Titanium Corporation Inc. (the “Company”
or
“Titanium”) (TSX-V: TIC) today released
its results for the three and nine-month periods ended September
30, 2020.
The COVID-19 pandemic and the collapse of oil
demand and prices in 2020 has introduced unprecedented
uncertainties for Canada’s oil sands industry and the Canadian
economy. In recent months, there has been a second wave of the
pandemic and the duration and the extent of the impact of these
events is not known but could adversely affect the progress and
timing of the CVW™ Horizon Project (the “Project”). In response,
the Company has taken measures to protect its balance sheet by
reducing costs and conserving cash.
During the first nine months of 2020, the
Company and Canadian Natural Resources Limited’s (“Canadian
Natural”) joint project engineering team has continued work on the
Project utilizing internal resources, performing post-front end
engineering design (“FEED”) 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 has
been the optimization of the concentrator facility and the design
and engineering of a tailings thickener and associated facilities.
Optimization of the minerals facility, including further work by an
external minerals engineering firm, commenced in the fourth quarter
2020 and will continue into 2021. In parallel, the Company has been
providing updates to the Alberta and Federal government agencies
who have awarded grant funding for the Project, working with them
toward finalizing funding contracts and assessing new, recently
announced programs, for potential additional funding for the
Project.
“While we are all experiencing the on-going
uncertainties and challenges of the pandemic and the economy, our
joint Project team has remained very focused on advancing our
Project, completing another successful quarter of facility
engineering and minerals development,” commented Scott Nelson,
Titanium’s President and Chief Executive Officer. “We were pleased
to complete the ERA funding agreement during the quarter and are
now working on other government funding programs to support the
Project. Our Project is highly relevant to government and industry
objectives of reducing climate changing emissions, particularly
methane, and supporting shovel-ready projects that will stimulate
Alberta and Canada’s economic recovery.”
Certain highlights for the three and nine-month
periods ended September 30, 2020 are set out in more detail
below:
- On September
28, 2020, the Company announced that Emissions Reduction Alberta
("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. $2.0
million in ERA grant funding is available for the detailed
engineering phase of the Project with the balance of $3.0 million
available for the procurement and construction phases.
- Engineering
optimization and validation activities by the internal Project
engineering team continued during the third quarter. This activity
has been mainly focused on the concentrator facility with the
objective of improving operability, enhancing environmental
performance and reducing costs. This 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 alternate flotation
technologies and the addition of a tailings thickener which will
process and remediate the tailings from the concentrator. The
Project team expects to substantially complete the optimization
phase of concentrator engineering by the end of the fourth quarter
of 2020.
- Minerals
testing and analysis of larger tailings samples commenced in the
third quarter 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 R&D and front end engineering design
programs, have been contracted for preliminary design of the
minerals facility process flowsheet. The redesign will incorporate
production of a high-quality zircon sand concentrate and a high
TiO2 ilmenite product and other modifications.
- In addition to
finalizing ERA, the Company continued to advance contracting with
other government funding agencies providing updates on the impacts
of the COVID-19 pandemic and the oil demand and price collapse on
the Project. Funding from government programs is subject to
finalizing funding agreements which outline 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.
- Several new
Alberta and Federal government funding programs aimed at reducing
emissions, increasing energy efficiency, and supporting new
technology implementations have been announced in the third and
fourth quarters of 2020. The Company is assessing these programs,
is in discussions with governments to determine their applicability
to the Project and is making further funding applications where
applicable.
- 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 their compensation and fees in restricted
share units and deferred share units (“DSUs”), respectively. This
program is aimed at conserving cash and further aligning 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. To
date, $3.9 million in management and Board cash compensation has
been conserved through the program.
FINANCIAL OVERVIEW
Titanium is focused on achieving long-term
financial success by implementing its innovative CVW™ technologies
in commercial operations at oil sands sites. The Company is working
with Canadian Natural on engineering optimization and detailed
engineering for the potential implementation of its technology at
Canadian Natural’s Horizon site. However, until post-FEED and
optimization 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
(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
nine-month periods ended September 30, 2020, the Company reported
net loss of $0.78 and $2.3 million, respectively. This resulted in
a $0.01 loss per share for the current quarter and a $0.03 loss per
share for the nine-month period ended September 30, 2020. The net
loss for the three month period ended September 30, 2020 consisted
primarily of G&A ($0.34 million) and R&D ($0.44 million)
expenses in the current quarter compared to net income of $0.3
million for the three-month period ended September 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 nine-month period ended September 30, 2020 net
loss of $2.4 million consisted primarily of G&A ($1.3 million)
and R&D ($1.2 million) expenses compared to net income of $0.75
million for the nine-month period ended September 30, 2019. As
noted above, the receipt of Project contributions related to the
FEED Project in the prior period exceeded G&A and R&D
expenses. For a development stage company, 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 on April
1, 2020. Project costs were higher by $0.2 million for the
three-month period ended September 30, 2020 compared to the same
period in 2019 due to minerals product development and ongoing
testing, and the Company’s share of joint project costs for
engineering work by Canadian Natural. Recovery of project costs was
nil for the three-month period ended September 30, 2020 compared to
$1.0 million for the three-month period ended September 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 post-FEED activity,
R&D costs were in line with expectations.
General &
Administrative – G&A expenses
for the three-month period ending September 30, 2020 were 29% lower
at $0.34 million as compared to $0.48 million for the three-month
period ended September 30, 2019. For the nine-month period ending
September 30, 2020, G&A expenses were 19% lower at $1.3 million
compared with $1.6 million in the comparable 2019 period.
Management made 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 related to the decline in oil prices.
Professional fees in the quarter increased due to legal costs
related to contract reviews for grant funding agreements offset by
zero travel expenses due to COVID-19 related restrictions. For the
nine-month period ended September 30, 2020, the increase in
consulting and professional fees related to legal fees for
shareholder matters and regulatory reporting requirements due to
the COVID-19 pandemic. Investor relations costs increased during
the nine-month period due to 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 $39,000 during
the quarter primarily related to compensation and travel
reductions, 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
and nine-month periods ended September 30, 2020 as the Company did
not grant stock options in the current fiscal year and voluntarily
reduced deferred compensation programs. These on-going initiatives
together with rent reductions, group benefit premium reductions,
workers compensation premiums refunds and other initiatives will
continue to reduce G&A throughout the balance of the year.
Cash Position – The
Company had an aggregate of $3.2 million in cash at September 30,
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 $1.9 million is the result of funding
the Company’s post-FEED Project activities, general and
administrative and public company expenditures. While the Company
has enough cash to cover normal operating cash costs for the next
twelve months, the ability to cover detailed engineering programs
will depend on the approved programs for 2021 and the amount of
government funding the Company is able to secure for those
programs. Once there is more certainty with respect to the approved
program and the supporting government funding, the Company will
evaluate the funding requirements to determine the timing and
required capital to support the continued development of the
project.
To view the Company’s management discussion and
analysis and interim unaudited financial statements for the three
and nine-month periods ended September 30, 2020, please visit our
website at www.titaniumcorporation.com or SEDAR at
www.sedar.com.
About Titanium Corporation
Inc.
Titanium is a clean technology innovator focused
on providing solutions to the mining sector of Canada’s oil sands
industry. Titanium 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
post-FEED, including the ongoing minerals analysis and optimization
of the minerals facility, timing of completion of the internal
optimization of the concentrator facility 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 high quality zircon sand
concentrate and a high TiO2 ilmenite product, 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, as well as any additional
funding requirements required to complete the detailed engineering
phase; 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 November 24,
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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