13:14:47 EDT Tue 17 Sep 2019
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or Name
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Arianne Phosphate Inc
Symbol C : DAN
Shares Issued 105,803,943
Close 2019-03-20 C$ 0.41
Recent Sedar Documents

Arianne has cash of $2.07-million at year-end 2018

2019-03-20 17:15 ET - News Release

Mr. Brian Ostroff reports

ARIANNE PHOSPHATE REPORTS FINANCIAL RESULTS FOR Q4 AND YE 2018

Arianne Phosphate Inc. has released its financial results for both the three- and 12-month periods ended Dec. 31, 2018.

"The fourth quarter was a strong finish to what was a very good year," said Brian Ostroff, chief executive officer of Arianne Phosphate. "During the quarter, Arianne was able to conclude two offtake agreements that not only demonstrate commercial interest in our product, but at premium prices that account for the high-quality nature of our concentrate. As well, during the quarter, approval was received for a maritime facility on the north shore of the Saguenay River, which will allow for global shipping of our product. These two major events, coupled with our other accomplishments throughout the year, are the milestones needed to advance our shovel-ready project through the financing stage and interest many of the strategic players that we are talking to."

2018 financial and operational highlights:

  • In March, 2018, the company announced that it has received an investment from the government of Quebec by way of private placement of $1,407,000 into the common shares of Arianne. Under the terms of the offering, the company issued 2,333,333 units at a price of 63 cents per unit. Each unit is composed of one common share and one-half of one common share purchase warrant. Each warrant entitles its holder to purchase one common share at a price of 85 cents per share until March 14, 2021.
  • In March, 2018, the company announced the start of research and development work to integrate aluminum in the design of the trailer that will transport the phosphate concentrate from the Lac a Paul mine to the deepwater port that will be located in Sainte-Rose-du-Nord. The work will be done by the National Research Council of Canada (NRC) and Alcoa Innovation. To carry out this major work, Arianne will be able to rely on confirmed financial support from the Centre quebecois de recherche et de developpement de l'aluminium (CQRDA) and the Societe de la vallee de l'aluminium.
  • In April, 2018, the company announced that it received a grant of $1.5-million from the Ministry of Energy and Natural Resources of Quebec. This funding has been provided as part of the government's plan to help advance the Quebec phosphate (apatite) sector. Arianne will be using this funding in support of its previously announced program to produce additional high-purity phosphate concentrate to fulfill demand from potential customers and to conduct further pilot-scale tests. The tests will be conducted at COREM (Research Consortium for the Treatment and Processing of Mineral Substances) in Quebec City, where the company conducted its previous pilot-scale tests, and materials will be sent to parties that have expressed a strong interest in pursuing some form of offtake and/or a strategic partnership with Arianne.
  • In August, 2018, the company announced it has entered into a memorandum of understanding (MoU) for the supply of sulphuric acid. Aside from phosphate rock, a phosphoric acid plant would also require a supply of sulphuric acid that could be consistently delivered in timely fashion. It is on this basis that Arianne has entered into an MoU with a large marketer of sulphuric acid. This agreement will allow the company to work with a strong industry player that can provide the venture continuing guidance on sulphuric acid pricing, logistics and industry supply/demand trends -- all necessary aspects in determining the project's viability.
  • In August, 2018, the company announced that it has partnered with the Province of New Brunswick to further its review of constructing a phosphoric acid plant in Belledune, N.B. As part of this agreement, the government, through Opportunities New Brunswick (ONB), will provide a financial contribution toward the cost of a prefeasibility study, the next step in Arianne's assessment of its downstream opportunity.
  • In September, 2018, the company announced the formal execution of its first offtake agreement. Under the terms of the agreement, the buyer has entered into a long-term contract to purchase Arianne's high-purity phosphate concentrate, which will be shipped to the buyer's processing plant for further processing into downstream phosphate products. The offtake agreement also has a mechanism whereby it can be extended beyond the initial contract period and applies pricing that accounts for the high quality of Arianne's concentrate.
  • In October, 2018, the company announced that the Port of Saguenay received a favourable decision with regard to the construction of a maritime terminal facility on the north shore of the Saguenay River. Granted by the Minister for the Environment and Climate Change Catherine McKenna, this decision now paves the way forward for the construction of a terminal that will allow for the shipping of Arianne's phosphate concentrate to customers around the world. In light of this announcement, the company determined that the technical feasibility and commercial viability of the Lac a Paul property had been established, and, accordingly, the company reclassified capitalized costs associated with the Lac a Paul property from exploration and evaluation assets and mining properties to mineral property under development within property, plant and equipment.
  • In December, 2018, the company extended its secured credit facility with Mercury, which will now have a maturity of June 30, 2020. These credit facilities will continue to bear interest at an annual rate of 15 per cent, with all interest capitalized through maturity. The company has also issued Mercury 22,417,458 non-transferable warrants with an exercise price of 42.5 cents per share. The warrants are exercisable through June 30, 2020. As required under the policies of the TSX Venture Exchange, 17,338,739 non-transferable warrants originally issued to Mercury have been cancelled as a result of the new extension.
  • Arianne has also closed on an unsecured loan in the aggregate amount of $1.5-million with third party lenders. This loan will bear interest at a rate of 12 per cent per annum and mature on Dec. 19, 2019. In conjunction with the loan, Arianne issued the lenders 2,117,646 non-transferable warrants at an exercise price of 42.5 cents per share, exercisable until Dec. 19, 2019.
  • In December, 2018, Arianne announced its second formal offtake agreement for the purchase and marketing of its high-purity phosphate concentrate. Under the terms of the agreement, the buyer has a commitment to purchase a specific annual quantity of phosphate concentrate and has been granted an option to purchase additional amounts under certain terms and conditions.

Financial summary

Arianne is a development-stage company and, as such, did not generate revenue or positive cash flow in 2018. In the fourth quarter and full-year period ended Dec. 31, 2018, the company incurred respective net losses of $500,000 and $1.9-million, compared with $1.0-million and $3.4-million in the comparable periods in 2017. The company's net loss and cash burn are consistent with other development-stage mining companies.

The decrease in net loss over the last two years is explained by internal work made toward the project finance and secure offtake agreements. During the past year, the company recorded a deferred income tax recovery of $80,000 compared with a deferred income tax recovery of $660,000 in 2017.

Liquidity

On Dec. 31, 2018, the company had $2.07-million cash on hand. These funds will be allocated toward general working capital and advancing development of the Lac a Paul project in 2019. Based on current spending estimates for future project development, Arianne anticipates it will need additional financing before the end of 2019.

Outlook

In 2019, Arianne will be focused on the continuing advancement and development of its Lac a Paul project. Expected milestones include:

  • Complete partnership and financing arrangements;
  • Continue to enhance the value of the project through project optimization;
  • Continue its dialogue with stakeholders.

Arianne's management's discussion and analysis and financial statements for the three- and 12-month period ended Dec. 31, 2018, are available on the company's website and on SEDAR.

Qualified person

Jean-Sebastien David, PGeo, qualified person by National Instrument 43-101, has approved this release. Mr. David is also the company's chief operating officer.

About Arianne Phosphate Inc.

Arianne Phosphate is developing the Lac a Paul phosphate deposits, located approximately 200 kilometres north of the Saguenay/Lac St. Jean area of Quebec, Canada. These deposits will produce a high-quality igneous apatite concentrate grading 39 per cent P2O5 with little or no contaminants (feasibility study released in 2013).

We seek Safe Harbor.

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