Feb 10 2010
Lakeside Steel Inc. (TSX-V: LS) ("Lakeside Steel" or the "Company") today announced that its Board of Directors has recently approved a significant capital investment for the fiscal year ending March 31, 2011. The capital expansion plans include the construction of new facilities at the Welland, Ontario location of its wholly-owned subsidiary, Lakeside Steel Corporation ("Lakeside").
Lakeside will install a casing threading line to perform work that Lakeside currently outsources in Texas, Alberta and Ontario. Once operational, Lakeside will be able to end finish all products produced in its Welland facility. This process will move Lakeside up the value chain, significantly improve customer lead times and is expected to have a positive impact on the Company's margins.
In addition, Lakeside plans to engage an outside consulting firm to review the feasibility of the installation of a new slitting line to process the hot band steel used as raw material at its Welland operations. Lakeside currently contracts 100% of its slitting business to three Ontario-based processors. It is anticipated that the installation of an in-house slitting line would improve margins, reduce costs and provide improved flexibility in raw steel purchasing.
When fully operational, the new operations are expected to create up to an additional 40 jobs. The capital expansion plans contemplate expenditures of approximately $5 million and construction of the new facilities is expected to begin in August 2010.
Once completed, the new facilities, in conjunction with Lakeside's recently completed upsetting and threading line and rail yard, will improve the Company's upstream and downstream integration.
Ron Bedard, President and CEO of Lakeside, commented that "The capital expansion plans are another step in pursuit of opportunities to grow our business responsibly. We have an excellent work force and believe that our employees will do a very good job in these new facilities. In addition, we expect the new operations to have a positive impact on working capital, efficiency, margins and customer service. The Company has become stronger over the past year and our recent appointment as a TSX Venture 50 Company identifies Lakeside as an emerging leader."
Lakeside Steel is also pleased to announce that it has recently renewed its credit facility with CIT Business Credit Canada Inc. ("CIT"). Ken Hunter, Chief Financial Officer commented "Lakeside has a long standing and excellent relationship with CIT and appreciates their support and confidence in Lakeside through the economic downturn. We believe that the worst is behind us and that we have turned a corner. While the economic recovery will be long and slow, we believe Lakeside is in a good position to return to profitability."
Source: www.lakesidesteelcorp.ca/