31st Jan 2007 09:49
Dwyka Diamonds Limited31 January 2007 QUARTERLY REPORT 31 DECEMBER 2006 DWYKA DIAMONDS LIMITED (ASX:DWY.AX; AIM:DWY.L) HIGHLIGHTS - Dwyka moves to 70% ownership of De Beers Tailings Retreatment Project (DBTR)as a result of the completion of BEE restructure - Ambrian Partners appointed as Nominated Advisor and Broker - Rough diamond stock on hand at quarter end - 855 carats. AFRICAN OPERATIONS Black Economic Empowerment (BEE) Compliance. The final implementation phase of the BEE restructure of Dwyka's South Africanoperations was completed in October. All of Dwyka's South African operations arenow held within Superkolong Holdings (Pty) Ltd in which Dwyka has a 70%interest. The remaining 30% interest is held by Dwyka's BEE partner, KolongInvestments (Pty) Ltd. The restructure is significant for Dwyka as it sees the Company move to 70%ownership of the De Beers Tailings Retreatment Project ("DBTR"). In addition, Dwyka's other projects and operations - comprising theKimberley-based Industrial Products businesses, the prospective Bosele diamondfissure project and Blaauwbosch, Newlands and New Elands underground kimberlitemines - are now fully BEE-compliant, with the result that Dwyka: - can proceed to conversion of all "old order" mining rights to "new order"rights as contemplated under applicable South African legislation; - can maximise development of its existing projects and operations; - is now placed in a strong position to secure further opportunities in SouthAfrica; and - will, as regards its Industrial Products division, be viewed as a "preferred"supplier to South African mining companies and in relation to tendering andprocurement with government. EXPLORATION AND DEVELOPMENT De Beers Diamond Tailings Retreatment Project - RSA A total of 70,501 tonnes was processed for the quarter and 3,698 carats ofdiamonds recovered. Feed grades improved towards the end of the quarter as plantavailability improved and increased throughputs were achieved. Under the terms of Dwyka's agreement with De Beers, Dwyka is paid a fixed amountto treat the material on a contract basis. Thus, Dwyka's exposure to operatingcosts at designed throughput is minimal. Dwyka shares the diamond revenue - lessoperating costs - with De Beers. Mahene and Itanana Kimberlites - Tanzania (JV with De Beers) No field activity was undertaken during the quarter. Bosele Exploration - RSA Further ground based geological investigations were undertaken during thequarter. New Elands Kimberlite Mine - RSA Contract tailings retreatment was implemented at New Elands, with Dwykareceiving R2.50 per ton treated with a minimum fee for 15,000 tonnes per monthtreated and tonnes exceeding 15,000 are charged accordingly. Nooitgedacht Alluvial Diamond Mine - RSA During the quarter, 33,402.65 tonnes of gravel were treated to recover 243.11carats at an average grade of 0.72 carats per hundred tonnes ('cpht'). Newlands Kimberlite Mine - RSA During the quarter, 7,920.00 tonnes of kimberlite were treated to recover 954.27carats at an average grade of 12.04 cpht. A number of large stones wererecovered, among them stones of the following sizes: 7.20, 3.91, 4.60, 4.59,3.35, 4.86, 3.81 carats. 3,810.00 Tons tailings were treated to recover 352.42carats at an average grade of 9.24 cpht, with a 9.49 and 3.36 carats among thestones. Blaauwbosch Kimberlite Mine - RSA Development continued at Blaauwbosch in preparation for production stoping. Thefirst of the stoping blocks were blasted and ore from those blocks will behauled to the surface in January. It is anticipated full production rates fromunderground (10,000 tonnes per month) will be achieved by April. Some kimberlitefrom development headings has been processed. Despite being heavily contaminatedwith wall rocks the material achieved reasonable grade (about 15 carats perhundred tonnes) and produced some large stones. During the quarter7,609.14 tonnes of development were treated to recover1,015.99 carats at an average grade of 13.35 cpht. A number of large stoneswere recovered, among them stones of the following sizes: 6.38, 6.14, 16.19,3.81, 3.52, 3.22, 5.22, 4.30, 3.16, 5.36, 4.58, 3.87, 4.53, 6.41, 3.39, 3.22,3.85, 3.92, 4.20 ,3.47, 3.36, 3.92 carats, 5,546.21 tailings were treated torecover 267.54 carats at an average grade of 4.82 cpht, with a 3.12 carat amongthe stones. Industrial Division - RSA Dwyka's Industrial Division (Supermix) achieved combined concrete and bricksales of R5,121,943 for the December quarter. Rising demand for bricks hasresulted in the implementation of two shift operations of the brick plantsubsequent to the end of the quarter. INDIAN DIAMOND EXPLORATION PROGRAMME The contractual obligations of Dwyka, under the terms of the Joint Venture withBHP Billiton were completed. A number of promising areas were identified duringthe program and BHP have undertaken to sole risk some further sampling beforeconsidering the future of the Joint Venture. CORPORATE Appointment of Nomad The company announced the appointment of Ambrian Partners as Nominated Advisorand Broker on 5th October 2006. Extension of term of shareholder loan made in conjunction with issue of sharesunder Dwyka Diamonds Share Plan The extension of the term of loans made to employees and some directors("Recipients") in conjunction with the issue to the Recipients of $0.52 sharesin the capital of the Company ("Shares") pursuant to the Dwyka Diamonds SharePlan (approved by shareholders on 28 November 2003) was announced on 20thDecember 2006. The loans in question were formerly due to expire on 18 December2006 and provide that the amount repayable is the lesser of the issue price ofthe Shares and the last sale price of the Shares on the loan repayment date.However, in view of the fact that shares in the Company are currently tradingbelow the issue price for the Shares, the Company would suffer a financial lossif the loans were to be repaid on the former due date. In addition, the Boardhas considered that if Recipients were currently required to repay the loans itwould be likely that some or all of those Recipients would sell significantnumbers of Shares in order to finance such repayment, with potentiallydetrimental consequences for the Company's share price. Accordingly, the Company and the Recipients have agreed that the loans will nowexpire on 21 December 2008, being the same date as that on which other loansmade to Dwyka personnel in conjunction with issues of shares under the Plan andthe 2005 Dwyka Diamonds Share Plan expire. Issue of Shares under Dwyka Diamonds Employee Share Plan 1,000,000 shares under the terms of the Dwyka Diamonds Replacement Share Planwere issued to a Director of the Company on 20th December 2006. The shares issued under the terms of the Dwyka Diamonds Replacement Share Planmay not be sold or otherwise dealt with until the later to occur of thefollowing: (a) the loan in respect of those shares has been repaid in full; and (b) in respect of: (i) one third of the shares issued, 12 months after the date of the issue of theshares (20 December 2007); (ii) another one third of the shares issued, 24 months after the date of theissue of the shares (20 December 2008); and (iii) the remaining one third of the shares issued, 36 months after the date ofthe issue of the shares (20 December 2009). SUBSEQUENT EVENTS Subsequent to the end of the quarter, Dwyka announced its intentions to takeadvantage of the current resources boom by way of diversification. Thediversification process will reduce the single commodity risk to which theCompany is presently exposed. Dwyka has project development as a core expertise and will initially apply itsresources to the Muremera nickel project in Burundi. The Muremera project lieswithin an igneous province that hosts a significant proportion of the world'sidentified nickel resources. Significantly the Kabanga deposit (Xstrata earning50% by expending USD145M) lies only 2km from the north-east boundary of Dwyka'sMuremera project. Kabanga is 0ne of the the world's largest undeveloped nickelsulphide deposit for which Xstrata quotes a resource of 26 million tonnes at2.6% nickel, with copper and cobalt credits. The geological; sequence at Muremera is similar to Kabanga, as are thegeophysical anomalies, which, through drilling undertaken by the United NationsDevelopment Program, have been shown to emanate from sulphides which containnickel. ADRIAN GRIFFIN Chief Executive Officer The technical exploration and mining information contained in this report wascompiled by Adrian Griffin (CEO of Dwyka Diamonds), who is a member of theAustralasian Institute of Mining and Metallurgy and is considered to be aCompetent Person in his respective area of expertise pursuant to theAustralasian Code for Reporting of Mineral Resources and Ore Reserves. For further information please contact: Adrian Griffin Dwyka Diamonds Limited +61 (0) 8 9324 2955 Richard Brown Ambrian Partners Limited +44 (0) 20 7776 6417 Laurence Read/ Leesa Peters Conduit PR +44 (0) 20 7429 6605/ +44 (0) 20 7979 955 923 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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