NEW YORK, Aug. 15, 2011 /PRNewswire/ -- Terra Nova Royalty Corporation ("Terra Nova" or the "Company") (NYSE: TTT) today announced results for the six months and second quarter ended June 30, 2011.  Unless otherwise noted, all dollar amounts are in United States dollars.

RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 2011

Revenues for our commodities and resources business were $257.0 million for the six months ended June 30, 2011, compared to $8.8 million for the same period in 2010, primarily as a result of the inclusion of the integrated commodities operations of Mass Financial Corp. ("Mass"), which we acquired in the fourth quarter of 2010. Included in our commodities and resources business are revenues generated by our royalty interest, which increased to approximately $12.3 million for the six months ended June 30, 2011, compared to $8.8 million for the same period in 2010. The increase in royalty revenue was mainly attributable to a higher royalty rate. A total of 1,515,120 tons of iron ore pellets were shipped during the six-month period ended June 30, 2011.

Revenues for our merchant banking business were $12.5 million for the six months ended June 30, 2011, compared to $nil for the same period in 2010, primarily as a result of the inclusion of Mass's results.

Other revenues, which encompass our corporate and other investments, were $8.1 million for the six months ended June 30, 2011, compared to $1.1 million for the same period in 2010, primarily as a result of the inclusion of Mass' results.

Costs of sales increased to $226.9 million during the six months ended June 30, 2011 from $6.0 million for the same period in 2010. Selling, general and administrative expenses increased to $21.8 million for the six months ended June 30, 2011 from $4.3 million for the same period in 2010. The increases were primarily linked to the inclusion of Mass's operations.

RESULTS FOR THE THREE MONTHS ENDED JUNE 30, 2011

Revenues for our commodities and resources business were $138.2 million for the three months ended June 30, 2011, compared to $4.9 million for the same period in 2010, primarily as a result of the inclusion of the integrated commodities operations of Mass. Included in our commodities and resources business are revenues generated by our royalty interest of approximately $6.8 million for the three months ended June 30, 2011. A total of 795,770 tons of iron ore pellets were shipped during the three months ended June 30, 2011.

Revenues for our merchant banking business were $1.1 million for the three months ended June 30, 2011, compared to $nil for the same period in 2010 as a result of the inclusion of the activities of Mass.

Other revenues, which encompass our corporate and other investments, were $4.4 million for the three months ended June 30, 2011, compared to $0.9 million for the same period in 2010, and are attributable to the inclusion of Mass in the current quarter.

Costs of sales increased to $120.5 million during the three months ended June 30, 2011 from $3.3 million for the same period in 2010, while selling, general and administrative expenses increased to $10.4 million from $1.7 million for the same period of 2010. These increases are primarily linked to the inclusion of Mass's operations in the current period.

OVERVIEW OF RESULTS FOR THE SIX AND THREE MONTHS ENDED JUNE 30, 2011

The table below shows our total revenues by operating segment for the six months ended June 30, 2011, as well as each of the three month periods ended June 30, 2011 and March 31, 2011 were:  

The table below shows our income from continuing operations for the six months ended June 30, 2011, as well as each of the three month periods ended June 30, 2011 and March 31, 2011 were:  

*Note: The income before income tax from the merchant banking segment was higher than its revenue in the three months ended March 31, 2011, which was due to a gain not recognised in revenue.

ONE-TIME NON-CASH EXPENSES

The following table shows the effects of one-time and non-cash discretionary expenses on 2011 earnings.

FINANCIAL HIGHLIGHTS

The following table highlights certain selected key numbers and ratio in order to better understand Terra Nova's financial position.

*Note: Calculated as cash and cash equivalents plus short-term cash deposits, short-term securities and receivables, divided by total current liabilities.

LIQUIDITY

As at June 30, 2011, we had cash and short-term securities of $435.2 million. We monitor our capital on the basis of our debt-to-adjusted capital ratio and long-term debt-to-equity ratio. The debt-to-adjusted capital ratio is calculated as net debt divided by adjusted capital, while net debt is calculated as total debt less cash and cash equivalents. The long-term debt-to-equity ratio is calculated as long-term debt divided by shareholders' equity.

*Note: The debt-to-adjusted capital ratio as at June 30, 2011 and December 31, 2010 were not applicable as we had a net cash and cash equivalents balance at such dates.

We had a net cash and cash equivalents balance after deduction of our total debt, and our long-term debt-to-equity ratio was 0.05 and 0.09 as at June 30, 2011 and December 31, 2010 respectively.

CREDIT FACILITIES

We maintain various types of credit lines and facilities with various banks, and most of these are short-term.  These facilities are used for day-to-day business, structured finance and various other activities in both the commodities and finance areas.

As at June 30, 2011 we had credit facilities aggregating $379.0 million, of which unsecured revolving credit facilities totalled $181.9 million. We also had revolving credit facilities of $9.8 million for our structured trade finance activities with the margin charged by the lender being negotiable when the facility is used. We also had (i) a foreign exchange credit facility of $63.9 million and (ii) a non-recourse factoring arrangement with a bank for up to $123.4 million based on receivables from commodities operations. All of these facilities are renewable on a yearly basis.

SALE / DIVESTITURE OF ASSETS

We have completed a comprehensive review of our assets and identified some merchant banking and other non-core net assets in the amount of approximately $102.0 million, or $1.63 per share, which are not required for our future operations.  We believe it is in the best interest of our shareholders to receive this value directly, by way of a special cash and/or spinout dividend or distribution. We are completing the final plan to do so in the most tax efficient manner for both the Company and its shareholders. We expect to complete this in November.

All of our assets are under constant review to assess the risk and acceptable returns for the Company.

DIRECTIONAL FOCUS

After considerable review and discussions, the Board of Directors has determined that the Company should primarily focus its efforts on building our existing commodities activities into a global commodities supply chain business that will source and deliver commodities and materials to all industries, with an emphasis on the financing and risk management aspect of the business. They have also approved a name change to MFC Industrial Ltd. We believe, by committing our capital and personnel, that this strategy will allow us to capitalize on our sourcing, finance, risk management and logistics capabilities and experience to maximize returns throughout the commodities supply chain. We still need to penetrate other markets and enhance our product lines.  

We view the major advantages of the commodities supply chain business to be:

• Turnaround cycle is generally short, resulting in a minimum risk profit realization.
• Requires a minimal investment in fixed assets.
• Generates long-term customer loyalty.
• Allows us to leverage our ability, arrange and/or finance suppliers for the long-term.
• Enables us to capitalize on our risk management expertise.  

The Company plans to implement the name change promptly upon receipt of regulatory approvals and our shares will continue to trade on the New York Stock Exchange under a new trading symbol, beginning in mid-September.

CORPORATE TAXATION

The Company continued to be fiscally responsible and paid minimal corporate income taxes during the first six months of 2011.

ANNUAL CASH DIVIDEND

The Company's annual cash dividend is based on the annual dividend yield of the New York Stock Exchange Composite Index for the preceding year, plus 25 basis points. In January we announced the declaration of an aggregate cash dividend for 2011 of $0.20 per common share, representing a dividend yield of 2.58 percent, payable quarterly.

To date we have paid total cash dividends of $0.15 per share, with an additional payment of $0.05 per common share expected to be announced in the third quarter of 2011. In the future, we plan to announce and declare the cash dividend during the first full week of each year.  The declaration, timing and payment of future dividends will depend on, among other things, our financial results.

EXPANSION PLANS

Michael Smith, Chairman, commented "We are pleased with our new focus on building a global commodities supply chain company together with all of our corporate changes and emphasis on expansion of our operations.  We have now identified several strategic acquisitions that will complement our new business focus. This strategy is now underway.

"Our task now is to acquire and integrate new operations that will make us larger and, most important, more profitable.  

"We are generally optimistic that 2011 will be a watershed year as we pursue our acquisition strategy. We have a much stronger financial base than many other companies our size, and years of experience in buying good assets and realizing value.  With the current financial uncertainty in the market, we believe that many interesting opportunities may present themselves."

Shareholders are encouraged to read the entire Form 6-K, which includes our unaudited financial statements and management's discussion and analysis for the six months ended June 30, 2011 and has been filed with the Securities and Exchange Commission ("SEC"), for a greater understanding of the Company.

Our annual report for the fiscal year ended December 31, 2010 on Form 20-F was filed with the SEC and Canadian securities regulators on March 31, 2011.  The Company will provide a hard copy of the annual report, free of charge, upon request.  Requests can be sent by mail to:  Suite 1620, 400 Burrard Street, Vancouver, British Columbia, Canada V6C 3A6.

Today at 10:00 a.m. EDT (7:00 a.m. PDT), a conference call will be held to review Terra Nova's announcement and results. This call will be broadcast live over the Internet at www.terranovaroyalty.com.  An online archive will be available immediately following the call and will continue for seven days. You may also to listen to the audio replay by phone by dialing: 1 (877) 344 7529, using conference number 10002970.  International callers should dial: 1 (412) 317 0088.

ABOUT OUR COMPANY

Terra Nova is active in a broad spectrum of activities related to the integrated combination of commodities and resources and merchant banking.  To obtain further information, please visit our website at:  http://www.terranovaroyalty.com.

Disclaimer for Forward-Looking Information

This document contains statements which are, or may be deemed to be, "forward-looking statements" which are prospective in nature. Forward-looking statements are not based on historical facts, but rather on current expectations and projections about future events, and are therefore subject to risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of forward-looking words such as "plans", "expects" or "does not expect", "is expected", "scheduled", "estimates", "forecasts", "projects",  "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "should", "would", "might" or "will" be taken, occur or be achieved. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, revenues, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Important factors that could cause our actual results, revenues, performance or achievements to differ materially from our expectations include, among other things: (i) periodic fluctuations in financial results as a result of the nature of our business; (ii) commodities price volatility; (iii) economic and market conditions; (iv) competition in our business segments; (v) decisions and activities of operators of our resource interests; (vi) the availability of commodities for our commodities and resources operations; (vii) the availability of suitable acquisition or merger or other proprietary investment candidates and the availability of financing necessary to complete such acquisitions; (viii) our ability to realize the anticipated benefits of our acquisitions; (ix) additional risks and uncertainties resulting from strategic investments, acquisitions or joint ventures; (x) counterparty risks related to our trading activities; (xi) unanticipated grade, geological, metallurgical, processing or other problems experienced by the operators of our resource interests; and (xii) other factors beyond our control. Such forward-looking statements should therefore be construed in light of such factors. Other than in accordance with its legal or regulatory obligations, the Company is not under any obligation and the Company expressly disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.  Additional information about these and other assumptions, risks and uncertainties are set out in our MD&A for the year ended December 31, 2010, which has been filed with Canadian securities regulators and filed on Form 20-F with the United States Securities and Exchange Commission.

SOURCE Terra Nova Royalty Corporation