VANCOUVER, March 25, 2013 /CNW/ - Lignol Energy Corporation
(TSXV: LEC) ("LEC" or "the Company"), a leading technology
development company in the advanced biofuels and renewable
chemicals sector, today announced its consolidated financial
results for the three months ended January
31, 2013. All figures in Canadian dollars, unless otherwise
noted.
Highlights
LEC continued to develop a number of strategic
investment opportunities in energy related projects which have
technical and commercial synergies with the Company.
- Increased the Company's equity interest in Australian Renewable
Fuels Limited (ASX: ARW) ("ARW") to 14.9% in November 2012, and further to 21.4% by
March 18, 2013
- Closed a $4.515 million brokered
financing and converted into LEC shares a $2.245 million convertible debenture in
December 2012
- Established a secured credit facility for up to $5 million with Difference Capital Funding Inc.
("DCF") in February 2013
- Subscribed for convertible notes with a principal value of
A$1.18 million issued by Territory
Biofuels Limited ("TBF") in March
2013, which are convertible into an equity interest of
between 20% to 40%
- Lignol Innovations Limited ("LIL") established an agreement
with a European market leader in the sustainable thermoplastics
industry to supply tonnage quantities of HP-LTM
lignin
During the quarter, the Company's activities
were focused mainly on performing the ground work for the above
investments and related financings which were either completed
during the quarter or shortly thereafter.
In December 2012,
LEC strengthened its balance sheet and closed a brokered private
placement which raised gross proceeds of $4.515 million. Also, in connection with the
private placement, Wasabi Energy converted its $2.245 million convertible debenture into
14,971,800 LEC shares at a price of $0.15 per share. As a part of the private
placement, DCF subscribed $1.150
million for 7,666,667 Subscription Receipts; which amount
was held in escrow until March 2013,
when shareholders voted in favour of a resolution to approve DCF
becoming a "Control Person" as defined in the TSX Venture Exchange
Corporate Finance Manual.
In February 2013,
LEC increased its access to financial resources by entering into a
secured credit facility for up to $5
million with DCF. Amounts drawn down in respect of the
facility bear interest at 8% per annum and the facility will mature
on the earlier of February 27, 2014,
or upon the completion of an equity financing raising gross
proceeds of at least $5 million. The
credit facility is secured initially by a general security
agreement covering all of LEC's present and future personal
property until such time as DCF has a perfected security interest
in all of the shares of ARW and the convertible notes of TBF held
by LEC.
LEC's wholly owned subsidiary LIL continued to
complete a body of work related to the work programs which are
largely funded by Sustainable Development Technology Canada and
other grant agencies. Such work included processing different
feedstocks to optimize the production of higher value cellulose
derivatives and to compare them against industry standards and to
increase the yield of hemicellulose sugars. LIL also shipped a
range of lignins for ongoing application development
activities. Most notable amongst these was related to a
commercial supply agreement secured with a European market leader
in the sustainable thermoplastics industry.
Financial Results
For the three months ended January 31, 2013 ("Q3 FY13"), LEC reported a net
comprehensive loss of $3.0 million,
and a total loss of $0.01 per share
(basic and fully diluted). Included in the total comprehensive loss
were non-cash charges relating to a reduction in the fair market of
LEC's investment in ARW of $1.3
million at the end of the period. Included in the
total loss were non-cash charges of $0.3
million relating to the difference in the market value of
the consideration LEC paid for its December
2012 acquisition of a further 88 million shares in ARW.
After excluding these $1.6 million in
total non-cash charges, the adjusted loss for Q3 FY13 would have
been comparable to the total loss of $1.2
million incurred during the same period of the prior
year.
Total research and development expenditures
(excluding amortization) were $0.7
million in the quarter ended Q3 FY13 compared to
$1.3 million in the prior year. The
current quarter decrease in operating expenses of $0.6 million was a result of reductions in
headcount and related expenses of $0.3
million, reductions in pilot plant operating expenses of
$0.2 million, and a reduction in
general overheads of $0.1 million.
General and administrative expenses increased by $0.4 million due to an increase in corporate
development costs, comprised of legal and professional fees and
corporate development related expenses incurred in respect of
acquisition and financing activities.
Total funding from government and corporate
contributions were $0.2 million for
the current quarter, compared to $0.8
million in the same quarter of 2012. Overall grant related
research expenses declined by $0.6
million, which reduced the potential for eligible grant
claims, and several grant programs which had provided funding in
the previous year, had been completed by the start of the current
quarter.
Subsequent Events
On February 27,
2013, the Company announced that it had entered into a
secured credit facility for up to $5
million with DCF, a major shareholder. Amounts drawn under
this facility will bear interest at 8% per annum and the facility
will mature on the earlier of February 27,
2014 or upon the completion of an equity financing raising
gross proceeds of at least $5
million. These funds will initially be secured by a general
security agreement providing for a security interest in all of
LEC's present and future personal property until such time as DCF
has a perfected security interest in all of the shares of ARW and
the convertible notes issued by TBF which are owned by LEC. Once
DCF's security interest in the ARW shares has been perfected, the
general security agreement will be terminated.
On March 6, 2013,
the Company held a Special Meeting of Shareholders to consider two
resolutions. At the meeting shareholders approved DCF
becoming a "Control Person" as defined in the TSX Venture Exchange
Corporate Finance Manual; and a waiver of the application of the
shareholder rights plan agreement between the Company and
Computershare Corporation Trust Company of Canada dated July 8,
2010 (the "Rights Plan"). On March 7,
2013, the Company announced that following the above
shareholder approvals, the proceeds of $1.15
million relating to the subscription receipts (the
"Subscription Receipts") issued to DCF as a part of the
December 17, 2012 private placement
had been released from escrow to the Company. Concurrently, each
Subscription Receipt had been converted into one unit of the
Company (each a "Unit"), each Unit consisting of one common share
of the Company (a "Common Share") and one half of one warrant, each
whole warrant entitling the holder to purchase one additional
Common Share at a price of $0.20 per
Common Share prior to December 17,
2014.
On March 11, 2013
the Company announced that it had subscribed for convertible notes
with a principal value of A$1.18
million ("Notes") issued by TBF and signed a Technology
Collaboration Agreement that includes a package of technical and
further assistance to aid in the restart of TBF's 150 million litre
per year biodiesel plant and glycerine refinery located in Darwin,
Australia.
The terms of the Notes provide for conversion
into an equity position for LEC of between 20% to 40% in TBF,
depending on a range of criteria related to the development of
TBF's Darwin facility. This investment was funded, in part, from
the Company's recently announced line of credit with one of its
major shareholder, DCF. The terms of the Technology Collaboration
Agreement provide for technical assistance from LIL and its
partners with respect to both the restart of the TBF facility and
the potential integration of new pretreatment technologies and
catalysts to facilitate the processing of a broad range of low cost
feedstocks.
On March 18, 2013,
the Company announced that it had increased its ownership of equity
in ARW to approximately 898 million shares, representing 21.4% of
the outstanding equity. This increase was accomplished as a result
of the Company's participation in a financing previously announced
by ARW on February 7, 2013; at that
time, ARW announced that it proposed to raise A$12.3 million at A$0.007 per share, comprising an immediate
private placement of A$4.27 million
(the "ARW Placement") and an underwritten rights offering of
A$8 million to ARW shareholders at
A$0.007 per share, with the ability
of shareholders to apply for oversubscriptions (the "ARW
Entitlement Offer").
The ARW Placement of A$4.27 million successfully closed on
February 12, 2013 and LEC further
acquired approximately 179 million ordinary shares at that time. On
March 18, 2013 LEC announced that it
had invested approximately A$2.5
million to further acquire approximately 356 million shares
as a part of ARW's underwritten rights issue which had successfully
closed raising the balance of approximately A$8 million.
Going Concern and Subsequent Events
LEC's consolidated financial statements have
been prepared on a going concern basis which assumes that LEC will
continue its operations and those of LIL for the foreseeable future
and contemplates the realization of assets and the settlement of
liabilities in the normal course of business.
LEC's consolidated financial statements and the
accompanying Management's Discussion and Analysis do not reflect
adjustments to the amounts and classification of assets and
liabilities that may be necessary if the going concern assumptions
were not appropriate and such adjustments could be material should
LEC be unable to continue as a going concern.
LEC has historically financed its working
capital requirements largely through public and private sales of
equity securities, and interest income. The ongoing funding
requirements of its wholly owned subsidiary LIL, were met out of
these funds together with funds received directly by LIL in the
form of government grants and corporate contributions. LEC's recent
investments in ARW and TBF have also been made out of its general
working capital and from the Company's line of credit with DCF.
At January 31,
2013, LEC and its subsidiary LIL, had $2.7 million in cash and cash equivalents and up
to $1.8 million in future funding
receivable from contracted government and corporate funding
agreements, and $1.4 million in
current liabilities. The Company had a $4.7
million surplus in net shareholders' equity after taking
into account an accumulated deficit of $34.1
million. As of the date of this report and incremental to
the balances at January 31, 2013, the
Company had requested a total of $4.0
million to be drawn under the line of credit with DCF.
LEC currently forecasts that its working capital
requirements for the next twelve months may exceed the combination
of its current working capital and those funds which are expected
to be received in the future from LIL's existing government grants
and corporate relationships. The ability of LEC to continue as a
going concern is dependent upon its ability to continue to fund its
stated business objectives and to repay amounts drawn under the DCF
credit facility. There can be no assurance that LEC will be able to
obtain further financing on favourable terms and in such event,
LEC's working capital may not be sufficient to meet its stated
business objectives.
The Company's complete financial statements for
the three months ended January 31,
2013 and the related Management's Discussion & Analysis
of Financial Condition and Results from Operations are available at
the Company's website, www.lignol.ca, or at www.sedar.com under the
Company's profile. These financial statements were prepared in
accordance with the required adoption of International Financial
Reporting Standards.
About Lignol Energy Corporation
("LEC")
LEC (TSXV: LEC) owns 100% of the issued and
voting shares of Lignol Innovations Ltd. ("LIL") and has interests
in Australian Renewable Fuels Limited (ASX: ARW) ("ARW") as well as
Territory Biofuels Limited ("TBF"). LEC also intends to invest in,
or otherwise obtain, equity interests in energy related projects
which have technical and commercial synergies with the Company and
have the potential to generate cash flow.
LIL is a leading technology company in the
advanced biofuels and renewable chemicals sector undertaking the
development of biorefining technologies for the production of
advanced biofuels, including fuel-grade ethanol, and other
renewable chemicals from non-food cellulosic biomass feedstocks.
LIL's modified solvent based pre-treatment technology facilitates
the rapid, high-yield conversion of cellulose to ethanol and the
production of value-added biochemical co-products, including high
purity HP-LTM lignin. HP-LTM lignin
represents a new class of high purity lignin extractives (and their
subsequent derivatives) which can be engineered to meet the
chemical properties and functional requirements of a range of
industrial applications that until now has not been possible with
traditional lignin by-products generated from other processes. LIL
is executing on its development plan through strategic partnerships
to further develop and integrate its core technologies on a
commercial scale. For more information please visit LEC's website
at www.lignol.ca.
ARW is the largest biodiesel producer in
Australia owning three plants with
a total nameplate capacity of 150 million litres per annum. ARW's
three plants were built at an aggregate cost of over A$100 million. More information on ARW can be
found on their website at www.arfuels.com.au.
TBF owns a large scale biorefining facility
located in Darwin, Northern Territory, Australia, which includes a Lurgi designed
biodiesel plant and the only glycerine refinery in Australia. The facility was commissioned in
2008 at a cost of A$80 million, along
with 38 million litres of related tankage, now leased by TBF. The
biodiesel plant is the largest in Australia with a maximum capacity of 150
million litres per year. The plant was shut down in 2009 and TBF is
currently in the process of planning the restart of the
facility.
Neither 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.
Caution concerning forward-looking
statements:
Certain statements contained in this document
may constitute forward-looking information within the meaning of
applicable securities laws. Such forward-looking statements or
information include, without limitation, statements or information
about LEC's ability to invest in, or otherwise obtain, equity
interests in energy related projects which have technical and
commercial synergies with the Company and which have the potential
to generate future dividends and cash flow, the outcome of factors
influencing the future conversion of LEC's Notes into an equity
position for LEC of between 20% to 40% in Territory Biofuels
Limited ("TBF") depending on a range of criteria related to its
Darwin facility, TBF's ability to restart and profitably operate
its 150 million litres per year biodiesel plant and glycerine
refinery, TBF's ability to work with strong commercial partnerships
and to become a major regional player in the biodiesel market in
the Pacific Rim, TBF's ability to
integrate new pretreatment technologies and catalysts to facilitate
the processing of a broad range of low cost feedstocks, the
successful outcome of projects undertaken under the Technology
Collaboration Agreement between LEC and TBF, the future exercise of
DCF's warrants, LEC's ability to continue as a going concern and to
raise additional financing to fund the operations of LEC and LIL,
the development status of LIL's fully integrated pilot scale
biorefinery in Burnaby, British
Columbia, the planning and development of a commercial
plant, LIL's ability to complete project deliverables which are
funded in part by government agencies, obtaining strategic
partnership investments and government funding for initial
commercial projects. Often, but not always, forward looking
statements or information can be identified by the use of words
such as "plans", "expects" or "does not expect", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes" or variations
of such words and phrases or words and phrases that state or
indicate that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
Such statements or information reflect LEC's
current views with respect to future events and are subject to
certain risks, uncertainties and assumptions including, without
limitation, our ability to establish the validity of LIL's
technology at the fully integrated biorefinery pilot plant scale,
LIL's ability to satisfy the conditions of existing government
grants and to obtain new additional grants, our ability to continue
to finance our operations and to finance and complete the
development of a commercial project, LIL's ability to work with
Novozymes to produce cellulosic ethanol at production costs
competitive with gasoline and corn ethanol, LIL's ability to
develop products and to obtain off-take agreements, LIL's ability
to obtain requisite regulatory approvals and its ability to enter
into agreements with strategic partners on terms acceptable to us,
the inability of LEC to influence the strategy, operations and
financial performance of Australian Renewable Fuels Limited ("ARW")
and TBF, the reliance on publically available information of ARW in
the Company's evaluation of its acquisition of shares in ARW, the
potential inability to divest the ARW ordinary shares due to modest
trading volumes and to divest of its TBF shares, the cost of any
future ARW capital investment, the fluctuation of biodiesel and
feedstock prices on ARW and TBF, the effect on ARW and TBF of
changes in government policy relating to the environment, and
incentives for renewable fuels, the ability of ARW and TBF to
generate cash flow and pay dividends, and the ability of ARW and
TBF to market their products overseas and to meet relevant
regulatory requirements. Many factors could cause LEC's actual
results, performance or achievements to be materially different
from any future results, performance or achievements that may be
expressed or implied by such forward-looking statements or
information, including among other things, the technological
challenges that remain to be surpassed in obtaining the necessary
operating data from LIL's fully integrated biorefinery pilot plant
that is required prior to completing the next scale-up of the
technology, financial market conditions which will impact our
ability to finance our operations and to finance the construction
and operation of a commercial plant, the price of gasoline and
demand for ethanol, the market pricing and demand for renewable
chemicals, risks relating to the protection of LIL's core
technology from infringement and those risk factors which are
discussed elsewhere in documents that LEC files from time to time
with securities regulatory authorities. Should one or more of these
risks or uncertainties materialize, or should assumptions
underlying the forward-looking statements or information prove
incorrect, actual results may vary materially from those described
herein as intended planned, anticipated, believed, estimated or
expected. Except as required by law, the Company expressly
disclaims any intention or obligation to update or revise any
forward looking statements and information whether as a result of
new information, future events or otherwise. All written and oral
forward-looking statements and information attributable to us or
persons acting on our behalf are expressly qualified in their
entirety by the foregoing cautionary statements.
SOURCE Lignol Energy Corporation