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Opta Minerals Inc. Reports Fourth Quarter and Year End Results for 2012

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WATERDOWN, ONTARIO -- (Marketwire) -- 03/06/13 -- Opta Minerals Inc. (TSX: OPM) today announced results for the three and twelve months ended December 31, 2012. All figures are reported in U.S. dollars and are in accordance with International Financial Reporting Standards (IFRS), except where otherwise noted.

Financial Highlights (presented in $000s USD except per share amounts):

3 months 3 months ended ended December 31, December 31, Increase 2012 2011 (Decrease) %Revenue $34,125 $22,625 $11,500 50.8%Gross Profit 6,647 4,913 1,734 35.3% 19.5% 21.7% (2.2%)EBIT(2) 1,548 1,270 278 21.9%Net Earnings 991 564 427 75.7%EPS 0.06 0.03 0.03EBITDA(1) 3,089 2,362 727 30.8% 12 months 12 months ended ended December 31, December 31, Increase 2012 2011 (Decrease) %Revenue $126,651 $93,120 $33,531 36.0%Gross Profit 26,760 20,746 6,014 29.0% 21.1% 22.3% (1.2%)EBIT(2) 9,007 7,276 1,731 23.8%Net Earnings 5,273 3,650 1,623 44.5%EPS 0.29 0.20 0.09EBITDA(1) 14,683 11,483 3,200 27.9%(1) EBITDA is a non-IFRS measure; refer to Footnotes.(2) EBIT is a non-IFRS measure; refer to Footnotes.



David Kruse, President and CEO of Opta Minerals, noted, "During the fourth quarter, Opta Minerals continued to experience revenue growth over the comparable period in 2011. Earnings in the steel sector were marginally offset by results in the industrial minerals sector. During the year, we successfully acquired 100% of the outstanding shares of Babco Industrial Corp. (Babco) and WGI Heavy Minerals, Incorporated (WGI), whose principal products are petroleum coke and garnet, respectively. These acquisitions strengthened our product breadth and geographic footprint consistent with our strategic plan to build the organization through a combination of internal growth and acquisitions. We will continue to focus our efforts on integrating these new businesses, generating cash flow, and paying down debt."

Operational Highlights:

-- Net earnings for the fourth quarter increased 75.7% over the comparable quarter in 2011 and 44.5% on a year over year basis. These increases were primarily attributable to the acquisition and successful integration of Babco in the first quarter, the recognition of deferred income tax assets from previously unrecognized non-capital loss carry forwards in the second and fourth quarters, and revenue growth in the steel segment throughout the year.-- Revenue in the Mill and Foundry Products and Services (Steel) segment increased 28.3% over the comparable quarter in 2011 due largely to the demand for lime blends, metallic magnesium and the acquisition of Babco during the first quarter which added petroleum coke to the product portfolio. Revenue in the Abrasive Products Manufacturing and Distribution (Abrasives) segment increased 87.5% over the comparable quarter in 2011 due to an increase in demand for metallurgical slags and the acquisition of WGI which contributed to garnet sales. For the twelve months ended December 31, the revenue increases represented 33.7% and 39.8%, respectively, for the same segments.-- Gross profit increased quarter over quarter and year over year as a result of revenue growth and acquisitions. Gross profit as a percentage of revenue has declined due to weakness in the abrasives segment related to, competitive pressures, economic conditions and weather related events such as Hurricane Sandy and, product mix due to the addition of WGI later in the year which inherently has lower margins than the base business.-- Selling, general and administrative expenses (SGA) increased to 15.7% of revenue for the fourth quarter of 2012 from 13.7% for the comparable quarter in 2011. The Company expects to reduce SGA during 2013 as synergies are achieved from the continued integration of the WGI acquisition. On a year over year basis, SGA remained at 14.2% of revenue in 2012, the same as 2011. The Company maintained SGA levels year over year despite a significant bad debt in the second quarter from the bankruptcy filing of a large American steel producer and customer in the amount of $0.9 million and one time professional fee costs for acquisitions approximating $0.7 million.-- The foreign exchange gain was $0.2 million for the quarter as compared to a foreign exchange loss of $0.5 million for the same quarter in 2011. The foreign exchange gain was $0.2 million for the year as compared to a foreign exchange loss of $0.3 million for 2011. The results reflect movement between the three currencies we principally do business in; the U.S. dollar, the Canadian dollar and the Euro. The foreign exchange gain for 2012 was primarily due to the recovery of the Euro against the U.S. dollar later in the year. The foreign exchange results are included in other expense (income) in the consolidated statements of income.-- Finance expense increased quarter over quarter and year over year as a result of professional fees and syndication costs associated with new bank borrowings to finance acquisitions.-- For the three months ended December 31, 2012, cash flow from operating activities before changes in working capital generated $0.9 million versus $1.7 million in the fourth quarter of 2011. On a year over year basis, cash flow from continuing operations before changes in working capital generated $8.3 million compared to $8.0 million. The positive cash flow was used to repay debt and finance working capital and capital expenditures.-- On February 10, 2012, the Company acquired Babco for $19.0 million funded by bank term debt. On August 29, 2012, the Company acquired WGI for $15.0 million which was also funded by bank term debt.-- The Company's working capital at December 31, 2012 amounted to $25.0 million and total assets were $142.8 million, as compared to $14.7 million and $92.4 million, respectively, at December 31, 2011.-- The debt to equity ratio at December 31, 2012 was 1.27 to 1.00, versus 0.65 to 1.00 at December 31, 2011. The increased debt to equity ratio results from the acquisitions of Babco and WGI during the first and third quarters, respectively, financed by bank term debt.



Opta Minerals is a vertically integrated provider of custom process solutions and industrial mineral products used primarily in the steel, foundry, loose abrasive cleaning, water-jet cutting and municipal water filtration industries. The Company has production and distribution facilities in Ontario, Quebec, Saskatchewan, Louisiana, South Carolina, Virginia, Maryland, Indiana, Michigan, New York, Texas, Florida, Ohio, Idaho, France, Slovakia and Germany. Opta has one of the broadest product lines in the industry.

FOOTNOTES:

Earnings before income taxes and interest ("EBIT"); and earnings before interest, income taxes, depreciation and amortization ("EBITDA") as defined below, are both non-IFRS earnings measures that do not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies.

For the three For the twelve Months Ended Months Ended December 31 December 31 2012 2011 2012 2011 $ $ $ $Net Earnings for the Period 991 564 5,273 3,650Finance Expense 1,642 185 3,818 1,429Income Tax Expense (Recovery) (1,085) 521 (84) 2,197Depreciation and Amortization 1,541 1,092 5,676 4,207EBITDA(1) 3,089 2,362 14,683 11,483Subtract:Depreciation and Amortization 1,541 1,092 5,676 4,207EBIT(2) 1,548 1,270 9,007 7,276--------------------------------------------------------------------------------------------------------------------------------------------------------



Notes

(1) The term "EBITDA" refers to earnings before deducting interest expense, provision for income taxes, depreciation and amortization. The Company believes that EBITDA is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed and taxed and also prior to taking into consideration asset depreciation. EBITDA is not a recognized measure under International Finance Reporting Standards (IFRS), and accordingly, investors are cautioned that EBITDA should not be construed as an alternative to net earnings or loss determined in accordance with IFRS as an indicator of the financial performance of the Company or as a measure of the Company's liquidity and cash flows. The Company's method of calculating EBITDA may differ from other issuers and accordingly, EBITDA may not be comparable to similar measures presented by other issuers.(2) The term "EBIT" refers to earnings before income taxes and interest expense. The Company believes that EBIT is useful supplemental information as it provides an indication of the results generated by the Company's main business activities prior to taking into consideration how those activities are financed or taxed. EBIT is a non-IFRS earnings measure that does not have standardized measures prescribed by IFRS, and therefore may not be comparable to similar measures presented by other publicly traded companies.



Certain statements in this release constitute forward-looking statements within the meaning of applicable securities laws. Forward-looking statements in this press release include, without limitation, statements relating to the Company's strategic plan to build the organization through a combination of internal growth and acquisitions and its intention to focus on integrating recently acquired businesses, generating cash flow and paying down debt, as well as other statements which reflect the current expectations of management of the Company regarding the Company's future growth, results of operations, performance, business prospects and opportunities. Wherever possible, words such as "may", 'would", "could", "should", "will", "anticipate", "believe", "plan", "expect", "intend", "estimate", "aim", "endeavour", "seek", "predict", "potential" and similar expressions have been used to identify these forward-looking statements. These statements reflect management's current beliefs with respect to future events and are based on information currently available to management of the Company. Forward-looking statements involve significant risks, uncertainties and assumptions. Many factors could cause the Company'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, including, without limitation: the impact of general economic conditions; the impact of specific industry conditions; the inability of the Company to successfully integrate recently acquired businesses or to achieve the anticipated benefits from such acquisitions; the risk of unexpected costs or liabilities relating to acquisitions; currency fluctuations and exchange rate risks; risks associated with foreign operations; governmental and environmental regulation; competition from other industry participants; cancellations of or the failure to renew purchase orders; production and delivery issues; quality, pricing and availability of raw materials; mining risks; and the other risks identified in the Company's Annual Information Form and other public filings (copies of which may be obtained at www.sedar.com).

Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements may vary materially from those expressed or implied by this press release. These factors should be considered carefully and reader should not place undue reliance on the forward-looking statements. Although any forward-looking statements contained in this press release are based upon what management currently believes to be reasonable assumptions, the Company cannot assure readers that actual results, performance or achievements will be consistent with these forward-looking statements, and management's assumptions may prove to be incorrect. These forward-looking statements are made as of the date of this press release and, other than as required by law, the Company does not intend, and does not assume any obligation, to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise.

Opta Minerals Inc.Consolidated Balance SheetsAs At December 31, 2012Expressed in Thousands of US Dollars (except per share amounts and number ofshares) 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------AssetsCurrent Cash and cash equivalents $ 3,966 $ 698 Trade receivables, other receivables and prepayments 19,894 12,515 Inventories 32,516 21,589---------------------------------------------------------------------------- 56,376 34,802----------------------------------------------------------------------------Property, Plant and Equipment 29,770 19,848----------------------------------------------------------------------------Intangible Assets 34,462 27,319----------------------------------------------------------------------------Goodwill 14,311 6,680----------------------------------------------------------------------------Deferred Income Tax Assets 7,846 3,793---------------------------------------------------------------------------- $ 142,765 $ 92,442--------------------------------------------------------------------------------------------------------------------------------------------------------LiabilitiesCurrent Trade and other payables 13,598 7,123 Borrowings 16,533 11,026 Derivative financial instrument - 256 Provisions 249 1,015 Other liabilities 612 444 Income taxes payable 360 168 Preference shares - 46---------------------------------------------------------------------------- 31,352 20,078----------------------------------------------------------------------------Borrowings 45,351 16,526----------------------------------------------------------------------------Derivative Financial Instrument 396 -----------------------------------------------------------------------------Provisions 227 -----------------------------------------------------------------------------Other Liabilities 1,274 1,481----------------------------------------------------------------------------Deferred Income Tax Liabilities 4,468 3,192----------------------------------------------------------------------------Deferred Income Tax Liability on Intangible Assets 10,985 8,650---------------------------------------------------------------------------- 94,053 49,927----------------------------------------------------------------------------Equity Attributable to the Shareholders of the CompanyCapital Stock Authorized without limit as to number - Preference shares (without par value) common shares Issued - 18,084,559 common shares (December 31, 2011 - 18,061,784) 17,729 17,680----------------------------------------------------------------------------Contributed Surplus 4,018 3,429----------------------------------------------------------------------------Accumulated Other Comprehensive Loss (1,849) (2,135)----------------------------------------------------------------------------Retained Earnings 28,814 23,541----------------------------------------------------------------------------Total Equity 48,712 42,515---------------------------------------------------------------------------- $ 142,765 $ 92,442--------------------------------------------------------------------------------------------------------------------------------------------------------Opta Minerals Inc.Consolidated Statements of IncomeFor the Years Ended December 31, 2012 and 2011Expressed in Thousands of US Dollars (except per share amounts) 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Revenue $ 126,651 $ 93,120Cost of Goods Sold 99,891 72,374----------------------------------------------------------------------------Gross Profit 26,760 20,746----------------------------------------------------------------------------Expenses Selling, general and administrative 17,973 13,205 Other expense (income) (220) 265---------------------------------------------------------------------------- 17,753 13,470----------------------------------------------------------------------------Operating Profit 9,007 7,276Finance expense 3,818 1,429----------------------------------------------------------------------------Profit Before Income Taxes 5,189 5,847Income tax expense (recovery) (84) 2,197----------------------------------------------------------------------------Profit for the Year Attributable to the Shareholders of the Company $ 5,273 $ 3,650----------------------------------------------------------------------------Earnings per share for the year - basic and diluted 0.29 0.20--------------------------------------------------------------------------------------------------------------------------------------------------------Opta Minerals Inc.Consolidated Statements of Comprehensive IncomeFor the Years Ended December 31, 2012 and 2011Expressed in Thousands of US Dollars 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Profit for the Year Attributable to the Shareholders of the Company $ 5,273 $ 3,650Other Comprehensive Income Unrealized (loss) gain on translation of foreign operations 386 (98) Unrealized (loss) gain on derivative financial instruments (100) 403----------------------------------------------------------------------------Comprehensive Income Attributable to the Shareholders of the Company $ 5,559 $ 3,955--------------------------------------------------------------------------------------------------------------------------------------------------------Opta Minerals Inc.Consolidated Statements of Changes in EquityFor the Years Ended December 31, 2012 and 2011Expressed in Thousands of US Dollars Number Contributed of Surplus - AOCI(i) - Shares - Share- Cash Capital Capital based Flow Stock Stock Payments Hedge--------------------------------------------------------------------------------------------------------------------------------------------------------At January 1, 2012 18,061,784 $ 17,680 $ 3,429 $ (193)----------------------------------------------------------------------------Comprehensive Income Profit for the year - - - - Unrealized loss on translation of foreign operations - - - - Unrealized loss on financial derivative designated as a cash flow hedge - - - (100)----------------------------------------------------------------------------Total Comprehensive Income - - - (100)----------------------------------------------------------------------------Transactions with Shareholders Employee share purchase plan 14,827 35 - - Stock options exercised 7,948 14 - - Share-based payment expense - - 589 -----------------------------------------------------------------------------Total Transactions with Shareholders 22,775 49 589 -----------------------------------------------------------------------------At December 31, 2012 18,084,559 17,729 4,018 (293)--------------------------------------------------------------------------------------------------------------------------------------------------------At January 1, 2011 18,036,974 17,632 2,781 (596)----------------------------------------------------------------------------Comprehensive Income Profit for the year - - - - Unrealized gain on translation of foreign operations - - - - Unrealized gain on financial derivative designated as a cash flow hedge - - - 403----------------------------------------------------------------------------Total Comprehensive Income - - - 403----------------------------------------------------------------------------Transactions with Shareholders Employee share purchase plan 9,530 20 - - Stock options exercised 15,280 28 - - Share-based payment expense - - 648 -----------------------------------------------------------------------------Total Transactions with Shareholders 24,810 48 648 -----------------------------------------------------------------------------At December 31, 2011 18,061,784 $ 17,680 $ 3,429 $ (193)-------------------------------------------------------------------------------------------------------------------------------------------------------- AOCI(i) - Foreign Currency Translation Retained Total Reserve Earnings Equity------------------------------------------------------------------------------------------------------------------------------At January 1, 2012 $ (1,942) $ 23,541 $ 42,515---------------------------------------------------------------Comprehensive Income Profit for the year - 5,273 5,273 Unrealized loss on translation of foreign operations 386 - 386 Unrealized loss on financial derivative designated as a cash flow hedge - - (100)---------------------------------------------------------------Total Comprehensive Income 386 5,273 5,559---------------------------------------------------------------Transactions with Shareholders Employee share purchase plan - - 35 Stock options exercised - - 14 Share-based payment expense - - 589---------------------------------------------------------------Total Transactions with Shareholders - - 638---------------------------------------------------------------At December 31, 2012 (1,556) 28,814 48,712------------------------------------------------------------------------------------------------------------------------------At January 1, 2011 (1,844) 19,891 37,864---------------------------------------------------------------Comprehensive Income Profit for the year - 3,650 3,650 Unrealized gain on translation of foreign operations (98) - (98) Unrealized gain on financial derivative designated as a cash flow hedge - - 403---------------------------------------------------------------Total Comprehensive Income (98) 3,650 3,955---------------------------------------------------------------Transactions with Shareholders Employee share purchase plan - - 20 Stock options exercised - - 28 Share-based payment expense - - 648---------------------------------------------------------------Total Transactions with Shareholders - - 696---------------------------------------------------------------At December 31, 2011 $ (1,942) $ 23,541 $ 42,515------------------------------------------------------------------------------------------------------------------------------Opta Minerals Inc.Consolidated Statements of Cash FlowsFor the Years Ended December 30, 2012 and 2011Expressed in Thousands of US Dollars 2012 2011--------------------------------------------------------------------------------------------------------------------------------------------------------Cash Provided by (Used in) - Operating Activities Profit for the year $ 5,273 $ 3,650 Items not affecting cash: Depreciation of property, plant and equipment 3,113 2,199 Amortization of intangible assets 2,563 2,008 Share-based payment expense 589 648 Non-cash finance expense (386) (268) Deferred income taxes (2,821) (750) Recognition of contingent consideration on acquisition - 540 Loss on disposal of property, plant and equipment (5) 2---------------------------------------------------------------------------- 8,326 8,029 Changes in non-cash working capital Trade and other receivables (1,748) (549) Inventories (2,899) (2,358) Trade and other payables 759 (2,026) Provisions (994) (545) Income taxes payable 200 (91)---------------------------------------------------------------------------- 3,644 2,460---------------------------------------------------------------------------- Financing Activities Proceeds from issuance of common shares - net of issuance costs 49 48 Proceeds from borrowings 36,848 7,272 Repayment of finance lease liability (284) (160) Repayment of borrowings (4,325) (2,854)---------------------------------------------------------------------------- 32,288 4,306---------------------------------------------------------------------------- Investing Activities Acquisition of subsidiaries, net of cash acquired (30,044) - Additions to property, plant and equipment (2,478) (5,328) Proceeds on disposal of property, plant and equipment 6 4 Additional contingent consideration paid on acquisitions (62) (233) Additions to intangible assets (128) (990)---------------------------------------------------------------------------- (32,706) (6,547)----------------------------------------------------------------------------Foreign Exchange Gain (Loss) on Cash Held in Foreign Currency 42 (16)----------------------------------------------------------------------------Increase in Cash and Cash Equivalents 3,268 203Cash and Cash Equivalents Beginning of Year 698 495---------------------------------------------------------------------------- End of Year $ 3,966 $ 698--------------------------------------------------------------------------------------------------------------------------------------------------------Additional Cash Flows Information: Interest paid $ 3,034 $ 1,730 Income taxes paid 2,396 3,147--------------------------------------------------------------------------------------------------------------------------------------------------------Opta Minerals Inc.Segmented InformationFor the Years Ended December 30, 2012 and 2011Expressed in Thousands of US Dollars



Intersegment revenues are recorded at transaction prices, which approximate cost. The Company's assets, operations and employees are located in Canada, the United States and Europe.

2012-------------------------------------------------------------------------------------------------------------------------------------------------------- Abrasive Mill and Products foundry manufacturing Products and and Distribution services operations Unallocated Total--------------------------------------------------------------------------------------------------------------------------------------------------------External revenue by marketCanada $ 14,936 $ 14,306 $ - $ 29,242U.S 48,453 27,347 - 75,800Europe 14,271 4,883 - 19,154Other 48 2,407 - 2,455----------------------------------------------------------------------------Total revenue from external customers 77,708 48,943 - 126,651----------------------------------------------------------------------------Segment profit before interest expense and income taxes 11,878 (2,133) (738) 9,007Finance expense - - - (3,818)Income tax recovery - - - 84Profit for the year - - - 5,273----------------------------------------------------------------------------Total assets as at December 31, 2012 78,220 61,184 3,361 142,765--------------------------------------------------------------------------------------------------------------------------------------------------------Depreciation of property, plant and equipment 1,427 1,523 163 3,113--------------------------------------------------------------------------------------------------------------------------------------------------------Amortization of intangible assets 2,172 194 197 2,563--------------------------------------------------------------------------------------------------------------------------------------------------------Goodwill and intangible assets as at December 31, 2012 44,257 4,232 284 48,773--------------------------------------------------------------------------------------------------------------------------------------------------------Expenditures on property, plant and equipment 1,291 881 306 2,478--------------------------------------------------------------------------------------------------------------------------------------------------------Total liabilities as at December 31, 2012 19,912 9,509 64,632 94,053--------------------------------------------------------------------------------------------------------------------------------------------------------



External revenue by market is attributed to countries based on location of the customer.

Included in the mill and foundry products and services segment is revenue from one customer that individually exceeds 10% of the Company's revenue.

The Company evaluates the performance of its operating segments primarily based on income before interest expense and income tax expense.

Opta Minerals Inc.Segmented InformationFor the Years Ended December 31, 2012 and 2011Expressed in Thousands of US Dollars 2011---------------------------------------------------------------------------- Abrasive Mill and Products foundry manufacturing Products and and Distribution services operations Unallocated Total----------------------------------------------------------------------------External revenue by marketCanada $ 2,685 $ 12,591 $ - $ 15,276U.S 41,421 22,286 - 63,707Europe 13,965 3 - 13,968Other 50 119 - 169----------------------------------------------------------------------------Total revenue from external customers 58,121 34,999 - 93,120--------------------------------------------------------------------------------------------------------------------------------------------------------Segment profit before interest expense and income taxes 9,896 (2,428) (192) 7,276Finance expense - - - (1,429)Income tax expense - - - (2,197)Profit for the year - - - 3,650----------------------------------------------------------------------------Total assets as at December 31, 2011 50,586 39,868 1,988 92,442--------------------------------------------------------------------------------------------------------------------------------------------------------Depreciation of property, plant and equipment 842 1,230 127 2,199--------------------------------------------------------------------------------------------------------------------------------------------------------Amortization of intangible assets 1,636 216 156 2,008--------------------------------------------------------------------------------------------------------------------------------------------------------Goodwill and intangible assets as at December 31, 2011 29,459 4,196 344 33,999--------------------------------------------------------------------------------------------------------------------------------------------------------Expenditures on property, plant and equipment 2,015 3,202 111 5,328--------------------------------------------------------------------------------------------------------------------------------------------------------Total liabilities as at December 31, 2011 10,729 3,441 35,757 49,927--------------------------------------------------------------------------------------------------------------------------------------------------------





Contacts:
Opta Minerals Inc.
David Kruse
President and Chief Executive Officer
905-689-7361, ext 405

Opta Minerals Inc.
Peter Fryters
Chief Financial Officer and Treasurer
905-689-7361, ext 405
investor_relations@optaminerals.com
www.optaminerals.com