MONTREAL, QUEBEC--(Marketwired - May 21, 2013) - Malaga Inc. ("MLG") (MLG.TO) reports its financial results for the quarter ended March 31, 2013. The management discussion and analysis and non-audited financial statements can be found on the Company's website (www.malaga.ca) and on SEDAR (www.sedar.com). All amounts are in US dollars unless otherwise indicated.
- The Company was able to monetize copper by-product and realized sales of $1.2M
- MLG cancelled its office operating lease in Canada reducing its operating lease commitments to nil (reduction of $550,000) for a cash settlement fee of $45,000.
- Non-cash impairment of $2.6M resulting from the lower carrying value of the cash generating unit ('CGU').
- On April 9, 2013 the Company reached an agreement to sell all of its shares in Hidroeléctrica Pelagatos S.A.C. ("Hidropesac") for cash proceeds of $650,000. Hidropesac owned and operated the 600kW hydroelectric power plant. The Company has received a deposit of $325,000 and the balance will be received on closing which should occur within the coming weeks.
- The plant and mine continue to remain on care and maintenance
- The Company is unable to discharge all of its financial obligations that are currently due and as such has announced that it is examining all possible alternatives to obtain financing or conclude a transaction with an investor that could result in the sale of a portion or all of its assets
For Q1-2013, the Company generated a net loss of $3.1M for the three-month period ended March 31, 2013 (net income of $0.1M in 2012) for a loss per share of $0.02 (earnings per share of $0.00 in 2012). As at March 31, 2013, the carrying value of the CGU was impaired. As a result, a non-cash impairment charge of $2.6M was recorded to the consolidated statement of net income (loss). The plant and the mine were in care and maintenance and therefore no production nor sales of tungsten were realized. The Company was able to monetize its copper by-product and realized sales of $1.2M in Q1-2013. The cost of care and maintenance for Q1-2013 was $0.4M which includes $0.2M in depreciation.
The Company put the mine and plant on care and maintenance in Q4-2012 casting significant doubt about the ability to continue as a going concern. The Company's working capital deficit as at March 31, 2013 was $8.3M, ($6.6M as at December 31, 2012), In addition, Malaga is currently not capable of discharging all of its financial obligations as they become due. The mine and plant at Pasto Bueno are still on care and maintenance. The Corporation has put in place additional measures to further reduce costs as well as examining all possible alternatives to conclude a transaction with an investor that could result in a sale of a portion or all of its assets. The Company is also contemplating the sale of all of its Peruvian operations.
This news release contains certain forward-looking statements or forward looking-information. These forward looking statements are subject to a variety of risks and uncertainties beyond the Corporation's ability to control or predict which could cause actual events or results to differ materially from those anticipated in such forward looking statements. Such risks and uncertainties are disclosed under the heading "Risk Factors" in the Corporation's Annual Information Form for the year ended December 31, 2012 and dated March 28, 2013. Further, forward-looking information is in addition based on various assumptions, including, without limitation, the expectation and beliefs of management, the assumed long term price of tungsten, that the Pasto Bueno property is a technical viable and economic operation and that the Corporation can access financing. Should one or more of these risks and uncertainties materialize, or should the underlying assumption prove incorrect or different, actual results may vary materially from those described in the forward-looking statements. The information provided reflects management's current expectations regarding future events and performance as of the date of this news release. Accordingly, readers should not place undue reliance on forward-looking statements.