3rd Apr 2006 06:01
SouthernEra Diamonds 2005 Year-End Results (All amounts are in United States dollars unless otherwise noted) Shares Issued and Outstanding: 128,343,101 TSX: SDM AIM: SRE TORONTO, March 31 /CNW/ - The Board of Directors of SouthernEra DiamondsInc. ("SouthernEra") (the "Company") (TSX: SDM, AIM: SRE) today reported onthe Company's 2005 year-end results. SouthernEra is engaged in diamond exploration, mine development andmining activities internationally. Exploration activities in 2005 wereconducted in Canada, South Africa, Gabon, the Democratic Republic of Congo(the "DRC"), Australia and Zimbabwe. The Company's 57%-owned Klipspringer Diamond Mine ("Klipspringer") inSouth Africa continued on a care and maintenance basis for most of 2005, dueprimarily to the continued strength of the South African Rand ("Rand"). The Company continues to pursue the commencement of development andmining operations at the Camafuca Diamond Project. The Company holds itsinterest through the Camafuca Joint Venture (CJV). In 2005, the CJV obtainedthe approval of the Angolan government and has since incorporated a localoperating company, Camafuca - Sociedade Mineira Lda. (CSM). The group's activities in 2005 included regional reconnaissance, groundand airborne geophysics, sampling and drilling exploration in addition togeneral and administrative, and corporate activities No significant revenue was generated in 2005 from diamond sales atKlipspringer and compares to the minimal sales recognized in 2004. Care and maintenance costs, at Klipspringer in 2005, amounted to$0.4 million and are comprised of steady state site maintenance, dewateringand security of the mine site. Comparable mining costs amounted to$1.3 million in 2004 and reflect the initial costs to wind down theoperations. Lower amortization charges of $0.6 million recorded in 2005 versus$3.2 million charged to operations in 2004 reflects the lower asset base ofthe depreciable assets at Klipspringer. In 2004 the Company re-evaluated thecarrying cost of its plant and equipment at Klipspringer and recognized a$1.9 million charge to the statement of operations. In summary, care and maintenance costs in 2005 and 2004 resulted in aloss from mining operations, after amortization, of $1 million and$4.5 million respectively. In 2005, $1 million of interest expense was recorded as a period costrelating to accrued interest on the South African tax liability. This comparesto a charge in 2004 of $2 million that comprised both the interest on the taxliability and interest paid on a Rand overdraft facility at Klipspringer. Theoverdraft facility was fully repaid in September 2004 and was not utilized in2005. Corporate, general and administration expenses increased from$2.7 million in 2004 to $3.8 million in 2005. The 2005 results marked thefirst full year that the Company operated without the Platinum Division andthe increase reflects the increased level of corporate costs recorded as astand alone entity. In 2005, after evaluating carrying values of the Company's explorationand development projects, it was determined that results from the YilgarnDiamond Project in Australia and certain projects within South Africa fellbelow the consistently applied criteria the Company has set for continuedinvolvement in exploration projects and wrote down the carrying value of theprojects by $1.3 million. This compares, in 2004, to a write down of$3.0 million for certain projects both in Canada and South Africa. The foreign exchange gain recognized in 2005 of $1.7 million is areversal of the $1.6 million loss recorded in the comparable period of 2004.The fluctuation in the income versus expense is related, in the main, to thefluctuations in the value of the South African Rand versus the US dollar. The Company, through a reciprocal agreement with Southern Platinum Corp.,collected a $1.0 million change of control fee from Southern Platinum Corp. inJune 2005 when Southern Platinum Corp. was purchased by Lonmin Plc. The$1.0 million has been recorded as a recovery of general and administrationexpenses on the statement of operations. Overall, the Company incurred a loss before taxes of $6.2 million in2005, a reduction from the loss from continuing operations in 2004 of$14.5 million. Net loss after tax amounted to $5.8 million ($0.06/share) after a netrecovery of current and future income taxes of $0.4 million compared to a netloss after tax from continuing operations of $13.5 ($0.17/share) in 2004. Please refer to the Company's website (www.southernera.com) orwww.sedar.com to view the full audited financial results for the year endedDecember 31, 2005. SouthernEra Diamonds is one of Canada's largest fully integrated diamondcompanies with extensive diamond exploration in five countries includingCanada, Gabon, the DRC, Zimbabwe and South Africa. This represents one of themost active global diamond exploration programs after the majors DeBeers, BHPBand Rio Tinto. The Company also holds the Klipspringer Diamond Mine in SouthAfrica and maintains an 18 percent free-carried interest in the CamafucaDiamond Project in Angola. SouthernEra Diamonds Inc. Consolidated balance sheets (in thousands of United States dollars) 2005 2004 ------------------------------------------------------------------------- Assets Current assets: Cash and equivalents $ 4,337 $ 732 Accounts receivable 1,508 3,207 ------------------------------------------------------------------------- 5,845 3,939 Restricted cash (note 3) 4,000 - Property, plant and equipment (note 4) 1,644 2,264 Development projects (note 5) 14,596 13,715 Exploration projects (note 6) 20,482 16,217 Other assets 1,111 1,149 ------------------------------------------------------------------------- $ 47,678 $ 37,284 ------------------------------------------------------------------------- Liabilities and shareholders' equity Current liabilities: Accounts payable and accrued liabilities $ 1,447 $ 1,530 Income taxes payable 15,897 15,733 ------------------------------------------------------------------------- 17,344 17,263 Long-term liabilities: Future income taxes (note 8) 524 700 Environmental rehabilitation provision 1,032 1,165 ------------------------------------------------------------------------- 18,900 19,128 ------------------------------------------------------------------------- Shareholders' equity: Common shares (note 7) 108,882 94,571 Share purchase warrants 1,578 518 Contributed surplus 3,558 2,501 Deficit (83,266) (77,460) Cumulative translation adjustments (1,974) (1,974) ------------------------------------------------------------------------- 28,778 18,156 ------------------------------------------------------------------------- $ 47,678 $ 37,284 ------------------------------------------------------------------------- Going concern (note 1) Commitments (note 12) SouthernEra Diamonds Inc. Consolidated statements of operations For the Years Ended December 31 (in thousands of United States dollars, except loss per share amounts) 2005 2004 ------------------------------------------------------------------------- Revenue $ 6 $ 10 ------------------------------------------------------------------------- Direct costs: Care and maintenance (366) (1,276) Amortization (581) (3,176) ------------------------------------------------------------------------- (947) (4,452) ------------------------------------------------------------------------- Loss from mining operations (941) (4,442) Interest expense (957) (1,978) General and administration expenses (3,801) (2,737) Stock option expense (note 7) (877) (799) ------------------------------------------------------------------------- Loss before the undernoted (6,576) (9,956) Exploration and development project writedowns (note 6) (1,346) (2,954) Foreign exchange gain (loss) 1,682 (1,627) ------------------------------------------------------------------------- Loss before income taxes (6,240) (14,537) Income taxes: Current expense (note 8) (834) (35) Future recovery (note 8) 1,268 1,072 ------------------------------------------------------------------------- Loss after income taxes (5,806) (13,500) Net loss of discontinued operations - (26,331) ------------------------------------------------------------------------- Net loss for the period $ (5,806) $ (39,831) ------------------------------------------------------------------------- Basic and diluted loss per share (note 9) Continuing operations $ (0.06) $ (0.17) Discontinued operations $ - $ (0.33) Net loss per common share $ (0.06) $ (0.50) ------------------------------------------------------------------------- Consolidated statements of deficit, contributed surplus and cumulative translation adjustments For the Years Ended December 31 (in thousands of United States dollars) 2005 ------------------------------------------------------------------------- CUMULATIVE CONTRIBUTED TRANSLATION DEFICIT SURPLUS ADJUSTMENTS ------------------------------------------------------------------------- Beginning of period $ (77,460) $ 2,501 $ (1,974) Translation gains (losses) net for the period - - - Fair value of share options granted and vested - 877 - Transfer to Southern Platinum Corp. (note 11) - 180 - Net loss for the period (5,806) - - ------------------------------------------------------------------------- End of period $ (83,266) $ 3,558 $ (1,974) ------------------------------------------------------------------------- 2004 ------------------------------------------------------------------------- CUMULATIVE CONTRIBUTED TRANSLATION DEFICIT SURPLUS ADJUSTMENTS ------------------------------------------------------------------------- Beginning of period $ (70,155) $ 2,293 $ 8,623 Translation gains (losses) net for the period - - (1,363) Fair value of share options granted and vested - 799 - Transfer to Southern Platinum Corp. (note 11) 32,526 (591) (9,234) Net loss for the period (39,831) - - ------------------------------------------------------------------------- End of period $ (77,460) $ 2,501 $ (1,974) ------------------------------------------------------------------------- SouthernEra Diamonds Inc. Consolidated statements of cash flows For the Years Ended December 31 (in thousands of United States dollars) 2005 2004 ------------------------------------------------------------------------- Net loss for the period $ (5,806) $ (39,831) Net loss from discontinued operations - 26,331 ------------------------------------------------------------------------- Net loss from continuing operations (5,806) (13,500) Adjustments for non-cash items: Exploration and development project writedowns 1,346 2,954 Amortization 581 3,176 Interest charged to earnings 957 1,978 Stock option expense 877 799 Income tax expense (434) (1,037) Foreign currency translation (gain) loss (1,682) 1,627 ------------------------------------------------------------------------- (4,161) (4,003) Change in non-cash working capital balances 1,675 14,657 Cash used in discontinued operations - (23,003) ------------------------------------------------------------------------- Cash used in operations (2,486) (12,349) ------------------------------------------------------------------------- Financing activities: Issue of common shares and share units for cash, net of issuance costs 16,443 98 Cash used in discontinued financing activities - (21,911) ------------------------------------------------------------------------- Cash (used in) provided by financing activities 16,443 (21,813) ------------------------------------------------------------------------- Investing activities: Exploration and development projects (6,340) (7,481) Property, plant and equipment (12) (86) Restricted cash (4,000) - Cash used in discontinued investing activities - (8,457) ------------------------------------------------------------------------- Cash used in investing activities (10,352) (16,024) ------------------------------------------------------------------------- Increase (decrease) in cash 3,605 (50,186) Transfer of cash to Southern Platinum Corp. under Plan of Arrangement - (12,599) Foreign exchange (loss) gain on cash held in foreign currency - (506) Cash and equivalents - beginning of period 732 64,023 ------------------------------------------------------------------------- Cash and equivalents - end of period $ 4,337 $ 732 ------------------------------------------------------------------------- Cash and cash equivalents comprise: Cash $ 4,337 $ 513 Short-term investments - 219 ------------------------------------------------------------------------- $ 4,337 $ 732 ------------------------------------------------------------------------- Supplementary information: Significant non-cash investing activity - Acquisition of additional interest in subsidiary for shares $ - $ (28,798) ------------------------------------------------------------------------- For further information: SouthernEra Diamonds Inc.: Mr. Chris Reynolds,Senior VP, CFO and Secretary, Telephone: (416) 359-9282, Fax: (416) 359-9141,E-mail: inbox(at)southernera.com, www.southernera.com; London: 4C-Burvale,Carina Corbett, Director, Telephone: ++44 (0) 207-907-4761,Fax: ++44 (0) 207-907-4769, Email: Corbett(at)4c-burvale.co.uk (SRE) ENDSOUTHERNERA DIAMONDS INCRelated Shares:
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