31st Jan 2006 07:00
Dwyka Diamonds Limited31 January 2006 Dwyka Diamonds Limited ("Dwyka" or "the Company") 2nd Quarter Results to 31 December 2005 HIGHLIGHTS • Recommencement of operations at the Blaauwbosch Diamond Mine • Two diamondiferous kimberlites secured in second deal with De Beers • First sale of diamonds from re-opened Newlands Mine • 42 carat Nooitgedacht stone sold for USD301,018 (USD7,167 per carat) • Rough diamond stock on hand 2,201.46 carats • Appointment of Chief Executive Officer AFRICAN OPERATIONS Mahene and Itanana Kimberlites, Tanzania (JV with De Beers) On the 27th October 2005 the Company announced that it had secured a second joint venture with De Beers. The joint venture includes the diamondiferous Mahene and Itanana kimberlite pipes in the Nzega District of Tanzania. Under the terms of the transaction Dwyka will bulk sample the pipes at a cost ofapproximately US$1.5m. Dwyka's Tanzanian partner, Thorntree Minerals Limited, isassisting with logistical, managerial and government liaison support withinTanzania. Thorntree Minerals has the right to participate in 20 per cent. ofDwyka's equity interest in the projects once the decision to progress tofeasibility study is taken. Thorntree will be required to fund their share ofcosts to maintain their equity position. De Beers has the option to acquire a 51 per cent. shareholding in Dwyka TanzaniaLimited, the Dwyka subsidiary holding the project, by reimbursing Dwyka threetimes the cost incurred by the Company to evaluate the projects. Alternatively,De Beers may elect to remain as a 5 per cent. shareholder in Dwyka TanzaniaLimited or convert its shareholding into a 1.5 per cent. gross royalty payableon diamond revenues. As part of the agreement Dwyka Tanzania Limited will sellall diamonds recovered in the licence areas to De Beers. De Beers Diamond Tailings Retreatment Project The tailings project is a joint venture between Dwyka's wholly owned subsidiarySupermix Mining (Pty) Ltd ("Supermix"), and Kolong Investment Holdings (Pty) Ltd("Kolong"). Kolong is a Black Economic Empowerment ("BEE") entity. Dwyka has aneffective 40 per cent. interest in the joint venture vehicle, Superkolong (Pty)Limited. At the end of the Quarter, the status of the project was as follows: • Debt finance of ZAR17.2 million was being negotiated • Construction of the project was scheduled to be completed Q1 2006 due to additional enhancements and to allow increased feed capability and enhanced recoveries • Plant to treat minimum of 50,000 tonnes per month from De Beers Kimberly operations Commissioning is expected to commence March 2006. The project will be suppliedwith tailings from De Beers Consolidated Mines Limited's Kimberley mines. Theplant has been designed for feed rates of over 80,000 tonnes per month andfurther increases in capacity should be possible at relatively low cost. DeBeers have indicated that additional feed, above the agreed 50,000 tonnes permonth, will be available subject to satisfactory plant performance. Suchincreased throughput could substantially boost project economics. Nooitgedacht Alluvial Diamond Mine In October 2005 the Company sold a 42 carat stone for US$7,167 per carat, a 17carat stone for US$2,105 per carat and an 11 carat stone for US$1,616 per carat. Additional run-of-mine production of 468 carats achieved a sale price ofUS$132,805 (US$285 per carat). During the quarter 30,133.58 tonnes of gravel were treated recovering 318.50carats at an average grade of 1.05 cpht. A number of large stones were recoveredincluding stones of the following sizes: 3.11, 3.13, 3.35, 4.54, 4.60, 4.83,5.72 and 18.89 carats. Diamonds recovered during the quarter are expected be sold in March 2006.Diamonds on hand from Nooitgedacht at the period end totalled 243.15 carats. Newlands Kimberlite Mine In October 2005 the first parcel of diamonds from tailings processed at therecently re-opened Newlands Diamond Mine was sold to Diamdel, De Beers' roughdiamond trading subsidiary. The parcel of 347 carats of predominantly whitediamonds achieved a price of USD 95 per carat for a total sale value of USD32,930. The value per carat is in line with the Company's expectations for theNewlands Mine. During the quarter 6,603.14 tonnes of kimberlite were treated recovering1,627.35 carats at an average grade of 24.64 cpht. Diamonds recovered during the quarter are expected be sold in March 2006.Diamonds on hand from Newlands at the period end totalled 1,349.65 carats. Underground development continued during the quarter with an access crosscutbeing completed to the winder station of the planned internal haulage shaft.Vertical development will continue by developing from that location. Blaauwbosch Kimberlite Mine On the 17th October the Company announced the recommencement of operations atits recently acquired Blaauwbosch Mine. The refurbished plant recommenced operations on 10 October 2005, on a feed oftailings material. Development on the main haulage shaft, and second egress progressed well duringthe quarter. The depth of the main shaft is presently at 222 metres. A stationhas been developed at the 205 metre level. A double shift is being worked on the second egress which is being developed byshaft sinking from the surface. At the end of the quarter the sinking hadadvanced to a depth of 50 metres. The shaft has been concrete lined to a depthof 46 metres. At the end of the quarter, tailings retreatment was expanded from a single shiftoperation to two shifts to improve diamond output prior to the availability ofunderground ore. Since operations recommenced in October 2005, 6,540.74 tonnesof tailings were treated recovering 608.65 carats at an average grade of 9.30cpht. Development in kimberlite from underground ore is still expected to commence inFebruary 2006. The underground operation has a target of 3,500 carats per monthwith a value of approximately US$3m per annum. Diamonds recovered during the quarter are expected be sold in March 2006.Diamonds on hand from Blaauwbosch at the period end totalled 608.65 carats. New Elands Kimberlite Mine The New Elands mine development has been scheduled to follow stable productionfrom Newlands and Blaauwbosch. Industrial Division The Industrial division continues to perform to expectations with combinedconcrete and brick sales for the December quarter being R9,901,429 compared toSeptember 2005 quarter being R9,600,020. Bosele Exploration Preparation commenced for bulk sampling of the Bosele pipe. It is anticipatedthe 150 tonne parcel will be processed by De Beers in January 2006. INDIAN DIAMOND EXPLORATION PROGRAMME Regional scale stream sediment sampling programmes have been completed withinthe states of Uttar Pradesh and Orissa during the December 2005 quarter. Two shipments of samples from the Uttar Pradesh and Orissa programmes have beenflown to a laboratory in Perth, Australia and are undergoing DMS treatment withthe first concentrates recovered. The concentrates will be treated and observedduring January 2006 with the first probe results being available during lateFebruary 2006. Follow up sampling to positive results will commence during thefirst quarter of 2006. Further green fields regional stream sediment sampling programmes willbe commencing in Uttar Pradesh and in Central Chhattisgargh for the firstquarter of 2006. Follow-up sampling and brown-field activities, based onpositive results from Q3/4 2005 sampling programmes, will be conductedsimultaneously with the 2006 regional sampling programmes. CORPORATE Appointment of Chief Executive Officer As announced on the 21st November 2005, Mr. Adrian Griffin has been appointed asChief Executive Officer of the Company, effective from 1 December 2005. Adrian'sappointment is designed to allow the Company to effectively manage its currentstage of rapid operational growth due to the recent successes in acquiring andopening the two underground kimberlite mines, Blaauwbosch and Newlands and theconclusion of the two transactions with De Beers. Mr. Griffin will receive an annual salary of A$125,000 and the Company has alsomade an offer to Mr. Griffin to apply for 1,000,000 shares under the terms ofthe Dwyka Diamonds Replacement Share Plan. The current composition of the Board is now: Executive Chairman - Melissa SturgessChief Executive Officer - Adrian GriffinManaging Director South African Operations - Cedric BredenkampChief Financial Officer - Mike LangoulantNon- executive Director - Edward NealonNon-executive Director - Dr Evan Kirby Placement On the 4 November 2005 the Company announced that 4.5 million fully paidordinary shares had been placed with institutional and other investors byWilliams de Broe Plc at a price of 30 pence (A$0.72) per share. The net placing funds of approximately £1.3 million (A$3.1 million) will be usedprimarily in the bulk sampling of each of the two diamondiferous kimberlitesrecently acquired through a joint venture with De Beers, as announced by theCompany on 27th October 2005. Issue of Shares to consultants The Company announced on the 22nd December 2005 that it had issued 749,137 fullypaid ordinary shares in the Company to consultants in relation to servicesrendered to date in connection with the Company's De Beers tailings retreatmentproject and the recently completed transaction with De Beers to secure ownershipof two diamondiferous kimberlites in Tanzania. The shares have been issued at adeemed issue price of A$0.685 per share. Issue of Shares under the Dwyka Diamonds Share Plans Existing Share Plan It was announced on the 21st December 2005 that in accordance with theshareholder approval received on 30 November 2005, the Company had issued750,000 shares under the terms of the Dwyka Diamonds Existing Share Plan to twodirectors of the Company. Replacement Share Plan On the same day a further announcement was made that in accordance with theshareholder approval received on 30 November 2005, 3,350,000 shares had beenissued under the terms of the Dwyka Diamonds Replacement Share Plan to employeesand directors of the Company. ADRIAN GRIFFINChief Executive Officer The technical exploration and mining information contained in this report wascompiled by Mr. Ed Nealon, a Dwyka Diamonds Ltd director. Mr. Nealon providesconsulting services via his company Athlone International Pty Ltd. Mr. Nealon isa member of the Australasian Institute of Mining and Metallurgy and isconsidered to be a Competent Person in his respective area of expertise pursuantto the Australasian Code for Reporting of Mineral Resources and Ore Reserves.Mr. Nealon consents to the inclusion in the report of the matters based on hisinformation in the form and context in which it appears. Further information please contact: In Australia: In United Kingdom:Mike Langoulant, Adrian Griffin, Melissa Laurence Read/Leesa PetersSturgess Dwyka Diamonds Limited Conduit PR(+618) 9324 2955 (+44) 20 7429 6605/ (+44) 7979 955 923 Rule 5.3 Appendix 5B Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98. Name of entityDWYKA DIAMONDS LIMITED ACN or ARBN Quarter ended ("current quarter")098 060 938 552 31 December 2005 Consolidated statement of cash flows Cash flows related to operating activities Current quarter Year to date $A'000 (6 months) $A'000 1.1 Receipts from product sales and related 1,956 4,158 debtors 1.2 Payments for (a) exploration and (317) (706) evaluation (b) development (554) (1,620) (c) production (1,693) (4,071) (d) administration (492) (1,208) 1.3 Dividends received 1.4 Interest and other items of a similar 76 188 nature received 1.5 Interest and other costs of finance paid 1.6 Income taxes paid 1.7 Other FOREX variance (13) (60) Net Operating Cash Flows (1,037) (3,319) Cash flows related to investing activities 1.8 Payment for purchases of: (a) prospects (170) (1,185) (b) equity investments (250) (250) (c) other fixed assets (10) (64) 1.9 Proceeds from sale of: (a) prospects 2 (b) equity investments (c) other fixed assets1.10 Loans to other entities (1,598) (2,467)1.11 Loans repaid by other entities 241.12 Other (employee loans re share issues) (4,003) (4,003) Net investing cash flows (6,031) (7,943)1.13 Total operating and investing cash flows (7,068) (11,262) (carried forward)1.13 Total operating and investing cash flows (7,068) (11,262) (brought forward) Cash flows related to financing activities1.14 Proceeds from issues of shares, options, 7,190 7,190 etc.1.15 Proceeds from sale of forfeited shares1.16 Proceeds from borrowings1.17 Repayment of borrowings (3) (12)1.18 Dividends paid1.19 Other - capital raising costs (107) (107) Net financing cash flows 7,080 7,071 Net increase (decrease) in cash held 12 (4,191)1.20 Cash at beginning of quarter/year to 5,467 9,582 date1.21 Exchange rate adjustments to item 1.20 6 941.22 Cash at end of quarter 5,485 5,485 Payments to directors of the entity and associates of the directors Payments to related entities of the entity and associates of the relatedentities Current quarter $A'0001.23 Aggregate amount of payments to the parties included in 115 item 1.21.24 Aggregate amount of loans to the parties included in item - 1.101.25 Explanation necessary for an understanding of the transactions - Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows During the quarter 749,137, fully paid shares were issued at $0.685 in lieu of payment of consulting fees to various contractors. 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest - Financing facilities available Add notes as necessary for an understanding of the position. Amount Amount used available $A'000 $A'0003.1 Loan facilities Nil Nil3.2 Credit standby arrangements Nil Nil Estimated cash outflows for next quarter $A'0004.1 Exploration and evaluation 1504.2 Development 450 Total 600 Reconciliation of cash Reconciliation of cash at the end of the quarter (as Current quarter Previousshown in the consolidated statement of cash flows) to quarterthe related items in the accounts is as follows. $A'000 $A'0005.1 Cash on hand and at bank 232 3375.2 Deposits at call 5,253 5,1305.3 Bank overdraft5.4 Other (provide details) Total: cash at end of quarter (item 1.22) 5,485 5,467 Changes in interests in mining tenements Tenement Nature of Interest at Interest reference interest beginning of at end of (note (2)) quarter quarter 6.1 Interests in mining tenements relinquished, reduced or lapsed 6.2 Interests in Tanzania P/l Held in Nil 95% mining tenements 2097/2002 & conjunction acquired or 2098/2002 with de Beers increased via Tanzanian subsidiary Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rightstogether with prices and dates. Total Number Issue price Amount paid up number quoted per security per security (see note 3) (see note 3) 7.1 Preference - - +securities (description) 7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions 7.3 +Ordinary 92,537,135 82,915,999 N/A N/A securities 7.4 Changes during 4,500,000 4,500,000 GBP0.30 GBP0.30 quarter (AUDO.72) (AUDO.72) (a) Increases 749,137 749,137 AUD0.685 AUD0.685 through issues (b) Decreases 750,000 - AUD0.87 AUD0.87 through returns of capital, buy-backs 3,350,000 - AUD1.00 AUD1.00 7.5 +Convertible - - debt securities (description) 7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted 7.7 Options 2,000,000 - Exercise price Expiry date (description and conversion factor) 1,100,000 - $1.47 30/6/2006 $0.52 30/6/2007 7.8 Issued during quarter 7.9 Exercised during quarter7.10 Expired (cancelled) during quarter7.11 Debentures - - (totals only)7.12 Unsecured notes - - (totals only) Compliance statement 1 This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Law or other standards acceptable to ASX (see note 4). 2 This statement does give a true and fair view of the matters disclosed. Michael Langoulant Date: 27 January 2006Company Secretary Notes 1 This quarterly report provides a basis for informing the market how the entity's activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report. 2 The "Nature of interest" (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2. 3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities. 4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report. 5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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