COEUR D'ALENE, Idaho, June 10, 2011 /CNW/ - WGI Heavy Minerals, Incorporated ("WGI") (TSX: WG) today reported a loss for the quarter ending March 31, 2011 of $0.003 per share ($0.07 million) compared to earnings of $0.005 per share ($0.13 million) for the same quarter in 2010. In order to functionally align and streamline the Company's efforts in Europe, the Company restructured the management of its German subsidiary, Kominex. The restructuring resulted in the removal of the resident Managing Director for Kominex and resulted in non-recurring costs of $0.32 million.

WGI recorded its highest quarterly revenue in the history of the Company, reaching $9.40 million. Corporate revenues have been growing quarter over quarter since Q4 2009, increasing 12.8% from Q1 2010 and 9.3% from Q4 2010. Overall demand in WGI's markets continued to recover from the recessionary trough of 2008-09 with Europe showing more progress than other regions. The revenues in Europe were assisted by a strong currency during the period. Most markets for garnet and other abrasives are strengthening in 2011 from previous year levels; however, growth specifically in the waterjet abrasive products is slower than the blasting abrasive products. Globally, improved demand and tighter supply conditions have stimulated revenue growth for blasting abrasives while waterjet abrasives continue to experience increased competitive pressures from ongoing product oversupply and the pursuit of market share over price among competitors.

In the first quarter of 2011 earnings from operations-before-tax and other charges including restructuring charges increased 39.8% to $0.29 million from $0.21 million in Q1 2010. The improvement is primarily driven by an increase in sales volume compounded by containment of sales, general, and administrative ("SG&A") expenses to an increase of only 2.1%. A charge was taken in the quarter of $0.32 million to cover costs associated with the management restructuring of the Company's European subsidiary, Kominex. Consolidated net loss for the quarter was $0.07 million ($0.003 loss per share) compared to net income of $0.13 million in the first quarter of 2010 (earnings per share of $0.005).

"The Company continues to focus on revenue growth in 2011 and is actively strengthening its sales team through the addition of salespersons in both North America and Europe," said Greg Emerson, President and CEO. "As WGI grows we are restructuring to position ourselves to better serve our customers and facilitate long-term sustained growth."

Highlights

•Revenues grew by 10.3% in Abrasives and 17.6% in Waterjet parts.

•The Company has added additional sales force and continues to seek sales talent to foster the Company's revenue growth.

•The Company participated in meetings with a B.C. First Nations band and anticipates commencement of exploration on its British Columbia placer claims.

Outlook

WGI's garnet and waterjet businesses in 2011 are expected to grow through an increase in market share and new business. Sales are forecasted to increase over 2010 primarily through increased volumes of garnet. Logistics costs and fuel prices remain volatile and along with pricing competition are expected to continue to keep pressure on margins through the year.

2011 will be a year of further operational improvements in addition to the identification of new resources through expanded mineral exploration. WGI will investigate larger regional garnet deposits where the Company can use its expertise to bring new multi-mineral resources into operation. We will be active in expanding our waterjet parts offering to keep current with evolving OEM designs and to enter new market space. The Company will continue its efforts to cross sell both garnet and waterjet parts to customers of either product thereby increasing our value to the customer.

The Company continues to strive to keep SG&A costs in line with revenues while expanding its sales and marketing department. In addition, the Company is in the process of restructuring its European management group. As a percentage of revenues SG&A is expected to decline in 2011 while exploration costs are expected to increase.