Titanium Corporation Inc. (the “Company” or “Titanium”)
(TSX-V: TIC) today released its results for the year ended
December 31, 2020. The Company also confirms that it will hold its
annual and special meeting (the "Meeting") as a virtual only
meeting via live audio webcast online at
https://virtual-meetings.tsxtrust.com/1135 on Thursday, June 17,
2021 at 11:00 a.m. (Toronto time).
“Our Company and business partners have
weathered a challenging 2020 marked by the COVID-19 global
pandemic, mandated lockdowns, an oil price war and the steepest
economic decline in history,” commented Scott Nelson, Titanium’s
President and CEO. “Amidst these challenges, with the support of
our business partners and the Federal and Alberta governments, our
Company has continued to execute engineering programs that are
critical to the progress of the Project.”
Over the past year the Company and Canadian
Natural Resources Limited (“Canadian Natural”) have continued work
on the Project utilizing internal resources, performing engineering
reviews, validation and optimization of the Project as well as
continuing on-going minerals analysis programs. The main focus of
the Project team in 2020 was the validation and optimization of the
concentrator facility and the design and engineering of a tailings
thickener and associated facilities. Optimization and redesign of
the minerals facility, including further work by external minerals
engineering firms, commenced in the fourth quarter of 2020 and is
continuing into 2021. In parallel three government funding programs
were contracted for contributions towards the joint Project costs
including Emission Reduction Alberta (“ERA”) for $5.0 million in
September 2020, Natural Resources Canada (“NRCan”) Clean Growth
Program for $1.96 million in January of 2021 and most recently
Sustainable Development Technology Canada (“SDTC”) for $10.0
million in March of 2021.
Certain highlights for the three and
twelve-month periods ended December 31, 2020 and recent months are
set out in more detail below:
- On January 19,
2021, Titanium announced that the Company and NRCan signed a
Non-Repayable Contribution Agreement for $1.96 million of funding
for eligible expenditures of a work program for the period April 1,
2020 to March 31, 2021 as part of the engineering phase of the
Project. The work program includes validation engineering for
Project facilities including the concentrator plant, minerals plant
and transload facility and associated Class 3 capital cost
estimates.
- On December 22,
2020, Titanium announced that the Company and Canadian Natural
entered into a 2020 Project Coordination Agreement (“PCA”) which
governed the 2020 engineering phase of the Project (the “2020
Program”). The PCA, effective January 1, 2020, set out the rights
and responsibilities for the 2020 Program along with the cost
sharing arrangement whereby Canadian Natural and Titanium were
responsible for each party’s share of the 2020 Program costs which
were 70% and 30%, respectively, for the total cost of the 2020
Program.
- On December 21,
2020, the Company announced SDTC approved a $10 million
contribution for the engineering phase of the Project. The SDTC
funding was subject to successful negotiation of a Project Funding
Agreement ("PFA") with SDTC which was concluded on March 30, 2021.
The start date for SDTC funding was December 1, 2020 and the
Company received the first advance funding of $733,738 ($815,264
less 10% holdback) on April 6, 2021 for completion of the first
milestone due to be completed on April 30, 2021 under the
agreement.
- On September
28, 2020, the Company announced that ERA and Titanium signed a
contribution agreement for the award of $5 million of grant funding
for the Project. A portion of eligible Project costs will be
reimbursed with the successful completion of specified milestones
outlined in the agreement. Of the total grant funding from ERA,
$2.0 million is available for the engineering phase of the Project
with the balance of $3.0 million available for the procurement and
construction phases.
- Engineering
validation and optimization activities by the internal Project
engineering team continued throughout the year and are continuing
into the first half of 2021. The activities have been mainly
focused on the concentrator facility with the objective of
improving operability, enhancing environmental performance and
reducing capital and operating costs. The work includes changes to
the plot plan to increase modularization, relocating certain
equipment and reducing building sizes; the addition of a vapor
recovery unit to the flotation circuit; the review of certain
alternate types of equipment and the addition of a tailings
thickener which will process and remediate the tailings from the
concentrator. The Project team expects to conclude the optimization
phase of concentrator engineering in the second quarter of
2021.
- Minerals
testing and analysis of larger tailings samples commenced in the
third quarter of 2020 and is ongoing to provide current data for
the engineering design of the minerals facility. In the fourth
quarter, optimization engineering commenced for the minerals
facility and will continue into 2021. IHC Robbins, an expert
minerals engineering firm, who have been providing engineering
services to the Company throughout research and development
(“R&D”) and front-end engineering (“FEED”) programs, have been
contracted for design of the minerals facility process flowsheet to
incorporate production of a high-quality zircon sand concentrate
and a high TiO2 ilmenite product and other modifications. The
engineering unit of FWS Group is working in collaboration with IHC
Robbins to engineer the non-process aspects of the minerals
facility building and utilities, as well as full engineering for
the minerals product handling transload facility.
- 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 products. The Company has identified
an opportunity to produce a high TiO2 ilmenite product for the
North America pigment industry. This ilmenite product will have a
TiO2 content of up to 72%. Work is underway to redesign the
minerals flowsheet to incorporate production of this new product
and redesign the minerals facility. This would enable the recovery
of ilmenite which was rejected in previous flowsheets.
- In response to
the uncertainty created by the COVID-19 pandemic and the resulting
delays to the Project, the Company implemented salary reductions in
the range of 15% to 20% effective April 1, 2020 for fiscal 2020 and
minimized external expenditures in all areas to preserve cash. In
addition, the Company significantly reduced incentive pay for 2020,
paid in Q1 2021, by 56% for an overall reduction of management
compensation of 26%. The Company is also continuing its other cash
conservation programs including those under which management and
directors receive a portion or all of their compensation and fees
in restricted share units ("RSUs") and deferred share units
("DSUs"), respectively. However, due to equity plan limits, no DSUs
have been issued to directors in the current year for settlement of
director fees, however director fees have been accrued and are
reflected as part of the deferred compensation liability on the
balance sheet. There have been no RSUs issued to management during
the current year due to equity plan limits and the Company has
suspended accruing a portion of variable management compensation to
be settled with RSUs until such time the Company has the capacity
to settle. This program was aimed to conserve cash and align
management and the Board of Directors ("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. To date, $3.9 million in
management and Board cash compensation has been conserved through
the program.
- On July 27,
2020, the Company announced Mr. Bruce Griffin assumed the role of
Chair of the Commercialization Committee of the Board (the
"Committee") of the Company. Mr. Griffin, who is currently a member
of the Committee, replaced Mr. David Macdonald. Mr. Macdonald has
been the Chair of the Committee since 2017 and will continue as a
member of the Committee.
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 engineering validation and optimization and planning for
the potential implementation of its technology at Canadian
Natural's Horizon site. However, until Project activities 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 (income)/losses are comprised of
R&D project costs, recovery of project costs, and general and
administrative (“G&A”) expenditures.
Net Income (Loss) – For the
year ended December 31, 2020, the Company had net loss $3.4 million
as compared to net income of $3,250 for the year ended December 31,
2019. R&D project costs were higher in the current year due to
the validation and optimization engineering work underway with
Canadian Natural which was offset by lower G&A expenses due to
costs reduction initiatives. For the year ended December 31, 2019
the recovery of Project contributions in respect of the FEED ($3.5
million) and a SR&ED tax credit ($71,000) exceeded total
R&D costs of $1.6 million which resulted in a net recovery of
$2.0 million for R&D. This R&D recovery offset G&A
expense of $2.0 million during the year resulting in $3,250 net
income reported. For a development stage company, and
given the timing of Project contributions, in respect of the FEED,
the net income reported 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 the Company’s share of joint Project costs for
engineering work by Canadian Natural. Compensation and
deferred compensation costs were lower due to the salary reduction
initiatives implemented on April 1, 2020 to preserve cash due to
uncertainties related to the COVID-19 pandemic and oil price
collapse impacting the timing of the Project. Project costs were
higher by $0.3 million for the three-month period ended December
31, 2020 compared to the same period in 2019 due to minerals
product development, ongoing testing and the Company’s share of
joint Project costs for engineering work by Canadian Natural. For
the year ended December 31, 2020, R&D costs were higher by $0.2
million compared to the year ended December 31, 2019. This increase
is primarily related to higher Project costs for the year ended
December 31, 2020 offset by reductions in compensation and benefits
described above. Some of the R&D costs incurred in 2020 were
eligible for cost recovery under ERA and NRCan’s contribution
agreements. Subsequent to year end, the Company applied for and
received $0.3 million as its share of funding from these agencies.
This cost recovery will be recorded in the first quarter of 2021,
consistent with the accounting policy of recognizing government
funding once approval is received for the related milestones.
General & Administrative –
For the year ended December 31, 2020, G&A expenses were 20%
lower at $1.6 million compared with $2.0 million in the comparable
2019 period. Management implemented voluntary salary reductions
effective April 1, 2020 and significantly reduced other variable
compensation to preserve cash and deal with the ongoing impact of
the COVID-19 pandemic and the economic uncertainty. Professional
fees in the quarter increased due to legal costs related to
contract reviews for grant funding and cost sharing agreements
offset by significantly reduced travel expenses. For the year ended
December 31, 2020, the increase in consulting and professional fees
related to legal fees for shareholder matters, regulatory reporting
requirements due to the COVID-19 pandemic and legal reviews of
government funding and cost sharing agreements. Investor relations
costs increased during the year due to costs related to hosting the
annual and special shareholder meeting in a virtual format to
comply with public health measures and guidelines resulting from
the COVID-19 pandemic. Deferred and equity-based compensation costs
were lower for the year ended December 31, 2020 as the Company did
not grant stock options in the current fiscal year and voluntarily
reduced variable compensation programs. These on-going initiatives
together with rent reductions, group benefit premium reductions,
workers compensation premiums refunds and other initiatives have
reduced G&A throughout the year.
Cash Position – The Company had
an aggregate of $2.7 million at December 31, 2020 consisting of
cash and interest-bearing cash accounts as compared to $5.1 million
at December 31, 2019. The decrease in cash and short-term
investments of $2.4 million is the result of funding the Company’s
validation and optimization engineering program with Canadian
Natural, general and administrative and public company
expenditures. The ability of the Company to cover normal operating
costs and engineering programs will depend on the amount of future
programs and the amount of government funding the Company is able
to apply to those programs and the ability to attract external
financing. Once there is more certainty with respect to the next
phase of the project and the supporting government funding, the
Company will evaluate the funding requirements to determine the
additional capital required within the next 12 months to support
the continued development of the Project.
To view the Company’s management’s discussion
and analysis and audited financial statements for the year ended
December 31, 2020, please visit our website at
www.titaniumcorporation.com or SEDAR at www.sedar.com.
SHAREHOLDER MEETING
The record date for shareholders to receive
notice and be entitled to vote at the Meeting is May 3, 2021.
Further information will be included in the Company's management
information circular in respect of the Meeting, which is expected
to be mailed to shareholders and filed under the Company's profile
on www.sedar.com in mid-May and will also be made available on the
Company's website at www.titaniumcorporation.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
information
This 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 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 ability of
the Company to continue to make steady progress with the joint team
on the optimization/validation engineering phase of the Project,
despite the decline in economic activity in 2020 and into 2021 and
the cancellation or suspension of many new oil sands projects; the
Company's continuing cash conservation program; the Company's
ongoing evaluation of financing opportunities, including grant and
financing opportunities from applicable government programs; the
terms of agreements entered into with certain government agencies;
the effect of market conditions and the COVID-19 pandemic on the
Company; 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 subsequent
waves) and other geopolitical risks, the condition of the global
economy and, specifically, the condition of the crude oil and
natural gas industry including the volatility of global crude oil
prices, other commodity prices and the decrease in global demand
for crude oil as a result of the ongoing COVID-19 pandemic, and the
ongoing significant volatility in world markets may adversely
impact oil sands producers' program plans, including proceeding
with an investment decision in further Project activities or any
final investment decision with respect to commercialization, which
could materially adversely impact the Company. 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).
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, 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, including the expected
assessment of engineering validation and optimization reviews for
next steps as part of the Project activities; 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 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, engineering validation and optimization 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 are completed and a final
decision to proceed has been made; future crude oil and minerals
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, engineering
validation and optimization 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.
The forward-looking information contained in
this news release describes our expectations as of April 27, 2021
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 |
Jennifer Kaufield |
President & CEO |
Vice President Finance & CFO |
Tel: (403) 561-0439 |
Tel: (403) 874-9498 |
Email: snelson@titaniumcorporation.com |
jkaufield@titaniumcorporation.com |
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