30th Sep 2005 08:24
Dwyka Diamonds Limited30 September 2005 Dwyka Diamonds Limited Annual accounts for year ended 30 June 2005 HIGHLIGHTS •Three hard rock diamond projects assessed and acquired - first revenue expected October 2005 •Joint Venture with De Beers to retreat diamond tailings - first revenue expected in January 2006 •Industrial Division gross profit of R9.5 million •Nooitgedacht Alluvial Mine completed second full year of cash positive operations with a number of large diamonds discovered including a 54 carat stone sold for US$360,000 (US$6,666 per carat) and an 18 ct stone sold for US$130,000 (US$7,100 per carat) •Indian exploration JV discovered numerous anomalies during the year with follow up in current field season Please find attached the Chairman's statement and financial results accompanyingthis highlights page. The company's annual report and accounts will be distributed to shareholders in late October and will be available on our websiteshortly. For further information please contact: In Australia: In United Kingdom:-------------------------- -------------------------Melissa Sturgess Laurence Read/ Leesa Peters-------------------------- -------------------------Dwyka Diamonds Limited Conduit PR-------------------------- -------------------------(+618) 9324 2955 +44 (0)20 7618 8707 / +44 (0)7979 955-------------------------- 923 --------------------------------------------------- -------------------------Or visit: http://www.dwykadiamonds.com --------------------------------------------------- CHAIRMAN'S LETTERFOR THE YEAR ENDED 30 JUNE 2005 Dear Shareholder After 18 months of perseverance and restructuring Dwyka has made significantprogress to become a diamond producer and resource developer. The operationalteam has achieved higher grades and production rates following restructuring ofthe Nooitgedacht plant and are now undertaking an optimisation programme tobring our three new hard rock mines to full potential. The Company has reachedsome important milestones this year in building a portfolio of diamondproduction. Acquisition of three hard rock diamond mines, Blaauwbosch, Newlands, New Elandsin South Africa and a partnership with De Beers to retreat diamond tailings fromtheir Kimberley mines will see Dwyka commence 2006 with multiple earningsstreams from diamond mining and tailings reprocessing. Dwyka now has a diverse production and exploration portfolio containing the newSouth African diamond production projects, the Nooitgedacht alluvial diamondmine, and exploration potential at Bosele and in India through our continuingalliance with BHP Billiton. We have deliberately pursued a strategy to bring innear term revenue and provide a firm cash base to build shareholder valuethrough further diamond production and exploration opportunities. The Company's Industrial Division continues to perform on a cash flow positivebasis, providing Dwyka with a strong underpinning business whilst we continue topursue our mining growth ambitions. To date, we have focused our African development around Kimberley in SouthAfrica. This strategy has had excellent results as it allows flexibility for ouroperational teams and permits infrastructure to be applied to multiple projectswithout high transportation costs and with minimal time wasted. As the Companygrows we shall consider the feasibility of operating projects slightly further afield while maintaining our commitment to a low cost overhead structure. The new Minerals Act of South Africa continues to offer opportunities forcompanies like Dwyka to increase their mining portfolio, with the emphasis onthe exploitation of minerals gaining momentum under the prevailing broad-basedblack economic empowerment (BEE) legislation. The tailings re-treatment projectwith De Beers is a good example of this in action. Together with our BEEpartner, Kolong Investment Holdings (Pty) Limited, Dwyka was the successfultenderer for this project in Kimberley, South Africa. India continues to generate great enthusiasm in global diamond explorationcircles. The world's major mining houses remain of the view, a view Dwykashares, that India may well be the home of the next significant hard rockdiamond discovery. With a continued focus on technical excellence, financial rigour, and sheerenergy I firmly believe 2006 will bring increasing diamond production andrewarding results for shareholders. Finally, a well earned vote of thanks to Dwyka's committed group of managers,staff and consultants in Australia, South Africa and India whose level ofenthusiasm ensures Dwyka's future. M J SturgessChairman Date: 30 September 2005 REVIEW OF OPERATIONS AND ACTIVITIES FOR THE YEAR ENDED 30 JUNE 2005 During the 2005 financial year, the Company pursued its ambition to become ahard rock diamond miner with the acquisition of the Blaauwbosch, Newlands andNew Elands mines. In addition Dwyka, together with its BEE partner, Kolong Investment Holdings(Pty) Limited, finalised an agreement with De Beers to retreat diamond tailingsfrom De Beers Kimberly mines. The Nooitgedacht alluvial diamond operation continued its record of regularlyproducing large good quality stones while the Industrial division returnedanother cash profit for the financial year. De Beers Tailings Re-treatment Project - 40% (BEE partner 60%) SuperKolong (Pty ) Limited, a BEE initiative company established by Dwykatogether with BEE partner Kolong Investments, has entered into an agreement withDe Beers Consolidated Mines Limited to retreat diamond tailings from De Beers'Kimberley mines. Dwyka will hold its 40 percent equity in SuperKolong (Pty) Ltd through its 100%owned subsidiary Supermix Mining (Pty) Limited. The capital cost of the project is expected to be in the order of R21 million.Technical discussions with De Beers have been underway for a number of monthsand construction of the plant has already commenced. First production from thisproject is expected in the first quarter of 2006. The re-treatment plant is being constructed within the De Beers Kimberly minesproperty on a site nominated by De Beers and will benefit from the establishedinfrastructure of De Beers Kimberley mines. This will provide cost effectiveaccess to security services, electrical supply, water supply and tailingsdisposal facilities. The agreement with De Beers allows for minimum monthly tonnages to be processed,reimbursement of working costs and shared profits from diamond sales. The contract known as the SMI4 contract was signed in May 2005. On the 15th ofJuly 2005 the sod turning ceremony marking the commencement of the constructionwas held with the Managing Director of De Beers Consolidated Mines Limited,Jonathan Oppenheimer, in attendance. Nooitgedacht Alluvial Mine - 100% The Nooitgedacht mine is located on the farm Nooitgedacht some 15 kms north westof Kimberley, South Africa. The farm extends for 6km along the eastern bank ofthe Vaal River, covering an area of 4,671 hectares. Between the late 1940's and the 1970's, a small portion of the Nooitgedachtproperty was mined by small diggers under a license arrangement with De BeersConsolidated Mines Limited. During this period historical records note that some76,000 carats were recovered in total from the property, with the largest stonebeing the Venter diamond that weighed 511 carats. This is the largest alluvialdiamond recovered in South Africa, and the subsequent diamond rush resulted inthe recovery of two plus 300 carat diamonds. A total of 14 diamonds weighinggreater than 100 carats each have been recovered from the Nooitgedacht property,including one recovered by Dwyka. Notwithstanding its ability to produce spectacular stones of high value theNooitgedacht project continues to run as a low cost, low volume operationrecovering grades of approximately 1 carat per hundred tonnes. The 2005 financial year saw the new wet X-ray diamond sorting system,commissioned in September 2004, in full production. The Nooitgedacht plant has operated effectively throughout the year with therecovery of large, gem grade stones including stones of 54, 18.11, 16.62, 10.30,9.32, 6.51, 4.98, 4.66 carats. Furthermore dollar per carat price received fromthe sale of these stones was impressive, with the 54 carat stone sold forUS$360,000 (US$6,666 per carat) and the 18.11 ct stone sold for US$130,000(US$7,100 per carat). Following the restructuring and optimisation programme completed at the projectin February 2004, Dwyka and its shareholders are now seeing the clear benefitsof the programme the Company undertook at the Nooitgedacht plant to improve allareas of diamond production. During the year 89,279 tonnes of gravel were treated recovering 861.63 carats anaverage grade of 0.96 cpht. The Company is pleased to report that Nooitgedacht has now concluded two yearsof cash positive operations. Blaauwbosch Kimberlite Mine - 100% The Blaauwbosch mine is located approximately 90 km east of Kimberley in thewell known diamond producing area of Boshoff. Historically, Blaauwbosch was the19th largest producing kimberlite pipe (3.71 acres) and was mined to a depth ofabout 110 metres producing an estimated 967,000t of ore, yielding some 338,000carats at an average grade of 34.95 carats per hundred tonne ("cpht").Operations were ceased in 1967 due to flooding. The mine was re-opened this year and production has recommenced. Tailings havebeen processed since May 2003 and underground operations started in 2004 withthe first ore produced in June. Dwyka had the Blaauwbosch Mine under option since August 2004 and entered into aheads of agreement to purchase the mine in April 2005. Final sales agreementsfor the purchase were signed in June 2005 with settlement being achieved inAugust 2005. As at the end of June 2005 production at the Blaauwbosch Mine was halted toundertake plant redesign, shaft deepening and underground development work. Significant progress has been made with the main shaft at Blaauwbosch now sunkto a depth of 185 metres. This stage of development will take the shaft depth toapproximately 220 metres to allow mining development of the next deeper block ofkimberlite ore. An ore tramming level will then be established at about 210meters. This will be followed by the development of a series of ore-passes,travelling ways and drifts within the kimberlite in preparation for bulk miningactivities. Production start-up is on target for the last quarter of 2005 with the immediatecommencement of processing of tailings through a significantly improvedextraction facility. Treatment development ore will commence in 2006, and bulkmining of kimberlite should be re-established by the end of 2006. At full production the Company anticipates processing 10,000 tonnes per month ofunderground ore to produce 46,000 carats per annum. In addition the Blaauwbosch mine immediate surroundings have significantadditional exploration potential and the Company is currently undertaking aprogramme to assess this potential. Newlands Kimberlite Mine - 100% This Newlands Mine is located some 60 kms North-West of Kimberley on the Hartsriver. It is currently being mined at a rate of 3,000 tonnes per month on asingle shift basis. Five kimberlite blows occur on two North-East striking fissures, with only oneblow being mined at present. The property has significant exploration potential. Dwyka had the Newlands Mine under option from August 2004 and entered into aheads of agreement to purchase the mine in April 2005. Final sales agreementsfor the purchase were signed in June 2005 with settlement being achieved inAugust 2005. The Newlands plant was taken off line in May 2005 for modifications to improvediamond recovery. As at the end of the June 2005 quarter these modifications areat an advanced stage with all major components already on site. Re-commissioningof the recovery plant at this site has since been completed. Production willrecommence before the end of September with the processing of both tailings andunderground ore. At full production the Company anticipates processing 5,000 tonnes per month toproduce 14,500 carats per annum. In addition the Newlands property has significant potential for furtherexploration and the company is currently undertaking a programme to assess this. New Elands Kimberlite Mine - 100% The New Elands Mine is located on the remaining extent of farm New Elands 949,situated 90km northeast of Kimberley in the Boshof district, Free StateProvince, South Africa New Elands historically produced some 1.5 million tonnes from dykes andkimberlite blows, yielding approximately 464,000 carats at an estimated grade of34.24 cpht. The old shafts are well preserved and it is Dwyka's plan tore-develop this mine. Dwyka had the New Elands Mine under option since August 2004 and entered into aheads of agreement to purchase the mine in April 2005. Final sales agreementsfor the purchase were signed in June 2005 with settlement being achieved inAugust 2005. No development work is planned at the New Elands Mine until Dwyka has both theBlaauwbosch and Newlands mines in full operation, Industrial Division - 70-100% (BEE partner 0-30%) Dwyka's Industrial division is located at the South African Operations office inKimberley, South Africa. The industrial division comprises subsidiary companies Supermix Mining (Pty)Limited and Biz Afrika (Pty) Limited and comprises production and sale of pavingbricks, building bricks, building blocks, readymix concrete, sand and aggregate,as by-products from the diamond mining operations, to the building industry inthe Northern Cape in South Africa. The brick and paving block component is 30%owned by Dwyka's BEE partner, Kolong Investments. The industrial division continued to perform to expectations resulting in a cashprofit for the June 2005 financial year. Bosele Exploration Project - 70% (BEE partner 30%) Dwyka together with BEE partner Kolong was granted a prospecting permit overthis property during August 2003. The 1100 ha area is situated immediately southof the Dancarl Mining Lease in the Northern Cape Province in South Africa, 80kmnorth of Kimberley. The prospecting permit area hosts numerous Group II kimberlitic fissures, someof which are diamondiferous. Since April 2004 exploration has focused on newlydiscovered crater facies volcanoclastic rocks which occur in the southern andcentral parts of the Bosele area. The volcanoclastic rocks contain abundantchromites and the odd garnet. Extensive old workings have been found to beassociated with both sandy tuffs and breccias which forms part of thevolcanoclastic sequence. The sandy tuffs resemble some of the diamondiferoushost lithologies of Western Australian mines. Ground geophysics and coredrilling have been utilized in the exploration of Bosele. During the June 2005 quarter seven percussion drill holes were drilled in thesouthern part of the project area, totaling 400 metres. Six of the drill holesintersected volcanoclastic rocks whilst the seventh hole was stopped inoverlying mudstones. Volcanoclastic rocks have now been located in three different areas,approximately 1 km apart. It appears that the 3 areas are part of the same bodyalthough they represent different geological environments. Further materialrecovered from the drilling will be submitted for kimberlitic indicator mineralstudies. In addition, discussions are underway with major mining houses to explore jointventure possibilities for the property. Indian Exploration Project In November 2002 Dwyka signed an Alliance Agreement with BHP Billiton to explorefor hard rock diamond deposits in India, where BHP Billiton had established abroad portfolio of prospective tenements following 2 years of preliminarydiamond exploration. The Alliance covers this extensive portfolio of tenementswhich exceed over 55,000km(2) in area and contains at least 4 knowndiamondiferous kimberlite pipes. India's pedigree as a source of diamonds is impeccable, being the only recordedsource of the gems until discoveries in Brazil, South Africa and Borneo duringthe 18th and 19th centuries. Additionally many of the worlds historic greatdiamonds including the Kohinoor (793 cts, discovered 1350AD), the Great Moghul(787 cts, discovered circa 1650), the Regent (410 cts, discovered 1701) and theOrloff (189 cts cut, discovered 1735) were recovered from southern India. Tothis day high quality, relatively large stones continue to be recovered fromsmall scale alluvial workings in Krishna River and other major rivers of southand central India. The hard rock source of all these gems have eluded detectionto date. The ongoing and sustained exploration activities by other major mining companiescontinue to underline the potential for India to host world class kimberlite orlamproite diamond mines. The high level of exploration activity in India showsno sign of abating in the near future. As at the end of the June 2005 quarter limited sampling was carried out withinthe BHP Billiton/Dwyka Diamonds Limited Indian Alliance area due to the earlyonset of the Indian monsoon season. Regional drainage, loam, rock and follow-upsampling and geophysical surveys are planned for the coming field seasoncommencing August 2005. Drill testing of the highest priority targets will bealso undertaken. New tenements continue to be granted, with a further four granted in UttarPradesh (3509 km(2)), and four new, prospective tenements recommended for grantby the Central Government in Orissa (7,200 km(2) available). Sampling programshave been designed for these tenements and previously executed tenements inOrissa (2,728 km(2)) to commence during the last quarter of 2005. Operating Results During the year under review the consolidated entity increased its cash assetsvia a placement to London based institutions. At year end the consolidatedentity's cash balances were in excess of $AUD10 million. A significant portion of these new funds have been either utilised on duediligence and project generation activities during the Reporting Period orearmarked to fund acquisitions. These activities culminated in August 2005 uponthe finalisation of the acquisition of three new mines. These due diligence andproject generation costs have however contributed to the increase in theconsolidated net loss for the year. The consolidated net loss of the Consolidated Entity after provision for incometax was $3,267,864 (2004 -$1,527,481). Dwyka Diamonds Limited audited results for the year ended 30 June 2005 STATEMENTS OF FINANCIAL PERFORMANCE FOR THE YEAR ENDED 30 JUNE 2005 Consolidated Parent entity 2005 2004 2005 2004 $000's $000's $000's $000's Revenue from sale of goods 5,164 5,068 - -Cost of sales (3,891) (3,587) - - -------- -------- -------- --------Gross profit/(loss) 1,273 1,481 - -Other revenue from ordinary activities 628 3,168 1,274 2,300Other expenses from ordinary activitiesAdministration (3,994) (2,691) (2,555) (1,479)Charges against assets (212) (2,190) (2,276) (1,468)Exploration, evaluation and miningproject generation costs (580) - (552) (126)Written down value of plant andequipment sold - (865) - -Cost of investments sold - (512) - (512)Foreign exchange gains/(losses) (382) 15 - - -------- -------- -------- --------Loss from ordinary activities beforeincome tax expense (3,267) (1,594) (4,109) (1,285) Income tax (expense)/benefit - (24) - - -------- -------- -------- --------Loss from ordinary activities afterincome tax expense (3,267) (1,618) (4,109) (1,285) Net loss attributable to outsideequity interest - 91 - - -------- -------- -------- -------- Net loss attributable to members ofDwyka Diamonds Limited (3,267) (1,527) (4,109) (1,285) ======== ======== ======== ========Total revenues, expenses and valuation - - - -adjustments attributable to members of Dwyka -------- -------- -------- --------Diamonds recognised directly in equityTotal changes in equity other thanthose resulting from transactions withowners as owners (3,267) (1,527) (4,109) (1,285) ======== ======== ======== ======== Cents Cents Basic loss per share (4.2) (2.4)Diluted loss per share (4.2) (2.4) STATEMENTS OF FINANCIAL POSITION AS AT 30 JUNE 2005 Consolidated Parent entity 2005 2004 2005 2004 $000's $000's $000's $000'sCurrent assets Cash assets 9,582 6,632 7,270 4,798Receivables 1,003 547 319 37Inventories 542 250 - - -------- -------- -------- --------Total current assets 11,127 7,429 7,589 4,835 -------- -------- -------- -------- Non-current assets Receivables 3,225 1,482 7,734 3,010Other financial assets 76 89 2,546 3,939Property, plant and equipment 3,582 3,054 147 89Exploration, evaluation and miningproperties 1,092 - - -Other 320 145 - - -------- -------- -------- --------Total non-current assets 8,295 4,770 10,427 7,038 -------- -------- -------- -------- Total assets 19,422 12,199 18,016 11,873 -------- -------- -------- -------- Current liabilities Payables 1,101 982 284 344Provisions 561 503 3 - -------- -------- -------- --------Total current liabilities 1,662 1,485 287 344 -------- -------- -------- -------- Non-current liabilities Payables - - 710 714 -------- -------- -------- --------Total non-current liabilities - - 710 714 -------- -------- -------- -------- Total liabilities 1,662 1,485 997 1,058 -------- -------- -------- -------- Net assets 17,760 10,714 17,019 10,815 ======== ======== ======== ======== Equity Parent entity interestContributed equity 52,147 41,834 52,147 41,834Accumulated losses (34,387) (31,120) (35,128) (31,019) -------- -------- -------- --------Total parent entity interest 17,760 10,714 17,019 10,815Outside equity interest - - - - -------- -------- -------- -------- Total equity 17,760 10,714 17,019 10,815 ======== ======== ======== ======== STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2005 Consolidated Parent entity 2005 2004 2005 2004 $000's $000's $000's $000'sCash flow from operating activities Receipts from customers (inclusive of goodsand services tax) 5,084 5,040 132 144Payments to suppliers and employees(inclusive (7,682) (6,368) (2,720) (1,512)of goods and services tax)Interest received 576 288 491 219Other income received 52 237 - - -------- -------- -------- --------Net cash flow (used) in operating activities (1,970) (803) (2,097) (1,149) -------- -------- -------- -------- Cash flow from investing activities Payments for exploration, evaluation andproject generation expenditure (1,672) (1,231) (552) (126)Payments for purchase of unrelated - (50) - (50)investmentsPayments for property, plant and equipment (1,083) (145) (113) (18)Proceeds from sale of property, plant andequipment - 1,084 - -Loans to controlled entities - - (4,889) (1,122)Loans to other parties (2,253) - (251) -Proceeds from sale of controlled entity - 208 - -Proceeds from the sale of unrelatedinvestments - 1,350 - 1,350Rehabilitation deposit (175) (108) - - -------- -------- -------- --------Net cash flow (used)/from in investingactivities (5,183) 1,108 (5,805) 34 -------- -------- -------- -------- Cash flow from financing activities Proceeds from issue of shares 10,856 1,787 10,856 1,787Payments for equity issue costs (543) (131) (543) (131)Repayment of borrowings 61 289 61 290 -------- -------- -------- --------Net cash flow from financing activities 10,374 1,945 10,374 1,946 -------- -------- -------- -------- Net increase in cash held 3,221 2,250 2,472 831 Cash at the beginning of the financial year 6,632 4,494 4,798 3,967Effects of exchange rate changes on cash (271) (112) - - -------- -------- -------- -------- Cash and cash equivalents held at the end ofthe financial year 9,582 6,632 7,270 4,798 ======== ======== ======== ======== Non-cash financing and investingactivities NOTE TO STATEMENT OF CASH FLOW FOR THE YEAR ENDED 30 JUNE 2005 Reconciliation of operating loss after income tax to net cash inflow from operating activities Consolidated Parent entity 2005 2004 2005 2004 $000's $000's $000's $000's Loss from ordinary activities after tax (3,267) (1,618) (4,109) (1,285)Depreciation and amortisation 442 364 55 36Exploration expenditure & miningproperty generation written off 580 1,231 552 126Provision for doubtful debts 39 (317) - (290)Profit on sale of equity investments - (838) - (838)Foreign exchange (gain)/loss 343 267 - -Profit on sale of controlled entity - (208) - (208)Write down of assets 213 777 2,276 1,468Profit on sale of plant - (220) - -Management fees charged to controlledentities - (783) -Decrease/(increase) in receivables (205) (175) (31) 24Decrease/(increase) in inventory (292) (78) - -(Increase)/decrease in tax assets - 24 - -Increase/(decrease) in payables 119 (243) (60) (182)Increase/(decrease) in provisions 58 231 3 - -------- -------- -------- -------- Net cash flow used in operatingactivities (1,970) (803) (2,097) (1,149) ======== ======== ======== ======== Non-cash financing activities During the year ended 30 June 2004, the Company issued 2,850,000 shares at $0.52each ($1,482,000). No cash funds were raised from this issue as the shares wereissued to directors/consultants/employees in accordance with an employeeincentive share plan with for the subscription monies being provided from theCompany entering into loan agreements to the value of $1,482,000 with thedirectors/consultants/employees. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Nyota Minerals