Lignol Reports Fiscal 2013 First Quarter Financial Results
VANCOUVER, Sept. 28, 2012 /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 July 31, 2012 (all figures in Canadian dollars, unless otherwise noted).
- Completed successful enzyme optimization work with Novozymes
- Continued development and expansion of intellectual property portfolio
- Joined the Oak Ridge Carbon Fiber Composites Consortium, a group of industry leaders who are dedicated to the development and commercialization of new carbon fiber and composite materials
- Developed a number of strategic investor opportunities that led to closing a $2.4 million private placement and the acquisition of an 11.2 percent interest in Australian Renewable Fuels
The Company's wholly owned subsidiary, Lignol Innovations Ltd. ("LIL") is presently one of only a handful of companies with an operational, integrated pilot-scale biorefinery capable of producing a clean, reactive cellulose for both cellulosic ethanol and a range of high value cellulose applications such as dissolving pulp. LIL has completed an engineering design package for a commercial-scale biorefinery that would produce up to 80 million litres of cellulosic ethanol (approximately 20 million U.S. Gallons) and 55,000 tonnes of High Performance Lignin (HP-L™ lignin) derivatives annually.
During Q1 FY13, LIL continued to operate its pilot plant and research facilities to accelerate a major body of work related to enzyme optimization with Novozymes, and to produce a range of pre-hydrolysates from a number of different feedstocks to enhance hemicellulosic sugars recovery. These process optimization activities have the potential to increase the amount of ethanol produced and improve plant economics. This is a key part of the extended work plan which is supported by Sustainable Development Technology Canada ("SDTC"). It was recently announced on September 6, 2012, that this major body of work had been successfully completed with Novozymes, showing performance improvements of up to 35%, as compared to previously best achieved results.
On August 27, 2012 the Company announced that it had completed a non-brokered private placement of 30.75 million common shares of the Company, at a price of $0.08 per common share, to raise gross proceeds of $2.46 million (the "Private Placement"), and had acquired from Wasabi Energy Limited (ASX/AIM: WAS) ("Wasabi"), 275 million ordinary shares of Australian Renewable Fuels Limited (ASX: ARW) ("ARW"), for a total purchase price of $4.27 million. The total purchase consideration was comprised of $0.5 million in cash, 19 million LEC common shares issued at $0.08 per share for $1.52 million and a 10-month secured convertible debenture for $2.25 million convertible into Lignol common shares at $0.15 per share.
For the three months ended July 31, 2012 ("Q1 FY13"), and the three months ended July 31, 2011 ("Q1 FY12") LEC reported a net loss of ($1.0) million, or ($0.02) per share (basic and fully diluted). Total operating expenses and government funding amounts were both reduced by $0.7 million in the current quarter.
Total expenses were $1.3 million for Q1 FY13 compared $2.0 million in Q1 FY12, as a result of a $0.7 million overall reduction in research and development expenses. This cost reduction was largely due to a reduction in headcount and headcount related costs.
At the same time, total government funding was reduced to $0.3 million for Q1 FY13 compared to $1.0 million in Q1 FY12, as a result of the completion of certain grant programs before the start of the current year, and as a result of the reduction in eligible research and development expenses.
Going Concern, Liquidity and Capital Resources
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. On August 27, 2012 LEC completed a non-brokered private placement ("Private Placement") to raise gross proceeds of $2.46 million. Of the total proceeds, $0.5 million was used as part of the total consideration given for an acquisition of an 11.2 percent equity interest in Australian Renewable Fuels Limited ("ARW") from Wasabi Energy Limited ("Wasabi"). In assessing its current cash projections, LEC has not factored in potential additional funding from government awards currently being negotiated by its subsidiary, LIL, or the impacts of its recent acquisition of shares in ARW. Accordingly, 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. 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.
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 and the research and development activities, capital expenditures and operations undertake by its subsidiary LIL, largely through public and private sales of equity securities, government and corporate contributions, and interest income. At July 31, 2012, the LEC had $0.7 million in cash and short-term investments currently available, and up to $2.3 million in future funding receivable, from contracted government and corporate funding agreements, and $1.3 million in current liabilities. As of July 31, 2012 LEC had an accumulated deficit of $29.8 million and a $0.8 million net deficit in shareholders' equity.
The Company continues to manage and defer non-priority expenditures, while at the same leveraging all available funding sources to extend, as much as is possible, the overall availability of its resources.
Lignol's complete financial statements for the three months ended July 31, 2012 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 an 11.2% stake in Australian Renewable Fuels Ltd (ASX: ARW) and owns 100% of the issued and voting shares of Lignol Innovations Ltd. ("LIL"). LEC also intends to invest in, or otherwise obtain, equity interests in energy related projects which have synergies with its biorefining technology.
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 approximately A$150 million. ARW has made significant changes in recent years to become a cost effective producer of high quality biodiesel to address growing biofuel demand in the Australian market. More information on ARW can be found at their website; www.arfuels.com.au
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 nonfood cellulosic biomass feedstocks. LIL's modified solvent based pretreatment 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 lignins. 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 byproducts 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 Lignol's website at www.lignol.ca.
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 continue as a going concern and to raise additional financing to fund the operations of LEC and its wholly owned subsidiary Lignol Innovations Ltd. ("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, LIL's 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, our ability to obtain requisite regulatory approvals and our ability to enter into agreements with strategic partners on terms acceptable to us, the inability to influence the strategy, operations and financial performance of Australian Renewable Fuels ("ARW"), the reliance on publically available information of ARW in LEC's evaluation of its acquisition of shares in ARW, the potential inability to divest the ARW ordinary shares due to modest trading volumes, the cost of future ARW capital investment, the fluctuation of biodiesel and feedstock on ARW, the effect on ARW of changes in government policy relating to the environment, and incentives for renewable fuels. Many other factors could also 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, LEC 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