Q4 2014 MFC Industrial Ltd Earnings Call

Mar 31, 2015 AM EDT
MFCB - Mfc Bancorp Ltd
Q4 2014 MFC Industrial Ltd Earnings Call
Mar 31, 2015 / 02:00PM GMT 

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Corporate Participants
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   *  Gerardo Cortina
      MFC Industrial Ltd. - President, CEO
   *  Sam Morrow
      MFC Industrial Ltd. - Deputy CEO, CFO
   *  Rene Randall
      MFC Industrial Ltd. - VP

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Conference Call Participants
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   *  Joe Pratt
      Stifel Nicolaus - Analyst
   *  George Berman
      J.P. Turner & Company - Analyst
   *  William Meyers
      Miller Asset Management - Analyst
   *  David Erb
      Merrion Financial Group - Analyst
   *  Gregg Abella
      Investment Partners Asset Management - Analyst
   *  Raymond Howe
      CFP Inc. - Analyst
   *  Leonard Samuels
      - Private Investor
   *  Rich Rogers
      Abbey Capital - Analyst
   *  Tony Polak
      Aegis Capital - Analyst

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Presentation
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Operator   [1]
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 Good morning and welcome to the MFC Industrial Limited year-end financial results conference call. (Operator Instructions) On the call today are Gerardo Cortina, President and CEO; Sam Morrow, Chief Financial Officer; and Rene Randall, Vice President. (Operator Instructions)

 Please note that certain statements in this conference call will be forward-looking statements which reflect management's expectations regarding future growth, results of operation, performance, and business prospects and opportunities. For detailed information about risks and uncertainties that could cause the Company's actual results to differ materially from those expressed or implied, please refer to the disclaimer for forward-looking information contained in today's press release on file with the Canadian securities regulators and on Form 20-F with the SEC. Please note this event is being recorded.

 I would now like to turn the conference over to Mr. Cortina, President and CEO of MFC Industrial. Please go ahead.

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [2]
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 Thank you. Good morning and welcome to the MFC Industrial investors call. We thank you for being with us this morning. We are all in Vancouver at our executive office.

 We are excited to be able to talk to you this morning about our vision for the future and our plans to grow and enhance value to our main business, that is, global supply chain and trade finance. We will also discuss our plans to rationalize certain MFC Energy assets and return the net proceeds to our shareholders as a return of capital with no withholding tax.

 But before we do, so let me briefly talk about our 2014 results and recent corporate developments. Later on, Sam will talk to you in more detail about our financial results; and then I will be back to talk about our vision and future plans.

 Our revenue for 2014 increased to $1.4 billion compared to $813 million over the same period 2013. This represented an increase of 73%. This increase was a result of organic growth, and an overall increase in supply chain revenue, and the consolidation of our two recent acquisitions.

 Net income before the impact of a noncash impairment loss was $22.2 million or $0.35 per share. As of December 31, 2014, we realized a noncash impairment loss of $28.6 million related to our natural gas properties in Alberta, Canada. This noncash impairment is directly related to the decline in long-term hydrocarbon price forecasts that we utilize to discount the present value of our reserves.

 With a lower pricing environment, despite the same amount of long-term hydrocarbon reserves remaining in the ground, the discounted value of these resources declined. This noncash impairment, net of income tax recovery, impacted our net income by $21.4 million or $0.34 per share. We are of course very disappointed of this outcome, but this is a result of the important decline in natural oil and gas and liquids prices that we have at the end of 2014.

 Net income for 2014 was $838,000 or $0.01 per share, compared to $9.7 million or $0.15 per share for 2013. Operating EBITDA was $76.2 million for 2014 compared to $65.4 million for 2013. We are satisfied with the increase in revenues, though clearly need to improve our margins and bottom line; and this is what we will talk about in our vision and plan.

 Our balance sheet continues to be strong: cash as of December 31, 2014, was $297 million; total assets of $1.5 billion; long-term debt of $330 million; and equity of $670 million.

 MFC Energy has been an important part of our business over the last few years. But moving forward, as we plan to allocate as much capital as possible towards supply chain and trade finance business, and the fact that natural gas, oil, and liquid prices are down over 50% from the 2014 level, before prices started to come down at the end of the year, we believe it is prudent to rationalize these assets.

 The net proceeds of certain of these assets, after repaying the debt incurred to refinance the acquisitions of these assets, will be distributed to shareholders as a return of capital with no withholding tax. We are presently working on a structure to implement this process, to enable the MFC management to focus on our ongoing business and, on the other side, ensuring certainty and stability for all stakeholders and maximizing the value of the distribution to our shareholders.

 Based on current market conditions in the oil and gas industry, this process will take some time. But our objective is to maximize returns, and therefore we anticipate an initial cash distribution to shareholders will be made within 18 months. The MFC Energy assets that we classified as held for sale in December 2014 will be monetized, and we'll deploy the capital to our trade finance business.

 We are focused on maximizing the long-term value of our assets. And to preserve our natural gas reserves, we have initiated a program to curtail production at certain of our wells.

 To date this program has focused on our properties in central Alberta that produce a higher mix of natural gas liquids. When production of these wells becomes economical, we will resume operations. We believe that this program is a prudent action and the environment and it will ensure that our natural gas remains in the ground, while maintaining the flexibility to monetize our reserves when attractive prices resume.

 On Wabush I would like to say that during 2014 Cliffs closed the mine; and until they terminate the lease they are obligated to pay us a minimum lease payment of CAD3.25 million per year. We believe that at some point Cliffs will terminate the sublease, in which case we as landlord will exercise our step-in rights, which will allow us to take back the mine and purchase certain infrastructure.

 I would like to thank the United Steelworkers Union Local 6285, the town of Wabush, and the local and provincial governments for their strong support as we work together to reopen the mine. As we have stated in the past, I want to restate it again: Wabush has been an important asset for MFC in the past. It's an important asset today, and we are working for Wabush to remain an important asset for MFC in the future.

 During 2014 we concluded two important acquisitions, FESIL and Elsner. Both groups are fully integrated into MFC.

 These two acquisitions added a significant increase in revenue, geographical diversification, new products, customers, and suppliers to our global supply chain business. Both companies together represented a contribution of 19% of our total assets and 36.3% of our revenue.

 Now Sam will talk to you in more detail about our financials. Sam?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [3]
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 Thank you, Gerardo; and good morning, everybody. In 2014 our revenues increased to $1.4 billion versus $814 million in 2013. This was due to organic growth in certain products and the consolidation of FESIL and Elsner in our financial results. Cost of sales and services increased to $1.3 billion from $710 million in 2013, again due to growth in certain products and the consolidation of our recent acquisitions.

 Selling, general and administrative expenses were $85.5 million, up from $63.1 million in the prior year due to expansion into new geographies and markets as well as the addition of FESIL and Elsner. As a percentage of gross revenue, SG&A was 6.1% in 2014 versus 7.8% in 2013.

 Finance costs of $16.5 million were up from $15.2 million in 2013 due to increased borrowings, offset partially by lower accretion on our decommissioning obligation. In 2014 we recognized a net foreign currency transaction loss of $5.5 million compared to $1.8 million in the prior year. This loss was primarily noncash and mainly relates to the settlement of some intercompany accounts to pursue certain fiscally responsible strategies.

 Income tax expense was $1.7 million in 2014 compared to $6.6 million in 2013. Our income tax paid in cash was $4.4 million in 2014; but this number includes mandatory prepayments in some jurisdictions which we will recover in 2015. We continue to strive to be fiscally responsible.

 Net income before the impact of noncash impairment losses was $22.2 million or $0.35 per diluted share, versus $14.2 million or $0.23 per diluted share in 2013.

 We recognized a noncash impairment loss related to our natural gas properties in Alberta, Canada. This noncash impairment is directly related to the decline in the long-term price forecast that we utilize to discount the present value of our hydrocarbon reserves.

 In December 2014 our realized prices of natural gas and natural gas liquids fell 20% and 32%, respectively. Net of a tax recovery, this noncash impairment loss impacted our net income by $21.4 million or $0.34 per share. Net income in 2014 was $838,000 or $0.01 per share, versus $9.7 million or $0.15 per share in 2013.

 Operating EBITDA, which we have defined as EBITDA plus noncash impairment losses of hydrocarbon properties, was $76.2 million versus $65.4 million in 2013. Under the balance sheet, cash was $297.3 million, up sequentially from $201 million in September, though down from the $332 million we recorded as of December 31, 2013.

 In 2014 our inventory and trade receivables increased alongside our revenue growth primarily due to the consolidation of Elsner and FESIL in March and April, respectively. On June 30, 2014, the first reporting period which included both acquisitions, our trade receivables were $207.6 million and our inventories were $205.7 million.

 Since then we've reduced our trade receivables to $161.7 million while maintaining our inventories at $212.6 million as of December 31, 2014. More than 50% of our inventories have been contracted to be sold at fixed prices, while the remainder is comprised of the raw materials, work in progress, and finished goods at our production facilities, strategic inventories such as consignment position, and goods in transit.

 I'd like to spend a moment to recognize our team in Vienna, and in particular Mr. Ferdinand Steinbauer, who's our Group Treasurer and the Managing Director of MFC Commodities. They've simply done an incredible job integrating our recent acquisitions into the Group and growing our revenue while reducing our working capital investment. Vienna is the heart of MFC, so I'd like to specifically acknowledge Mr. Steinbauer and the whole team there, and congratulate them for their successes, and thank them for their contributions.

 Back to the balance sheet, current assets were $865 million; current liabilities $380 million; and our current ratio was a healthy 2.28, a slight increase year-over-year. Long-term debt was $313 million; long-term debt less current portion was $256 million. The increase in long-term debt sequentially was related to a refinancing in the fourth quarter.

 Our long-term decommissioning obligations related to our natural gas properties in Alberta increased to $130 million from $106 million in 2013. The reason for this is that the risk-free interest rates we use to discount those long-term liabilities declined in 2014; and we also updated our estimates of the cost to abandon and reclaim those assets, to align with the Alberta Energy Regulator's recent publications.

 Shareholders' equity was $670.4 million, down year-over-year due to the cumulative translation loss from the weaker euro and Canadian dollar versus the US dollar, as well as the payment of cash dividends. One thing I'll note: as part of our capital strategy we match our assets and liabilities to the extent possible. This includes both duration and currency.

 We finance our current assets with short-term borrowings and our long-term assets with long-term debt. We continue to be responsible stewards of capital.

 Book value per share was $10.63 at December 31, 2014, versus $11.18 at December 31, 2013, again due to the cumulative translation loss and cash dividends paid. So with that, Gerardo, I pass it back to you.

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [4]
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 Thank you, Sam. So, let me finally talk to you about our vision for the future. Our main business today is global supply chain, sourcing and supplying a wide range of products such as metals, alloys, minerals, chemicals, and wood products to different industries around the world, and providing a wide range of trade finance solutions to both consumers and suppliers.

 MFC's global supply chain business is active worldwide. We have offices in Europe, North America, Latin America, Middle East, and Far East. Recently we opened offices in South Africa; Houston, Texas, to cover the south of the US; and San Jose in Costa Rica to cover Central America. Through this network of offices and a global network of agents, we are active on on-time sourcing and delivery of products on predefined terms and conditions to consumers in multiple industries.

 On the supply side we have been able to expand our secure sources by offtake, marketing, or agency agreements and will continue to do so in order to expand our offerings to the market.

 Going forward we intend to substantially grow our trade finance business and improve profit margins by offering new and complete trade finance services and solutions to the established value chain. To support and be able to expand our trade finance business, MFC will partner with a European bank that will become our in-house bank.

 Through our in-house bank, we will be able to expand our trade finance business into a wide range of new services such as financing, factoring, forfaiting, marketing, and risk management. Through our in-house bank, we will also be able to grow our supply chain business by expanding the services we offer to our customers.

 We are not getting into the banking business. Through our in-house bank we are looking to expand in the services and solutions that we offer to our existing global supply chain and trade finance network of customers and suppliers, and improve our margin. This will enable us to expand our business with our existing banks where we have long-standing relationships.

 Our head office of trade finance business will continue to be Vienna. But we will have specialized trade finance teams in some of the different locations where our supply chain business is active.

 Successful trade finance, efficient to customers and safe to lenders, requires both expanding customer relationships and knowledge and experience in products, markets, sponsored risk, collateral management, and credit management. These are our strengths; this is our competitive advantage; and this is the reason why we are excited and optimistic about our future.

 Thank you. With this we finalize our presentation. Operator, we are ready to start the Q&A.

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Questions and Answers
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Operator   [1]
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 (Operator Instructions) Joe Pratt, Stifel.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [2]
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 Hi, good morning. Is there any way to give us an idea, if all the acquisitions had been made on January 1, 2014, what the -- would you have had revenue growth, or not?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [3]
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 Thank you, Joe. The two acquisitions that we are talking about, FESIL and Elsner, were concluded in March and April, 2014. So in our 2014 results we are including nine months of their revenue.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [4]
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 Okay. But pro forma, were you up or down on revenues?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [5]
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 We are substantially up.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [6]
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 Okay. But if you look at all the businesses that you owned in 2014, what were the revenues of those businesses in 2013?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [7]
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 Excuse me. Can you repeat?

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 Joe Pratt,  Stifel Nicolaus - Analyst   [8]
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 What were the revenues of all the businesses you owned in 2014 for the year 2013?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [9]
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 Sam, do you have that number? Hold on a second, Joe.

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [10]
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 Joe, excluding Elsner and FESIL, we still would have reported revenues greater than $900 million.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [11]
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 Including?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [12]
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 Excluding.

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [13]
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 Excluding.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [14]
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 Yes; but including, what would it have been?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [15]
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 Oh, sorry. You're asking what the annualized revenue would have been with Elsner and FESIL in Q1?

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 Joe Pratt,  Stifel Nicolaus - Analyst   [16]
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 Well, in 2013.

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [17]
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 It's a little bit difficult to say specifically because in 2013 one of the furnaces at the FESIL Rana plant was down for five months. So there's no real way to do that type of pro forma calculation. But those businesses (multiple speakers)

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 Joe Pratt,  Stifel Nicolaus - Analyst   [18]
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 Then let me move on. Was there generic growth in these businesses in 2014?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [19]
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 Yes.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [20]
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 Okay. Then what was the gross margin in 2013 with all the businesses, and what was it in 2014?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [21]
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 Our gross margin in 2014 was 10%, and 12.7% in 2013. The decline in gross margin is a result of the incorporation of FESIL and Elsner, as they operate with a lower gross margin in highly competitive business, mainly Europe.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [22]
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 Okay, that's very helpful. One other question would be: do you expect gross margin improvement and revenue improvement in 2015?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [23]
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 That's what our plan is all about, Joe. We will have an important increase in revenue just by consolidating the 12 months of FESIL and Elsner; and our plan to (technical difficulty) our growth, our business, it's all based on providing new solutions to our customers, and to our supply chain customers. And this (technical difficulty) opportunity.

 If you look at our business today (technical difficulty) of our business is in Europe, and it's a very competitive market, especially when we are talking about steel and the foundry business. So the only way we have to increase our markets is to provide new services and new solutions to our customers. And that's what our plan is all about.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [24]
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 Okay, good. How much will it cost you to bring this bank in-house?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [25]
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 We are presently evaluating different alternatives, and we hope to have a final decision over the next month. Our plan is to definitely have everything in place and operating before the end of the year.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [26]
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 Okay. Thank you very much for answering my questions.

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Operator   [27]
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 George Berman, J.P. Turner.

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 George Berman,  J.P. Turner & Company - Analyst   [28]
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 Good morning, gentlemen. Thanks for taking my call. The numbers aren't looking too bad. Huge revenues; obviously the bottom line leaves something to be desired.

 How are you working with the currently very, very low euro currency? Is that going to hurt us going forward? Or are you seeing any profits from the definitely picking up economies in the European Union?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [29]
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 Sam, would you like to comment on that?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [30]
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 Sure. I mentioned this earlier, George. We do match our assets and our liabilities; so from a balance sheet standpoint we're quite comfortable.

 In addition we do have a lot of export from Europe to other countries. As an example, we export or FESIL exports certain ferro alloys from Europe to the US. So the depreciated euro has actually been quite a help.

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 George Berman,  J.P. Turner & Company - Analyst   [31]
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 Okay. Concerning the cash dividend I didn't catch the full press release. Did you eliminate the cash dividend?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [32]
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 Yes, Joe. Our Board decided that it is not appropriate at this time to declare a quarterly dividend, based on all the other announcements that we've made today.

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 George Berman,  J.P. Turner & Company - Analyst   [33]
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 Okay. The noncash charge basically reverses some of the bargain purchase gain you had about a year ago; right?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [34]
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 The bargain purchase gain was recognized in 2012, but we don't think that this is related to that. Our belief is that this solely had to do with the decline in the long-term pricing of natural gas and natural gas liquids in the end of 2014.

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 George Berman,  J.P. Turner & Company - Analyst   [35]
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 Okay. And you basically now feel that, given time, natural gas liquids and natural gas prices will appreciate some, and at an opportune time you're looking to sell this asset off?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [36]
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 Well, it's very difficult to talk about future prices. We certainly hope that they will increase. That's why we don't want to (technical difficulty). We are (technical difficulty) a time frame of around 18 months to distribute the net proceeds to our shareholders.

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 George Berman,  J.P. Turner & Company - Analyst   [37]
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 Okay. If the Cliffs Corporation terminates the lease, would you have -- would you be looking at another noncash charge on your asset there? Or did you never write that up?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [38]
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 We review our -- the values that we have in for the Wabush mine in our books; and at this time there is no impairment.

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 George Berman,  J.P. Turner & Company - Analyst   [39]
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 Okay. Given your book value of $11 a share, stock price at $4 a share, how do you feel we can narrow that gap some?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [40]
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 Well, that's what our plan is all about. As I said already, our revenue -- we are very satisfied to increase the revenue, but we have to increase our bottom line; and that's what our plan is all about.

 We are optimistic about the future with our long-standing relationship with the banks and our very strong and diversified customer base. We are optimistic that providing all these new services and solutions will help us increase our bottom line. And with that, you know what our stock price will do.

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 George Berman,  J.P. Turner & Company - Analyst   [41]
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 Okay. Can you be a little bit more specific about your idea about a house bank? It would not be that you acquire a banking charter, but you have one bank that you primarily work with; correct?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [42]
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 Well, at this time we have not finalized the structure. We are looking at different alternatives.

 What we know is what we need the bank to be. We are definitely not interested to get into the banking industry. We are interested in the front room of the bank, and not in the backroom; so we will outsource all backroom services.

 I don't know if you have been (technical difficulty) the Company for some years, but starting in the late 1990s and up to the late 2000s MFC already owned a bank; and MFC has experience to run and operate a bank. So as I already said, probably over the next two to three months we will finalize the structure, and our plan is to have this run before the end of the year.

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [43]
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 And George, this is really all about adding additional services to our current portfolio of offerings. The only way we will increase our margins going forward is to offer more services to our customers, and that's really what's driving this decision.

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 George Berman,  J.P. Turner & Company - Analyst   [44]
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 Okay. All right. Thank you.

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Operator   [45]
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 William Meyers, Miller Asset Management.

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 William Meyers,  Miller Asset Management - Analyst   [46]
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 Hi, thanks. Can you give us a little bit of color on how Q4 compared to Q3? And any comments on what you've seen on this Q1 2015 would also be helpful. Thank you.

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [47]
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 Revenue over Q4 was (technical difficulty) million and (technical difficulty) very similar to Q3 (technical difficulty). So in Q4 we have $391 million and Q4 we have $392 million.

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 William Meyers,  Miller Asset Management - Analyst   [48]
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 Okay, thanks.

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Operator   [49]
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 Joe Pratt, Stifel.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [50]
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 Thank you. I just want to clarify. Do you have two asset groups for sale?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [51]
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 Hello, Joe. No, MFC Energy assets we will rationalize. The assets that we put up for sale as of December 31, 2014, we will rationalize; and the capital will redeploy to our trade finance business.

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [52]
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 But to clarify, Joe, so we do have our Niton assets which are classified as held for sale, which are on our balance sheet for about $100 million, just on the asset side.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [53]
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 What do you call those assets? What was the name?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [54]
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 What was that? Sorry.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [55]
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 What was the name of those assets?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [56]
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 The MFC Energy assets which we have classified as held for sale are our Niton assets.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [57]
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 Okay. How do you spell that, Niton: N-I-T-O-N?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [58]
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 That's it.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [59]
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 Okay. So the Niton assets are held for sale for $101 million. Is there another set of assets held for sale?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [60]
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 We have an investment property in East Germany which is held for sale for about $30 million.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [61]
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 Okay, that clarifies it. Relative to the last comment, my phone wasn't working properly from an audio point of view. What was the statement about how the first-quarter revenues of 2015 would compare to the fourth-quarter revenues?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [62]
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 Very similar. We had a $391 million quarter in the fourth quarter, and $392 million in the third quarter.

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 Joe Pratt,  Stifel Nicolaus - Analyst   [63]
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 Okay. Thank you for that clarification.

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Operator   [64]
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 David Erb, Merrion Investment Management.

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 David Erb,  Merrion Financial Group - Analyst   [65]
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 Thanks for taking the question. I was wondering if you could provide some detail on what exactly is taking place in Uganda with the hydro facility there, some sense of what cash flow and the go-forward view would be. In addition, if you could comment on any potential recoveries with respect to the Goa situation.

 And then lastly, please address the financial side of the Alberta power arrangements, which I guess you've set up as a peaker there.

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [66]
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 Thank you, David. Rene, would you like to start with Uganda?

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 Rene Randall,  MFC Industrial Ltd. - VP   [67]
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 Sure. Uganda is a power station. It is operating at this time. It's separate from the refinery that is still there.

 We're -- revenues are about $3.8 million a year, and it progresses very well. I mean, we're just waiting to see what happens with the power station -- I mean, with the refinery at this point.

 And (technical difficulty) on Goa, we really haven't been watching Goa. We had already sold our investments in Goa. As far as I know that -- I think some mines have come back, but not all. I don't think any of the ones that we were involved have come back.

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [68]
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 David, today the iron ore prices at the level they are -- this morning it was down to $51. It's very difficult for the Indians to supply Chinese ore -- sell Indian ore to China.

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [69]
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 As part of that SBA -- David, this is Sam -- there were future gains on free cash flow which we would have been entitled to; and we continue to believe that that will be zero.

 To your question on the Alberta power plant, final commissioning has not yet occurred. We will see that in June of 2014. First sales to the grid will be in May.

 So we're excited about this little project. But it's a little project.

 And the peaking option is one of our options. To begin, we're going to be running that plant 100%.

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 David Erb,  Merrion Financial Group - Analyst   [70]
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 Thank you.

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Operator   [71]
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 Gregg Abella, IPAM.

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 Gregg Abella,  Investment Partners Asset Management - Analyst   [72]
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 Good morning, gentlemen. Okay, so if I'm hearing things correctly here, generally you're pretty confident with the valuation marks of your assets and your lines of business; and the balance sheet seems like it's relatively still liquid. So why wouldn't you consider a buyback when every share purchased at this valuation would be more than 100% return on your money?

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 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [73]
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 Sam, would you like to answer that?

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 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [74]
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 Sure. I will say we're not just relatively liquid; we're very liquid. But in light of all of the other announcements that we made today our Board did not feel that it was appropriate to implement a share buyback.

 We've spoken internally about this point at length. And we continue to believe that share buybacks only work if they are really big.

 We don't have substantial liquidity in our common shares. That's a consideration. In addition we want to allocate capital to our trade finance business; and some of our longer-term projects such as Wabush will require capital as they move forward.

 So for now our Board of Directors has decided not to repurchase any shares in the open market. But we continue to have these conversations at every Board meeting, and we appreciate your feedback.

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 Gregg Abella,  Investment Partners Asset Management - Analyst   [75]
------------------------------
 Will management be buying shares to give a sense of a vote of confidence that at least this valuation can be supported?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [76]
------------------------------
 We are currently blacked out until May 18, and we all know that date.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [77]
------------------------------
 Fair enough. To what degree do you intend to -- I mean this is -- it's not a complicated story, but there are many moving parts. And Wall Street tends to shoot at what's moving.

 To what degree do you intend to come to the United States or other parts of the country and tell this story to Wall Street? One of the ways that you get an increase in valuation is by having better exposure to the Street.

 I'd say that that's one area that the Company has been severely lacking. So what are you going to do about it?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [78]
------------------------------
 We agree with that, and we will be very active.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [79]
------------------------------
 Okay. What's lined up so far?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [80]
------------------------------
 We have nothing -- no definite plan. But we will be in New York probably over the next two months.

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [81]
------------------------------
 And Gerardo lives in New York.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [82]
------------------------------
 Okay. Well, I mean living in New York and talking to Wall Street are very different things. So I'm glad to hear at least you're going to be telling the story a little more often because --

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [83]
------------------------------
 We definitely are.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [84]
------------------------------
 Putting out a press release that you don't understand why the stock is down is not the same as talking about why the stock should be higher.

------------------------------
Operator   [85]
------------------------------
 Raymond Howe, CFP Incorporated.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [86]
------------------------------
 Good morning. Thanks for taking my questions. Can you dumb down that trade finance section for me a little bit? I see you broke it out; but I'm seeing revenues of $12 million and EBITDA of $16 million. How does that work?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [87]
------------------------------
 Sam?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [88]
------------------------------
 Sure. Our trade financing services -- we have renamed all of our segments, so now we will report three segments going forward. The first is global supply chain; the second is trade finance and services; and the third is other.

 In 2014 our trade finance and services segment included a gain on sale of one of our subsidiaries. So the income from operations was higher than revenue.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [89]
------------------------------
 Okay. The assets for sale you just mentioned were the Niton assets and I think you said some German real estate. The German real estate is that the old SWA REIT real estate?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [90]
------------------------------
 Yes, it is.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [91]
------------------------------
 Okay. Now, would the elimination of the dividend -- was that decision made in part due to the fact that you plan on returning capital? Or was that just a business decision in and of itself?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [92]
------------------------------
 No, I think the decision was made in view of all the announcements that we are making today.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [93]
------------------------------
 In light of that -- I mean, if I remember correctly the Niton assets have pretty much been for sale since, I guess, you purchased Compton. So I guess, what gives you the confidence that those assets will be sold here in the next, say, 18 months?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [94]
------------------------------
 We have had some interest in this property. As we have mentioned the oil and gas market today in Alberta with the pricing is depressed. But we are confident that (technical difficulty) markets will have better times. And it's our (technical difficulty) are there. We have a good property, so we are confident we will be able to sell it.

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [95]
------------------------------
 One thing that I'll add to that, Raymond, is when we announced our participation agreement for those Niton properties we reclassified a processing facility and the probable reserves out of being an asset held for sale to our long-term assets. We always assumed that the partner for this participation agreement would ultimately acquire those assets, or that this would just be the beginning of a much larger deal.

 That didn't happen as quickly as we wanted it to. So in September -- I guess it was October we reclassified the plant and the probable reserves back to our assets held for sale. And we've been very actively marketing them ever since.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [96]
------------------------------
 To help me get this straight in my mind, the assets that are also segregated for return of capital, those are also Compton assets. I guess, to help me out, which assets are you keeping and which ones do you want to sell?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [97]
------------------------------
 The assets which are held for sale at Niton we are keeping (technical difficulty) reallocation to our other businesses. And our other MFC Energy assets which are classified as long-term we will rationalize in a prudent manner over a period of time.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [98]
------------------------------
 Okay, thank you.

------------------------------
Operator   [99]
------------------------------
 [Leonard Samuels], private investor.

------------------------------
 Leonard Samuels,  - Private Investor   [100]
------------------------------
 Hi, thanks for taking my call. In terms of the return of capital, the net long-term assets are valued at $101 million; and I'm wondering -- two questions.

 One, is that a fair -- in your assessment -- estimate of the value of the properties at this time?

 And number two, when those properties are disposed of, I notice there is a large decommissioning liability; and how thoroughly will that be gotten rid of? Is there any risk that you might get rid of the property and something will go bankrupt and that could head back your way? Thanks.

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [101]
------------------------------
 Sam?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [102]
------------------------------
 We're confident with the valuation of all of these assets on our balance sheet at this time. When it comes to the decommissioning obligation, these are related to wells and facilities at our natural gas properties; so they are really inseparable from the assets themselves.

 The average duration of those liabilities is about 15 years. But there are regulations in Alberta which we are considering when it comes to any potential disposal. So we wouldn't pursue any transaction in which we would have a residual tail risk, certainly.

------------------------------
 Leonard Samuels,  - Private Investor   [103]
------------------------------
 That's all of my questions.

------------------------------
Operator   [104]
------------------------------
 Rich Rogers, Abbey Capital.

------------------------------
 Rich Rogers,  Abbey Capital - Analyst   [105]
------------------------------
 Sure. I just had a quick question. You mentioned that the window opens for insider purchases on May 14. I was wondering why. Normally it would be within a week or so after earnings release.

 Is there a reason why it's prolonged out to May 14? And then after that, how long is that window open?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [106]
------------------------------
 Sorry, I think I said the 18th. It's after we report earnings; and we report earnings on -- it's the 15th.

 We do have an insider trading policy which stipulates that we're not able to acquire shares in the open market until three days after we report; and we're not allowed to acquire shares after the quarter ends. So because we're reporting on March 31, that window is pushed until May.

------------------------------
 Rich Rogers,  Abbey Capital - Analyst   [107]
------------------------------
 How long is the window -- I mean, pretty much since the last reported, when was the window open between -- I think last time you reported, was it in November of last year? And then between November and now was there ever a window open that you could actually have purchased shares?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [108]
------------------------------
 I'm going to have to check that. I don't specifically know off the top of my head how long that window is open before the quarter closes. But I can get back to you on that, Rich.

------------------------------
 Rich Rogers,  Abbey Capital - Analyst   [109]
------------------------------
 No, it's almost a five-month period where the stock trading where it is. But I mean it just it seems like the shareholders are absolutely not on the same side of the table as the management, simply because the financial interest of the management is -- their salaries, bonus, and travel and entertainment expenses, where you're not getting damaged financially when the stock gets cut in half. So there's really no financial incentive to you and management to actually care about the stock in any way is what I'd say.

 And I know Mr. Cortino as the President and CEO got 500,000 shares resulting from his coming to the Company and his Mexican company being bought out. But that's not open market purchases. So who knows where that valuation came for those 500,000 shares?

 So when the stock gets cut in half, you guys don't get damaged in any way because your salaries and your bonuses continue to go on. So I'm trying to figure out how we get on the same side of the table and as a shareholder I continue to hold on to the stock.

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [110]
------------------------------
 Rene, would you like to take that?

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [111]
------------------------------
 You know we all have share or stock option plans. And so yes, it does affect us.

------------------------------
 Rich Rogers,  Abbey Capital - Analyst   [112]
------------------------------
 A stock option plan is an option to purchase the shares. You don't have to do that. That's not going to financially affect you in any way. And if the stock (multiple speakers) you benefit.

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [113]
------------------------------
 Of course it affects us because (multiple speakers) that's where a lot of our incentive is.

------------------------------
 Rich Rogers,  Abbey Capital - Analyst   [114]
------------------------------
 It just doesn't seem like we're lined up on the same side of the table. The more money the Company seems to be able to keep in the bank obviously that's a benefit. Every dollar spent out of the bank's -- out of the Company's bank account is one less share -- one less dollar that management can use for other purposes as far as income and salaries and things like that.

 So I just (multiple speakers) five years of the stock being cut in half, where the opportunity loss being -- rather than being up 300% like the S&P, we're down 50% over five years. So obviously the performance is not commensurate with holding on to this. It just doesn't make any sense. Any thoughts?

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [115]
------------------------------
 Well, Rich, number one we're in an industry where commodities have been falling dramatically. And we're trying to shift our focus a bit so that we can try to ride the recovery back up and also expand our business so we're not so reliant just on commodity prices.

------------------------------
 Rich Rogers,  Abbey Capital - Analyst   [116]
------------------------------
 I do commend you for doing that. I mean changing your focus here and your direction because it wasn't working out, that's not easy to do and that's hard to do. And that's very commendable.

 But I just -- probably about 40% of your float tied up with Mr. Miller and Mr. Kellogg, there's not that much float out there. For shareholders there's just nothing for us to grab on to here, because it doesn't seem like the commitment to the shareholders is there.

 So I just -- going forward over the next year we have absolutely no idea whether you're going to make money, lose money, or -- and there's really nothing in place other than the dividend getting cut. That's all.

 It's actions speak louder than words. All that we have left out of this call is that we're not going to get the dividend and there's no intention to buy back shares.

 So that's -- doing this for 25 years, managing a lot of money, that's what I think.

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [117]
------------------------------
 Rich, I would like to clarify. I cite that our trade finance and global supply chain, it's our main business. We are active in Europe; we are active worldwide; and we have a substantial revenue.

 The markets where we are active are 61% Europe, 29% North America. We are active in steel and concrete, and steel products, wood pellets; those are our main business, and they are very competitive.

 So we have had an important increase in revenue. But we have to improve on our bottom line, and that's what we are (technical difficulty) and that's what our vision is.

 We have to expand the services and solutions that we give our customers. And we believe that we have many opportunities, especially in countries or in markets where financing is needed, or that they are paying a higher financial cost. We have many opportunities.

 So our purpose is to concentrate our business in our main markets and in these two services that we have been providing for many years.

------------------------------
 Rich Rogers,  Abbey Capital - Analyst   [118]
------------------------------
 No, so that's all very nice. The market cap on your stock -- on your Company is $256 million. So as a publicly traded Company with EBITDA of $76 million last year and hopefully you would be $50 million plus this year, why wouldn't you throw -- to keep shareholders involved and smarter money involved, why wouldn't you throw a bone and say we're going to buy back up to $50 million worth of stock at a (technical difficulty) million market cap?

 So two years from now when your actually revenues and your earnings per share -- when your earnings increase it's going to be on 48 million shares, but your stock will be $18, $20. It's just -- I mean, I went to a pretty good business school and it just doesn't make sense that you wouldn't do that.

 Then all we see is the results here, is now we have less than what we showed up at this meeting, and the stock is still down 50%. And that's what we're walking away with: with a promise two years from now to get paid off if you sell some assets that are underwater.

 So that's what we see. For a market cap at $256 million to announce a buyback, it's not out of your cash flow over the next 12 months, wouldn't be a detriment in any way, shape, or form. And it would also show that you're somewhat cognizant of the pain the shareholders for the last five years have gone through.

 So I've said a lot. But I do commend you guys on changing your direction when things weren't working well.

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [119]
------------------------------
 Thank you.

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [120]
------------------------------
 Thank you.

------------------------------
 Rich Rogers,  Abbey Capital - Analyst   [121]
------------------------------
 Okay.

------------------------------
Operator   [122]
------------------------------
 Tony Polak, Aegis Capital.

------------------------------
 Tony Polak,  Aegis Capital - Analyst   [123]
------------------------------
 Good morning. Could you give us a little clarity on the iron ore project and, with the prices where they are, whether you think if you end up owning the property it is possible at today's prices to be profitable?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [124]
------------------------------
 Yes, Tony. As we all know iron ore is at the low price today of $51. That's on the 52% iron ore. And definitely that makes it difficult.

 On the other side there are some positives. The shipping market, the shipping cost to China, to Europe, and the US from Canada is way down. And the Canadian to US dollar exchange rate will also be a positive effect.

 At this time we have no production decision, in case that we step back into the mine, when this project will be restarted. Any such decision would have to be based on studies demonstrating economic and technical viability.

 So as we have stated we are very confident that long term this is a very important asset for MFC. All stakeholders, as I mentioned in the call, we have been working together. So the only thing I can say is we are optimistic, but we cannot give you a time frame at the present time.

------------------------------
 Tony Polak,  Aegis Capital - Analyst   [125]
------------------------------
 When is the next payment due from the company that owns it now?

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [126]
------------------------------
 They pay on a quarterly basis.

------------------------------
 Tony Polak,  Aegis Capital - Analyst   [127]
------------------------------
 So today?

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [128]
------------------------------
 No. In --

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [129]
------------------------------
 In April. It will be April 25.

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [130]
------------------------------
 Yes, probably around the end of April.

------------------------------
 Tony Polak,  Aegis Capital - Analyst   [131]
------------------------------
 Okay. Are they officially in bankruptcy?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [132]
------------------------------
 No.

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [133]
------------------------------
 No. They just have one property in Eastern Canada that is in CCAA.

------------------------------
 Tony Polak,  Aegis Capital - Analyst   [134]
------------------------------
 Okay, thank you.

------------------------------
Operator   [135]
------------------------------
 David Erb, Merrion Investment Management.

------------------------------
 David Erb,  Merrion Financial Group - Analyst   [136]
------------------------------
 The previous caller just asked the same question I was going to. Thank you.

------------------------------
Operator   [137]
------------------------------
 Joe Pratt, Stifel.

------------------------------
 Joe Pratt,  Stifel Nicolaus - Analyst   [138]
------------------------------
 Hi, just to clarify. It sounds to me like the assets held for sale net are $30 million for the German real estate and $55 million for Niton. Am I correct?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [139]
------------------------------
 Hold on a second, Joe.

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [140]
------------------------------
 No. Sorry, Joe, it would be $30 million for the German real estate; and then there's $100 million that's allocated for the Niton assets in Alberta, Canada. And associated with those Niton assets there is about $15 million of decommissioning obligations, which is shown on our balance sheet as a current liability of the assets held for sale.

------------------------------
 Joe Pratt,  Stifel Nicolaus - Analyst   [141]
------------------------------
 Okay. So if you sold the two at the accounting value, you'd sell the German real estate for $30 million and you'd get $85 million for the Niton assets, if you sold it at the accounting value?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [142]
------------------------------
 That's correct.

------------------------------
 Joe Pratt,  Stifel Nicolaus - Analyst   [143]
------------------------------
 Okay, thank you.

------------------------------
Operator   [144]
------------------------------
 Gregg Abella, IPAM.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [145]
------------------------------
 Thanks, one more quick question. I just wanted to make an additional comment, based on what a caller had said a couple of callers ago.

 I had asked the question about whether or not management intends to buy back stock. The problem -- and I want to see management of course step up and buy some stock. I like to see that, and so do most investment managers.

 The problem of course that comes about is if the purpose of cutting the dividend and then not buying back your own stock when the stock is low is to keep the valuation low; and then use your own personal assets to buy more of the Company, to put more of it on your side of the board, at the same time that you could have bought back stock as a Company. It's in my mind a breach of fiduciary duty, because you're usurping an opportunity that the Company could have used to make all of us larger owners.

 Now you're going to use that opportunity to enrich yourselves, buying back stock at less than 50% of book. Can you comment on that?

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [146]
------------------------------
 We're prudent fiduciaries of our shareholders' capital. Buying back shares is a Board decision when it comes to the Company's capital. And given all of the announcements that we've made today the Board decided not to repurchase any shares on the open market.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [147]
------------------------------
 Yes, I understand that. But for example, if your Board and your largest owners have a strategy here to get control of the Company by owning 51% by using your -- the Board's individual ability to buy the stock at a 50% value and not using the Company's assets that would have enriched all of us -- I think that's a problem.

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [148]
------------------------------
 The Board's not buying stock right now.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [149]
------------------------------
 Okay, but the Board members, if they are buying stock or the management is --

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [150]
------------------------------
 No, no, they are not. They cannot.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [151]
------------------------------
 Okay. You all see the point I'm trying to raise?

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [152]
------------------------------
 No, but you're saying the Board or management is buying stock, and we just said we're in a blackout period.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [153]
------------------------------
 I'm saying that if, when the window opens, you intend not to use the Company's assets to buy back stock; and you're not going to declare a dividend; and that keeps the stock price low; but then you personally decide that it's a good opportunity; and then individually with the window opens you all decide to basically usurp a corporate opportunity --

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [154]
------------------------------
 Nobody said we're going to buy back stock.

------------------------------
 Sam Morrow,  MFC Industrial Ltd. - Deputy CEO, CFO   [155]
------------------------------
 Just to be clear, our focus here is maximizing the value for all of our shareholders over the long term. There's no intention to keep our stock price low today. We're all very conscious of where the stock is, and we're all very disappointed where the stock is.

 Our Chairman owns almost 33% of the Company. Gerardo owns a significant portion of the shares. Our Managing Director and our Treasurer also own a significant number of shares; and many of our other people are motivated and incentivized by stock option plans that they have in place.

 I can promise you all of our incentives are aligned to do what's in the best interest of all of our stakeholders and all of our shareholders over the long term. And that's what we're focused on.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [156]
------------------------------
 Okay. Well, I'd like to see that borne out obviously; and it sounds like there are a couple of other disappointed investors here. But what I would not want to see is that the largest owners, the insiders basically, decide to use this low price as an opportunity to buy the stock at a cheap price for themselves when the Company could have done so.

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [157]
------------------------------
 Okay. Yes, we already said that's not the case.

------------------------------
 Gregg Abella,  Investment Partners Asset Management - Analyst   [158]
------------------------------
 Okay. Well, we'll make sure that that doesn't happen.

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [159]
------------------------------
 Okay.

------------------------------
 Rene Randall,  MFC Industrial Ltd. - VP   [160]
------------------------------
 We will.

------------------------------
Operator   [161]
------------------------------
 Raymond Howe, CFP Incorporated.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [162]
------------------------------
 With regard to Wabush, do you have any guess as to, if Cliffs walks away from their lease, how long it would take you to get that back up and running and at what cost? Assuming market conditions were right.

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [163]
------------------------------
 Raymond, we expect that Cliffs will terminate the lease but we cannot speculate when. In the meantime we're happy to receive the lease payments that, as we have said, they have been on time on a quarterly basis.

 No, we cannot -- once we take back the mine we will have to continue certain studies to make sure the feasibility technically and economically of the mine. So no, at this time we cannot give you a time frame.

 And also, sooner or later the market will turn around. Today the iron ore market is way down, and we will just have to wait.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [164]
------------------------------
 Yes, I guess my question was more along the lines if market conditions were -- how long does it take to, for lack of a better term, rehabilitate a mine or get it back up and running? I'm not asking you to predict when that will happen. Just, if conditions were right and you started today, how long does that take?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [165]
------------------------------
 Look, the only thing that we can say is that all the assets in the mine are very well kept. Cliffs has done a very good job keeping these assets, so that will certainly be a help.

 I would say that it will take probably -- I don't know, six months to a year to get the mine back in place, in operation.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [166]
------------------------------
 And any guess on the cost involved in that?

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [167]
------------------------------
 No, no. We cannot give you a number right now.

------------------------------
 Raymond Howe,  CFP Inc. - Analyst   [168]
------------------------------
 Okay, thank you.

------------------------------
Operator   [169]
------------------------------
 This concludes our question-and-answer session. I would like to turn the conference back over to management for any closing remarks.

------------------------------
 Gerardo Cortina,  MFC Industrial Ltd. - President, CEO   [170]
------------------------------
 Thank you. Well, as we have talked today, we are very satisfied of our revenue growth and we have a plan, we have our vision to make our bottom line grow. Our main business as we have stated over this call is global supply chain and trade finance.

 We believe that with our in-house bank we will be able to provide new services and solutions to our customers and that will bring up our bottom line. This includes financing, factoring, forfaiting, marketing, and risk management. We have been doing this for many years, and this is what we know, and these are our strengths.

 So we thank you very much for being with us this morning, and goodbye.

------------------------------
Operator   [171]
------------------------------
 The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.




------------------------------
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