity requirements through November
2012, and unrestricted funds will be sufficient to enable it
to meet its corporate operating expense requirements through August
2013.
Bruce Wrobel, CEO, commented,
"Subsequent to the close of our third quarter, we entered into a
transformational agreement to purchase BHP Billiton's stake in the
Project, setting the stage for a more efficient Project ownership
structure and for accelerated development of one of the world's
largest low-cost alumina refineries. Along with our remaining
partners, DUBAL and Mubadala, we remain firmly focused on advancing
the Project, aiming to capitalize on the expected long-term global
supply-demand gap in alumina, while providing economic and social
benefits to the people of Guinea
and enhanced value for our shareholders."
Subsequent Events
On November 1, 2012 the Company
announced it had entered into the SPA with BHP Billiton for the
acquisition of its one-third interest in the Project. Under
the existing Project shareholders' agreement, each of Dubai
Aluminium Company Limited ("DUBAL") and MCD Industry Holding
Company LLC ("Mubadala"), the other two Project joint venture
partners in the Project, has the right to purchase its
proportionate share of the interests to be sold under the
SPA. Global Alumina's ownership interest in the Project will
increase from its current 33.3% to a level between 50.0% and 66.7%
depending on whether each of DUBAL and Mubadala either exercises or
waives its right to purchase its proportionate share of the
interests to be sold under the SPA.
The purpose of the SPA is to facilitate the exit of BHP Billiton
from the ownership of GAC and to consolidate ownership of GAC among
the remaining owners. The SPA is expected to enhance the
Company's shareholder value as it: (1) removes an owner whose
strategic focus has shifted away from development of the Project;
and (2) will result in an increase in both the Company's ownership
interest in the Project and associated rights to the Project's
alumina production, by 50% to 100%.
In connection with the proposed purchase of BHP Billiton's
interest in the Project and to fund future Project development and
its operating costs, the Company plans to raise additional capital
through the private placement of its securities. The Company
has retained RK Equity Capital Markets as its financial advisor in
connection with the financing. Any offering of the securities
of Global Alumina will be subject to the prior approval of the
Toronto Stock Exchange (the "TSX") and is expected to require the
approval of the shareholders of Global Alumina. The Company
expects to provide additional details regarding the offering in a
management information circular that will be sent to its
shareholders in due course.
Other Corporate Developments
On September 6, 2012 the Company
adopted a share compensation plan (the "SCP"). Pursuant to
the SCP, directors and key employees and consultants of the Company
("Key Employees") are eligible to participate in the SCP while such
persons are employed by, provide services to, or hold an office
with, the Company. The SCP provides that participants may
elect to receive all or a portion of their quarterly board
retainer, bonus, salary or consulting fees in shares of the Company
issued from treasury. The number of shares issued is
determined by the applicable elected compensation being divided by
the closing trading price of the shares on the TSX on the date of
issue. The SCP will (a) increase the shareholdings of
participating directors and Key Employees to further align their
interest with those of the Company and its shareholders and (b)
preserve the cash of the Company by providing non-cash compensation
to participants.
About Global Alumina
Global Alumina is in a joint venture through its wholly owned
subsidiary, Global Alumina International, Ltd., with BHP Billiton,
Dubai Aluminium Company Limited and Mubadala Development Company
PJSC, to develop an alumina refinery in the bauxite-rich region of
the Republic of Guinea. Global Alumina is headquartered in
Saint John, New Brunswick and has
administrative offices in New
York, London and
Montreal. For further information visit the Company's website
at www.globalalumina.com.
Forward Looking Information
Certain information in this press release is "forward looking
information", which reflects management's expectations regarding
the Company's future growth, results of operations, performance and
business prospects and opportunities. In this release, the words
"may", "would", "could", "should", "will", "intend", "plan",
"anticipate", "believe", "seek", "propose", "estimate" and "expect"
and similar expressions, as they relate to the Company and its
assets and interests, are often, but not always, used to identify
forward looking information. Such forward looking information
reflects management's current beliefs and is based on information
currently available to management. Forward looking information
involves significant risks and uncertainties, should not be read as
a guarantee of future performance or results, and will not
necessarily be accurate indications of whether or not or the times
at, or by which, such performance or results will be achieved. In
particular, this release contains forward looking information
pertaining to the following: the agreement to purchase additional
interests in the Project; the adequacy of the Company's cash
resources and its ability to continue to fund the Project or and
purchase of interests in the Project; the decision to proceed with
the Project and the ability of the joint venture partners to agree
on timing of development of the Project; the decisions of the joint
venture with respect to conduct of the Project; fair value
estimates of the Project; expectations regarding the financing of
the Project, the amount, nature and timing of capital expenditures
to complete the Project; future production levels; expectations
regarding the negotiation of contractual rights; prices for alumina
and aluminium; operating and other costs; political developments in
Guinea and recognition by the new
political regime in Guinea of
historical agreements negotiated by the previous government,
general business strategies and plans of management with respect to
the Project. A number of factors could cause actual results
to differ materially from the results discussed in the forward
looking information, including, but not limited to: the inability
of the Company to source new funding for the purchase of interests
in the Project or to fund its on-going expenses pending a sale of
the Company and continue as a going concern; ongoing political
events in Guinea and the
transition to a new government and the policies of such new
government; the current political and economic risks of investing
in a developing country; a decision by the joint venture partners
not to proceed with the Project; material changes to the cost
estimates and time estimates for development of the Project;
unanticipated liabilities of Global Alumina at the corporate level
and the inability of the Company to obtain additional financing to
fund corporate expenses; the accuracy of the assumptions used to
determine the fair value of the Project; the possibility that the
value of the Company's assets could deteriorate; operational risks
such as access to infrastructure and skilled labour; the inability
of the Company to raise additional financing to fund its share of
future development costs of the Project; the Company's dependence
on an interest in a single asset; the possible forfeiture of the
690 square kilometre mining concession area near Sangarédi in
certain circumstances; construction risks such as cost overruns,
delays and shortages of labour, materials or equipment; currency
fluctuations; price volatility of alumina, aluminium or raw
materials and certain other factors related to the Project and the
factors related to the business of the Company discussed under the
heading "Risk Factors" in the Company's Annual Information
Form.
The forward looking information contained in this release is
based on the following principal assumptions: that market
conditions will not be materially adverse to the Company raising
additional capital prior to completing financing of the Project and
the Project will remain a viable asset; that the data, estimates
and projections in the bankable feasibility study of the Project
are within the range of accuracy suggested therein and the
conclusions reached therein are still valid as of the date of this
release; that general economic and political conditions will not be
adverse to proceeding with and completing financing for the Project
and will have no material adverse impact on the Project; that the
negotiations with prospective Project lenders and between the
prospective Project lenders and the Guinean government will resume
and be successfully concluded; that the bidding process for
contracted work in connection with the Project will be completed in
a competitive manner and that actual costs to complete work will be
within the range of quotes provided by contractors to date; that
the joint venture will be able to acquire necessary labour at
currently assumed labour costs and productivity rates; that once
approved the development plan for the Project is conducted
according to schedule; that general economic factors and trends
relating to construction costs remain constant or improve and that
the future political and economic climate in Guinea has no material adverse effect on the
Project and the new political regime arising from the transition to
a new government continues to recognize agreements negotiated by
the previous government. Although the forward looking
information contained in this release is based upon what management
of the Company believes are reasonable assumptions, Global Alumina
cannot assure investors that actual results will be consistent with
this forward looking information. If the assumptions
underlying forward looking information prove incorrect or if other
risks or uncertainties materialize, actual results may vary
materially from those anticipated in this release. This
forward looking information is made as of the date of this release,
and Global Alumina assumes no obligation to update or revise it to
reflect new events or circumstances, except as required by
applicable law.
For further information, please contact:
Michael
Cella
Global Alumina
212 351 0010
cella@globalalumina.com
|
Susan
Borinelli
Breakstone Group
646 330 5907
sborinelli@breakstone-group.com
|
SOURCE Global Alumina Corporation