Titanium Corporation Inc. (the “Company” or “Titanium”)
(TSX-V: TIC) today released its results for the
three-month period ended March 31, 2020.
In the first quarter of 2020, the COVID-19
pandemic and the collapse of oil demand and prices introduced
unprecedented uncertainties for industries and economies globally.
These include sectors directly related to the Company’s Creating
Value from Waste™ technology (“CVW™”) at the Canadian Natural
Resources Limited (“Canadian Natural”) Horizon site (the
“Project”), including 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 quarter of 2020, the Company
and Canadian Natural joint project team has continued work on the
Project, performing post-Front End Engineering Design (“FEED”)
reviews and optimization of the Project as well as continuing the
on-going minerals analysis programs. In parallel, the Company has
been providing updates to the Alberta and Federal government
agencies who have awarded grant funding to the Project and are
working with them toward funding contracts for the detailed
engineering phase of the Project.
“During this very challenging period, our team
is continuing to work with our industry partner and the government
funding agencies to advance our Project,” commented Scott Nelson,
Titanium’s President and Chief Executive Officer. “As governments
plan next steps and new programs to spur economic recovery, we
believe our CVW™ technology can provide important environmental and
economic benefits that will assist with the recovery of a resilient
and sustainable energy industry in Alberta and Canada.”
Certain highlights for the three-month period
ended March 31, 2020 are set out in more detail below:
- The Company has been conducting technical marketing and testing
programs including meeting with potential minerals processors and
customers, visiting their facilities and providing minerals samples
for customer testing. These activities have been largely suspended
due to the COVID-19 pandemic and will be resumed when the relevant
countries and businesses reopen and resume normal operations.
- 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 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.
- 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 is 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
(income)/losses are comprised of research and development
(“R&D”) project costs, recovery of project costs, and general
and administrative (“G&A”) expenditures.
Net (Loss) Income – For the
three-month period ended March 31, 2020, the Company reported net
loss of $0.9 million or $0.01 loss per share. The net loss
consisted of G&A ($0.5 million) and R&D ($0.4 million)
expenses in the current period compared to net income of $0.5
million for the three-month period ended March 31, 2019 as the
Company received Project contributions for the FEED in the prior
period which exceed Project costs incurred and G&A
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 preliminary post-FEED optimization engineering
work. Project costs were lower by $0.1 million for the
three-month period ended March 31, 2020 compared to the same period
in 2019 due to the completion of the FEED Project in the first
quarter of 2019. Recovery of Project costs was nil for the
three-month period ended March 31, 2020 compared to $1.5 million
for the three-month period ended March 31, 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 March 31, 2020
were slightly lower at $0.53 million as compared to $0.55 million
for the three-month period ended March 31, 2019. There was an
increase in the quarter in professional fees due to legal costs
related to shareholder matters. This was offset by a decrease
investor relations costs as investor relations services were
provided on an as-needed basis compared to a fixed retainer in the
prior fiscal period.
Cash Position – The Company’s
aggregate cash and short term investment position was $4.2 million
as of March 31, 2020. The Company had $2.2 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 at
March 31, 2020 as compared to $5.1 million at December 31,
2019. The decrease in cash and short-term investments of $0.9
million is the result of funding the Company’s post-FEED Project
activities, general and administrative and public company
expenditures. With the costs 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
month period ended March 31, 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 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 May 28, 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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