Titanium Corporation Inc. (the “Company” or “Titanium”)
(TSX-V: TIC) today released its results for the three and
six-month periods ended June 30, 2020.
In 2020, the COVID-19 pandemic and the collapse
of oil demand and prices has introduced unprecedented uncertainties
for Canada’s oil sands industry, the global mineral sands industry
and the Canadian economy. The duration and the extent of the impact
of these events is not known but could adversely affect the
progress and timing of the Project. In response, the Company has
taken measures to protect its balance sheet by reducing costs and
conserving cash over the months ahead.
During the first six months of 2020, the Company
and Canadian Natural’s joint project engineering team has continued
work on the Project using internal resources, performing post-FEED
engineering reviews and optimization of the Project as well as
continuing on-going minerals analysis programs. The focus of the
Project team in 2020 is the optimization of the concentrator
facility and the design and engineering of a tailings thickener and
associated facilities. In parallel, the Company has been providing
updates to the Alberta and Federal government agencies who have
awarded grant funding for the Project and are working with them
toward funding contracts for the detailed engineering phase of the
Project in 2020. The internal optimization of the concentrator
facility, including updating cost estimates, is expected to be
completed by the end of 2020. Optimization of the minerals facility
is expected to start in early 2021.
“Our staffs have been successfully continuing
project activities under the constraints imposed by the COVID-19
pandemic and uncertain economic conditions. Using internal
engineering resources, work ramped up in the quarter with the joint
project team making very good progress optimizing the design of the
concentrator facility,” commented Scott Nelson, Titanium’s
President and Chief Executive Officer. “In parallel, our minerals
team has identified enhancements to the minerals facility including
the addition of circuits to produce a new L72 titanium product
while continuing testing and evaluation of the minerals content in
tailings.”
Certain highlights for the three and six-month
periods ended June 30, 2020 are set out in more detail below:
- Engineering optimization activities
by the internal Project engineering team were planned in Q1 and are
now underway in 2020. These activities are focused on the
concentrator facility with the objectives of improving operability,
enhancing environmental performance, reducing costs, and include:
changes to the plot plan to increase modularization, relocate
certain equipment and reduce building sizes; the addition of a
vapor recovery unit to the flotation circuit; the review of
alternate flotation technologies and the addition of a tailings
thickener which will process and remediate the tailings from the
concentrator.
- Prior to the COVID-19 pandemic, the
Company conducted technical marketing and testing programs
including meeting with potential minerals processors and customers,
visiting their facilities and providing minerals samples for
customer testing. Based on results and feedback from these
activities, the Company has adjusted its plans for the production
of minerals. The Company has identified an opportunity to produce a
blended L72 titanium product for the North America pigment
industry. L72 would be an average 72 percent TiO2 product comprised
of a blend of leucoxene, ilmenite and rutile. Preliminary work is
underway to redesign the minerals flowsheet to include production
of this new product. This would enable the recovery of ilmenite
which was rejected in previous flowsheets. In addition, the Company
is adjusting the design of its zircon circuitry to produce a
high-quality zircon concentrate to market to a growing concentrates
processing industry in Asia. A number of new minerals projects have
adopted a concentrates strategy in order to address this market and
reduce the costs of constructing and operating separation
facilities at their project sites. More detailed optimization and
engineering of the minerals facility is expected to start in early
2021 following the completion of the engineering optimization of
the concentrator by the end of 2020 subject to future economic and
health conditions.
- The Company continued to advance
the contracting with government funding agencies for grant awards
for the next phase of the Project. This has included Project
updates regarding the impacts on the Project of the COVID-19
pandemic and the oil demand and price collapse. Funding from
the government programs is subject to finalizing funding agreements
which will outline the conditions under which funding would be
provided. Of the $50 million of grant awards to the Company in
2019, approximately $7 million is designated for the engineering
phase of the project with the balance for the procurement and
construction phases.
- On July 27, 2020 the Company
announced Mr. Bruce Griffin will assume the role of Chair of the
Commercialization Committee of the Board of Directors (the
"Committee") of the Company. Mr. Griffin, who is currently a
member of the Committee, will be replacing Mr. David Macdonald, who
has been the Chair of the Committee since 2017. Mr. Macdonald
will remain a member of the Committee.
- The Company implemented salary
reductions in the range of 15 to 20% effective April 1, 2020 to
preserve cash in response to the uncertainty created by the
COVID-19 pandemic and the resulting delays to the Project.
The Company is also continuing its cash conservation programs
including those under which management and directors receive a
portion or all of their compensation and fees in restricted share
units and deferred share units (“DSUs”), respectively. This
program was aimed to conserve cash and further align management and
the Board with shareholder interests. Since the inception of
the program in 2015, the Company’s directors have been receiving
100% of their compensation in DSUs in lieu of cash
compensation.
FINANCIAL OVERVIEW
Titanium is focused on achieving long-term
financial success by implementing its innovative CVW™ technologies
in commercial operations at oil sands sites. With the FEED portion
of the Project completed, the Company is working with Canadian
Natural on Project activities post-FEED, including engineering
optimization and planning for the potential implementation of its
technology at Canadian Natural’s Horizon site. However, until
Project activities post-FEED are completed to the satisfaction of
the parties, commercial arrangements and investment decisions are
made, and facilities constructed and operating, the Company expects
to continue to incur losses. Currently, quarterly
(losses)/income are comprised of research and development
(“R&D”) project costs, and general and administrative
(“G&A”) expenditures.
Net (Loss) Income – For the
three and six-month periods ended June 30, 2020, the Company
reported net loss of $0.7 and $1.6 million, respectively.
This resulted in a $0.01 loss per share for the current quarter and
a $0.02 loss per share for the six-month period ended June 30,
2020. The net loss for the three month period ended June 30,
2020 consisted of G&A ($0.4 million) and R&D ($0.3 million)
expenses in the current quarter compared to net income of $52,000
for the three-month period ended June 30, 2019 as the Company
received project contributions for the FEED Project in the prior
period which exceeded Project costs incurred and G&A expenses.
For the six-month period ended June 30, 2020 net loss of $1.6
million consisted G&A ($0.7 million) and R&D ($0.9 million)
expenses compared to net income of $0.5 million for the six-month
period ended June 30, 2019. As noted above the timing and
receipt of project contributions in the prior period exceed G&A
and R&D expenses. For a development stage company and
given the timing of Project contributions in the prior year, the
net loss was in line with expectations.
Research & Development –
R&D spending in the current quarter consisted primarily of
compensation for technical staff, on-going minerals testing and
evaluations, and post-FEED optimization engineering work.
Compensation and deferred compensation costs were lower due to the
salary reduction initiatives implemented in April of 2020 to
preserve cash as a result of uncertainty related to COVID-19 and
oil price collapse impacting the timing of the project.
Project costs were higher by $53,000 for the three-month period
ended June 30, 2020 compared to the same period in 2019 due to
minerals product development and optimization work in the current
quarter. Recovery of project costs was nil for the
three-month period ended June 30, 2020 compared to $1.0 million for
the three-month period ended June 30, 2019. The recovery in
2019 related to the collection of FEED contributions from ERA and
Canadian Natural for the final FEED project milestones. Based on
the level of R&D post-FEED activity, R&D costs were in line
with expectations.
General &
Administrative – G&A expenses for the
three-month period ending June 30, 2020 were lower at $0.42 million
as compared to $0.55 million for the three-month period ended June
30, 2019. Management undertook voluntary salary reductions
effective April 1, 2020 and reduced other variable compensation in
order to preserve cash and deal with the impacts of the COVID-19
pandemic and the economic uncertainty. There was an increase in the
quarter in professional fees due to legal costs related to
shareholder matters and impacts and assessments of regulatory
reporting requirements due to the COVID-19 pandemic. Investor
relations costs also increased during the quarter with the changes
and costs related to hosting the annual shareholder meeting in a
virtual format to comply with public health measures. G&A cash
expenses were lower by $73,000 during the period ended June 30,
2020 primarily related to compensation, noted above and travel,
offset by professional fees and regulatory costs as compared to the
three-month period in the prior year. Deferred and
equity-based compensation costs were lower during the three-month
period ended June 30, 2020 as the Company did not grant stock
options in the current fiscal year and voluntary reduced deferred
compensation programs. These initiatives along with minor
rent reductions, group benefit premium reductions, workers
compensation premiums refunds and other initiatives will reduce
G&A cash requirements throughout the balance of the year.
Cash Position – The
Company had an aggregate of $3.6 million at June 30, 2020
consisting of cash and short term investments, with $1.6 million in
interest-bearing cash accounts and a $2.0 million short-term
investment with a Schedule I bank in the form of a cashable GIC as
compared to $5.1 million at December 31, 2019. The decrease
in cash and short-term investments of $1.5 million is the result of
funding the Company’s post-FEED Project activities, general and
administrative and public company expenditures. With the cost
reduction initiatives and delayed timing of the Project, the
Company expects its current cash position will support it through
the next 12-month period.
To view the Company’s management discussion and
analysis and interim unaudited financial statements for the three
and six-month periods ended June 30, 2020, please visit our website
at www.titaniumcorporation.com or SEDAR at www.sedar.com.
About Titanium Corporation
Inc.Titanium Corporation’s CVW™ technology provides
sustainable solutions to reduce the environmental footprint of the
oil sands industry. Our technology reduces the environmental impact
of oil sands froth treatment tailings while economically recovering
valuable products that would otherwise be lost. CVW™ recovers
bitumen, solvents, heavy minerals and water from tailings,
preventing these commodities from entering tailings ponds and the
atmosphere: volatile organic compound and greenhouse gas emissions
are materially reduced; hot tailings water is improved in quality
for recycling; and residual tailings can be thickened more readily.
A new minerals industry would be created commencing with the
production and export of zircon, an essential ingredient in
ceramics. The Company’s shares trade on the TSX-V under the symbol
“TIC”. For more information please visit the Company’s website at
www.titaniumcorporation.com.
Disclosure regarding forward-looking
informationThis news release contains forward-looking
statements and information within the meaning of applicable
Canadian securities laws (collectively, "forward-looking
information") that reflect the current expectations of
management about the future results, performance, achievements,
prospects or opportunities for Titanium, including statements
relating to the occurrence and timing of future steps with respect
to the CVW™ Horizon Project, including the Project activities
post-FEED and the factors that are expected to affect such
occurrence and timing; the continued effective collaboration
between the Company and Canadian Natural; the Company's ongoing
engagement with its business partners and government funding
agencies; the Company's continuing cash conservation program and
expectations regarding the Company's current cash position; the
Company's ongoing evaluation of financing opportunities, including
grant and financing opportunities from applicable government
programs; and the advantages of the Company's technology in
assisting with the recovery of the energy industry in Alberta and
Canada. This forward-looking information generally can be
identified by use of forward-looking words such as "may", "will",
"expect", "estimate", "anticipate", "believe", "project", "should"
or "continue" or the negative thereof or similar variations.
Forward-looking information is presented in this
news release for the purpose of assisting investors and others in
understanding certain key elements of our financial results and
business plan, as well as our objectives, strategic priorities and
business outlook, and in obtaining a better understanding of our
anticipated operating environment. Readers are cautioned that such
forward-looking information may not be appropriate for other
purposes.
Forward-looking information, by its very nature,
is subject to inherent risks and uncertainties and is based on many
assumptions, both general and specific, which give rise to the
possibility that actual results or events could differ materially
from our expectations expressed in or implied by such
forward-looking information and that our business outlook,
objectives, plans and strategic priorities may not be
achieved. Macro-economic conditions, including public health
concerns (including the impact of the COVID-19 pandemic) and other
geopolitical risks, the condition of the global economy and,
specifically, the condition of the crude oil and natural gas
industry including the collapse of global crude oil demand and
prices and other commodity prices and demand in 2020, and the
ongoing volatility in world markets may adversely impact oil sands
producers' program plans, including proceeding with an investment
decision in further Project activities post-FEED or any final
investment decision with respect to commercialization, which could
materially adversely impact the Company. In addition to other
factors and assumptions which may be identified in this news
release, assumptions have been made regarding, among other things:
the condition of the global economy, including trade, public health
(including the impact of the COVID-19 pandemic) and other
geopolitical risks, including the fact that any estimates of
Project next steps post-FEED, as well as the detailed engineering
and construction period may be affected by the COVID-19 pandemic,
condition of the global economy and commodity prices, in particular
crude oil prices; the stability of the economic and political
environment in which the Company operates; the success of the
Project activities post-FEED, including the expected assessment of
post-FEED engineering reviews for next steps as part of the Project
activities post-FEED; the focus of the post-FEED project on
optimization of the concentrator facility and design and
engineering of a tailings thickener and associated facilities,
including the expected timing of completion thereof and
commencement of optimization of the minerals facility; the ability
of the Company to produce and sell a blended L72 titanium product
and a high quality zircon concentrate, including the ability of the
Company to redesign its minerals flowsheet and zircon circuitry to
include production of these products; the ability of the Company to
enter into commercial contracts with oil sands producers and to
achieve commercialization of the CVW™ technology, including the
anticipated scope of such commercial contracts; the ability of the
Company to enter into commercial contracts with other strategic
partners in relation to building and operating facilities, as
required; the ability of the Company to continue with its cost
reduction initiatives and to be supported by its current cash
position; the ability of the Company to retain qualified staff; the
ability of the Company to obtain financing on acceptable terms,
including available grant and financing opportunities from
government programs and finalizing funding agreements for such
government programs; the translation of the results from the
Company's research, pilot programs, Project activities during the
FEED, Project activities post-FEED and studies into the results
expected on a commercial scale; the belief that the Company's
technology will provide important environmental and economic
benefits that will assist with the recovery of a resilient and
sustainable energy industry in Alberta and Canada; the anticipated
timing for the completion of detailed engineering and construction
once all Project activities post-FEED are completed and a final
decision to proceed has been made; future crude oil and zircon
prices and the impact of lower prices on activity levels and cost
savings of oil sands producers; the impact of increasing
competition; the ability to protect and maintain the Company's
intellectual property; currency, exchange and interest rates; the
regulatory framework regarding royalties, taxes and environmental
matters in the jurisdictions in which the Company operates; and the
ability of the Company to successfully market its CVW™ technology.
The Company has not commercially demonstrated its technologies and
there can be no assurance that our research, pilot programs,
Project activities during the FEED, Project activities post-FEED
and related studies will prove to be accurate nor that such
commercialization efforts will be successful, as actual results and
future events could differ materially from those expected or
estimated in such forward-looking information. As a result,
we cannot guarantee that any forward-looking information will
materialize and we caution you against relying on any of this
forward-looking information. Accordingly, readers should not place
undue reliance on forward-looking information.
Additional information on these and other
factors are disclosed in our most recently filed management's
discussion and analysis, including under the heading “Discussion of
Risks”, and in other reports filed with the securities regulatory
authorities in Canada from time to time and available on SEDAR
(sedar.com).
The forward-looking information contained in
this news release describes our expectations as of August 26, 2020
and, accordingly, is subject to change after such date.
Except as may be required by Canadian securities laws, we do not
undertake any obligation to update or revise any forward-looking
information contained in this news release, whether as a result of
new information, future events or otherwise.
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 this release.
For further information, contact:
Scott Nelson
President & CEO
Tel: (403) 561-0439
Email: snelson@titaniumcorporation.com
Jennifer Kaufield
Vice President Finance & CFO
Tel: (403) 874-9498
jkaufield@titaniumcorporation.com
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