Nordex Explosives Ltd. Q2 2012 Sales Highest Ever, Up 20%


KIRKLAND LAKE, ONTARIO--(Marketwire - Sept. 4, 2012) - NORDEX EXPLOSIVES LTD. ("Nordex" or the "Corporation") (TSX VENTURE:NXX) is pleased to announce that its second quarter 2012 financial results recorded its highest ever quarterly sales revenue from an expanding mining customer list and new sales in the quarry and construction sectors. Please see the Corporation's interim unaudited financial statements and related management's discussion and analysis for the three and six month period ended June 30, 2012, available under the Corporation's profile on www.SEDAR.com, for further details.

Jim Taylor, Chief Executive Officer, stated, "It is most gratifying to show shareholders these strong quarterly and year‐to‐date results. The outlook for the balance of 2012 is for Nordex to post a positive overall performance."

Three and six months results ended June 30th 2012, compared to three and six months ended June 30th 2011:

Canadian Dollars Q2 Q2 Six Months Six Months
2012 2011 2012 2011
Revenues $ 3,641,096 $ 3,032,938 $ 6,907,697 $ 5,521,979
Cost of Goods Sold $ 2,914,612 $ 2,413,973 $ 5,547,915 $ 4,405,436
Gross Profit $ 726,484 $ 618,965 $ 1,359,782 $ 1,116,543
Expenses† $ 576,070 $ 666,000 $ 1,061,751 $ 1,330,458
EBITDA* $ 369,016 $ 126,149 $ 756,806 $ 119,779
Net Income (Loss) Before Taxes $ 150,414 $ (47,035 ) $ 298,031 $ (213,915 )
Net Income (Loss) per Share
Basic $ 0.01 $ 0.00 $ 0.03 $ (0.02 )
Fully Diluted $ 0.01 $ 0.00 $ 0.03 $ (0.02 )
Includes Administrative, Depreciation and Finance Costs
* Earnings Before Income Taxes, Depreciation and Amortization

It is noteworthy that Nordex's product mix continues to shift to the benefit of the Corporation. In 2005, only 25% of Nordex's revenues were from the sale of products manufactured by the Corporation, and remaining revenues were from products purchased from multinational suppliers and resold. Nordex has implemented a strategy to increase its manufacturing capabilities. This has included the introduction of a proprietary line of emulsion explosives products and the manufacture and sale of new specialty products. The majority of second quarter 2012 revenues (65%) consisted of sales from products manufactured by Nordex.

The Corporation is advancing this proprietary strategy by continuing to increase its manufacturing and delivery capabilities, by presenting specialized customer service offerings and by sourcing its own proprietary lines of explosive products. In addition, the Corporation is seeking alternate sources of raw materials in order to decrease costs and increase gross margins. This approach has reduced the dependency of the Corporation on outside suppliers.

The Corporation plans to expand its business beyond its traditional market by pursuing opportunities in both Southern Ontario and Quebec. Nordex has determined that new satellite sites will need to be established to achieve this objective. The first of these satellite sites is expected to be operational in the third quarter of 2012.

Gross profit margins for the second quarter of 2012 were 20.0% as compared to 20.4% for the second quarter of 2011 and 21.9% for the full twelve‐month period of 2011. As reported in the first quarter, gross margins continue to be negatively affected by increasing raw material costs and an inability to increase selling prices due to competitive market conditions.

For the three months ended June 30, 2012, Nordex recorded income before tax of $150,414. There was an income tax expense of $41,091. This resulted in net income after tax of $222,631 for the first six months of 2012. This compares to a net loss after tax of $(155,755) for the first six months of 2011. The net profit is primarily attributable to an increase in revenues and a reduction in administrative expenses.

Earnings before interest, taxes, depreciation and amortization (EBITDA), which is an indication of the operational profitability of a business, has improved significantly in the first six months of 2012, from $119,779 as of June 30, 2011 to $756,806 as of June 30 2012.

Administrative expenses include wages for administrative staff, selling, marketing, customer support, executive personnel, professional services, interest and bank charges (excluding interest on long term debt), office expenses and occupancy costs required to manage the Corporation. Administrative expenses do not include depreciation, interest on long term debt, bad debt and stock based compensation expense. Administrative expenses for the six months ended June 30, 2012 decreased to $602,977 compared to $978,093 for the six months ended June 30, 2011. The major decrease in administrative expenses is due to onetime expenses related to legal disputes which were settled in fiscal 2011.

Inventories were $2,353,260 on June 30, 2012 compared to $2,486,758 at the fiscal year ended December 31, 2011. Inventory values decreased during the period primarily due to the ability to manage inventory at lower levels due to less reliance on third party suppliers and an increase in revenues from manufactured products.

As at June 30, 2012, the Corporation has 9,977,859 common shares outstanding.

Outlook

With the increased costs and time commitments associated with two legal disputes now behind the Corporation, Management can focus attention on building our customer and revenue base. The Corporation continues to expand its base of operations and manufacturing capabilities. Nordex is recognized as an innovator and leader in the field of bulk emulsion products. This includes the development of our unique bulk delivery systems for both surface and underground applications. As the market continues to move towards wider acceptance of new technology and product solutions, Nordex expects to acquire an increased share of the explosives market. Negotiations are ongoing with potential clients, satellite locations are being established, technology to manufacture new products is being developed and the outlook for the future is encouraging.

About Nordex Explosives Ltd.

Nordex Explosives Ltd. is a manufacturer and distributor of explosives for the mining, quarry and road construction industries since 1970. Its manufacturing operations and distribution centre is strategically located in one of the world's largest mining regions near Kirkland Lake, Ontario. Nordex is the exclusive supplier of the Econotrim and Ezicharge Johnex Explosives products in Canada. Nordex trades on the TSX Venture Exchange under the symbol "NXX".

For more information about Nordex please visit our website at www.nordexexplosives.com. To receive Corporation news via email, contact aman@chfir.com and mention "Nordex news" in the subject line.

Forward‐Looking Statements

Certain information included herein may contain "forward‐looking statements" which reflect the current expectations of management of the Corporation regarding the Corporation'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", "endeavor", "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 Corporation. Forward‐looking statements involve significant risks, uncertainties and assumptions. Many factors could cause the Corporation'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, cancellations of or the failure to renew purchase orders; production and delivery issues; quality, pricing and availability of raw materials; compliance with environmental regulations; exchange rate fluctuations as well as the other risks identified in the "Risk Factors" contained in the Corporation's Management Discussion and Analysis 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 the 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 Corporation 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 Corporation 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.

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information:

Nordex Explosives Ltd.
Jim Taylor
CEO
(705) 642-3265
jtaylor@nordexexplosives.com
www.nordexexplosives.com

CHF Investor Relations
Robin Cook
Senior Account Manager
(416) 868-1079 x228
robin@chfir.com