28th Sep 2012 07:00
DiamondCorp plc
JSE share code: DMC
AIM share code: DCP
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
('DiamondCorp' or 'the Company' or 'the Group')
Interim Results (unaudited) for the six month period ended 30 June 2012
DiamondCorp plc, a southern Africa focussed diamond mine development and exploration company, releases its unaudited interim results for the six month period ended 30 June 2012.
HIGHLIGHTS
·; SRK Consulting (South Africa) completed an independent engineering report on the proposed 47 level block cave development at the Lace diamond mine and concluded that:
- the continuous trough block caving method is an appropriate mining method for the Lace mine to achieve 1.2 million tonnes a year of kimberlite production.
- the proposed twin decline access and conveyor system is a sound approach which will be quicker and cheaper than refurbishing the collapsed shaft system.
- the existing mine engineering infrastructure has been designed, installed and operated to a high standard.
·; Furthermore, SRK reviewed DiamondCorp's capital and operating cost estimates and were satisfied that they were reasonable. These included, inter alia:
- the peak funding requirement (including working capital and 15% contingency) is estimated to be in month 25 at R286 million (£21.3 million).
- The project net present value of after tax cash flow in the agreed life of mine financial model using a 10% discount rate is R1,452 million (£108.4 million). DiamondCorp's 74% share of this is £80 million, but in addition, the Company is due to be repaid shareholder loans and interest which currently stand at around R273 million (£20 million).
·; DiamondCorp's 74%-owned subsidiary, Lace Diamond Mines (Proprietary) Limited and the Industrial Development Corporation of South Africa Limited ("IDC") reached agreement and signed loan documentation whereby the IDC will provide a project loan facility for R220 million (approximately £16.4 million), representing approximately 77% of the forecast peak funding requirement for the 47 level block cave development.
- the term of the loan is 7 years with an interest rate of 2% over the South African Prime Rate (which is currently 8.5%).
- interest on the loan is to be capitalised for the first two years from the initial drawdown date (which is any time up to 31 July 2014) and payable semi-annually in arrears thereafter.
- there will be a two year moratorium on loan repayments from the initial drawdown date.
·; It has been agreed with the IDC that DiamondCorp shall arrange an additional R100 million (approximately £7.5 million) funding for Lace prior to the initial drawdown of the IDC facility. Therefore, the total funding available for the project will be R320 million (£23.8 million), representing a 33% contingency on the forecast peak funding requirement.
·; In order to complete the total financing package for the Lace development, DiamondCorp has engaged Rand Merchant Bank and PSG Capital in South Africa as advisers and arrangers of up to R150 million of additional funding through the issuance of convertible bonds which, at the sole discretion of DiamondCorp, may be settled in shares or the cash equivalent.
·; In order that investors outside of South Africa may participate, the Company's UK brokers Fairfax I.S. plc and Ocean Equities Limited have also agreed to market an issue of convertible bonds denominated in UK sterling, which are expected to be on parallel terms to the South African bond issue.
·; From 15 March 2012 until the end of May 2012 the Company treated 55,391 tonnes of tailings for a recovery of 4060.97 carats. This represented a recovered grade of 7.33 carats per hundred tonnes (cpht), which was 47% above budget and included an 8.3 carat good quality white gem diamond.
Tailings retreatment costs in May averaged R28.70 per tonne, 14% below the budgeted R33.40 per tonne.
·; Weakening of diamond prices in the July-August period in response to macroeconomic challenges in Europe and the US resulted in management taking a decision to shut down the Lace processing plant and commencing the required plant upgrades while diamond prices were weak. As a consequence, full scale production of diamonds from tailings retreatment will not resume until the first quarter of 2013.
·; Modifications are required to the existing DMS (dense media separation) processing plant at Lace to ensure 200 tph of kimberlite can be treated without the scrubber section being overloaded. These modifications are budgeted for in the 47 level block cave capital costs and will take six months to complete.
·; A total of 5,312 carats of diamonds recovered from tailings retreatment prior to shutting down the plant are currently held in inventory. The proposed sale of these diamonds by tender in September has been postponed due to market conditions and will be sold when management see a recovery in diamond prices.
·; In addition, the Company holds 2,168 carats of diamonds recovered from underground bulk sampling, which management will retain for evaluation by potential off-take partners.
·; Net loss for the six months ended 30 June 2012 was £1,556,701 (30 June 2011 £1,168,179).
Commenting on the results, DiamondCorp CEO Paul Loudon said: "The period under review saw us make significant steps towards our goal of being a long-term diamond producer. Having secured the majority of the project finance required for the Lace underground development, we look forward to finalising the balance of the financing and commencing underground development as soon as possible."
27 September 2012
London
CONSOLIDATED INCOME STATEMENT
Six months ended 30 June 2012
Six months ended 30 June 2012 (£) | Six months ended 30 June 2011 (£) | |
Administrative expenses | (1,192,493) | (663,568) |
Depreciation and amortisation expense | (387,165) | (491,194) |
OPERATING LOSS | (1,579,658) | (1,154,762) |
Investment revenues - interest on bank deposits | 22,957 | 5,120 |
Interest expense | - | (99,861) |
Foreign exchange gain / (loss) on loan payable | - | 109,076 |
LOSS BEFORE TAX | (1,556,701) | (1,140,427) |
Tax | - | (27,752) |
LOSS FOR THE FINANCIAL PERIOD | (1,556,701) | (1,168,179) |
ATTRIBUTABLE TO: | ||
EQUITY HOLDERS OF THE PARENT | (1,325,656) | (1,046,064) |
NON CONTROLLING INTEREST | (231,045) | (122,115) |
(1,556,701) | (1,168,179) | |
BASIC & DILUTED LOSS PER SHARE | £0.006 | £0.006 |
HEADLINE LOSS PER SHARE | £0.006 | £0.006 |
All of the activities of the Group are classed as continuing.
STATEMENT OF CHANGES IN EQUITY
Six months ended 30 June 2012 (£) | Six months ended 30 June 2011 (£) | |
Opening balance | 16,601,837 | 18,006,470 |
Loss for the financial period | ||
Attributable to equity holders of the parent | (1,325,656) | (1,046,064) |
Attributable to non-controlling interest | (231,045) | (122,115) |
New equity share capital subscribed | - | 590,817 |
Premium on new equity share capital subscribed | - | 1,823,378 |
Translation reserve | (539,168) | (733,054) |
Value attributed to warrants granted | - | - |
Closing balance | 14,505,968 | 18,519,431 |
CONSOLIDATED BALANCE SHEET
30 June 2012 (£) | 31 December 2011 (£) | |
NON-CURRENT ASSETS | ||
Goodwill | 4,606,026 | 4,606,026 |
Other intangible assets | 4,933,098 | 4,641,801 |
Property, plant and equipment | 4,200,616 | 4,609,284 |
13,739,740 | 13,857,111 | |
CURRENT ASSETS | ||
Inventories | 614,900 | 442,433 |
Other receivables | 221,238 | 182,350 |
Cash and cash equivalents | 296,575 | 2,632,760 |
1,132,713 | 3,257,543 | |
TOTAL ASSETS | 14,872,453 | 17,114,654 |
CURRENT LIABILITIES | ||
Other payables | (352,861) | (498,876) |
Provisions | (13,624) | (13,941) |
(366,485) | (512,817) | |
NET ASSETS | 14,505,968 | 16,601,837 |
EQUITY | ||
Share Capital | 7,268,041 | 7,268,041 |
Share premium | 26,702,502 | 26,702,502 |
Warrant reserve | - | 505,877 |
Share option reserve | 429,066 | 429,066 |
Translation reserve | (140,692) | 398,476 |
Retained losses | (18,833,701) | (18,013,922) |
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE PARENT | 15,425,216 | 17,290,040 |
NON CONTROLLING INTEREST | (919,248) | (688,203) |
TOTAL EQUITY | 14,505,968 | 16,601,837 |
CONSOLIDATED CASH FLOW STATEMENT
Six months ended 30 June 2012 (£) | Six months ended 30 June 2011 (£) | |
Operating loss for the period | (1,579,658) | (1,173,299) |
Depreciation and amortisation | 387,165 | 491,194 |
Gain on disposal of property, plant and equipment | - | (2,071) |
Other non-cash charges | 5,051 | (109,076) |
Increase in receivables | (38,888) | (32,924) |
(Increase) / Decrease in inventories | (172,467) | 14,683 |
(Decrease) / Increase in other payables | (146,332) | 89,244 |
NET CASH USED IN OPERATING ACTIVITIES | (1,545,129) | (722,249) |
INVESTING ACTIVITES | ||
Purchase of intangible assets | (454,744) | (2,330,615) |
Disposal of property, plant and equipment | - | 86,492 |
Purchase of property, plant and equipment | (81,443) | (340,435) |
Interest received | 22,957 | 5,120 |
NET CASH USED IN INVESTING ACTIVITIES | (513,230) | (2,579,438) |
FINANCING ACTIVITIES | ||
Proceeds on issue of ordinary shares | - | 2,414,195 |
Repayment of capital on long term loan | - | (1,029,999) |
Interest payment on long term loan | - | (99,861) |
NET CASH FROM FINANCING ACTIVITIES | - | 1,284,335 |
NET (DECREASE) / INCREASE IN CASH AND CASH EQUIVALENTS | (2,058,359) | (2,017,352) |
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD | 2,632,760 | 4,293,185 |
Effect of foreign exchange rate changes | (277,826) | 106,750 |
CASH AND CASH EQUIVALENTS AT END OF PERIOD | 296,575 | 2,382,583 |
NOTES TO THE FINANCIAL STATEMENTS
Six months ended 30 June 2012
1. ACCOUNTING POLICIES
These interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs). The same accounting policies, presentation and methods of computation are followed in the condensed interim financial information as applied in the Group's latest annual audited financial statements. The financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods.
These interim financial statements were approved by the Board on 27 September 2012 and do not constitute statutory financial statements within the meaning of Section 435 of the Companies Act 2006. The results for the year ended 31 December 2011 have been extracted from the statutory financial statements of DiamondCorp plc.
A copy of the statutory accounts for the year ended 31 December 2011 has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006; however the auditor's report did contain an emphasis of matter in respect of the material uncertainty around the company's ability to continue as a going concern.
These interim financial statements have been prepared using the accounting policies set out in the Group's 2011 statutory accounts.
Results for the six-month period ended 30 June 2012 and 30 June 2011 have not been audited.
The comparative information presented in the income statement has been prepared for the period 1 January 2011 - 30 June 2011. This has been performed in order to comply with the AIM rules and is presented solely for this purpose.
2. LOSS PER SHARE
IAS 33 "Earnings per share" requires presentation of diluted earnings per share when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss-making company with outstanding share options, net loss per share would only be decreased by the exercise of out-of-money options. Since it seems inappropriate to assume that option holders would exercise out-of-money options, no adjustment has been made to basic loss per share for out-of-money share options.
The calculation of basic and diluted loss per ordinary share is based on the loss attributable to equity holders of the parent of £1,325,656 for the six months ended 30 June 2012 (30 June 2011: £1,046,064) and on 242,268,048 ordinary shares (30 June 2011: 184,852,905) being the weighted-average number of ordinary shares in issue.
The Group presents and alternative measure of loss per share after excluding all capital gains and losses from the loss attributable to ordinary shareholders ("Headline earnings / (loss)"). The impact of this is as follows:
2012 | 2011 | |
Basic loss per share | £0.006 | £0.006 |
Effect of gain on disposal of property, plant and equipment | - | - |
Effect of impairment of intangible assets | - | - |
Headline loss per share | £0.006 | £0.006 |
3. SHARE CAPITAL
30 June 2012 | 31 December 2011 | |||
No. | £ | No. | £ | |
Called up, allotted and fully paid Ordinary shares of 3 pence each | 203,567,533 | 6,107,026 | 203,567,533 | 6,107,026 |
There were no changes to share capital during the current period.
4. GOING CONCERN
In determining the appropriate basis of presentation of the interim financial statements, the Directors are required to consider whether the Group can continue in operational existence for the foreseeable future, this being a period of not less than 12 months from the date of the approval of the financial statements. During the next 12 months the Group intends to be in a mine-development phase and Company announcements have stated that the Group will have insufficient resources to meet all its development goals and meet all its resulting financial obligations during this period without access to further funds. The raising of additional finance is deemed to be a material uncertainty which casts doubt over the ability of the Group to continue as a going concern.
The Group will be required to (i) supplement its current cash resources by accessing the capital markets in 2012-2013 or by sale of assets or, alternatively, (ii) to modify its development plan to preserve cash.
After making enquiries, given the agreement reached by the Company's subsidiary, Lace Diamond Mines (Pty) Ltd, and the Industrial Development Corporation of South Africa Limited ("IDC") (see note 5), assuming that the Group adheres to its development plan, the Directors have a reasonable expectation that additional funds will be available within the next 12 months. Accordingly the Directors continue to adopt the going concern basis of presentation of the financial statements.
The financial statements therefore do not include the adjustments that would result if the Group were not able to continue as a going concern.
5. POST BALANCE SHEET EVENTS
On 21 September 2012, the Company announced that its subsidiary, Lace Diamond Mines (Pty) Ltd, and the Industrial Development Corporation of South Africa Limited ("IDC") had reached agreement and signed loan documentation whereby it had been agreed that the IDC shall provide a project loan facility for the amount of R220 million (approximately £16.4 million), representing approximately 77% of the forecast R285 million peak funding requirement for the 47 Level block cave development, which includes a 15% contingency.
Further, it has been agreed that the Company shall arrange additional funding of R100 million (approximately £7.5 million) for Lace prior to the initial drawdown of the IDC facility. The total funding available for the project will then be R320 million, representing a 33% contingency on the Company`s forecast funding requirement.
Contact details:
AIM Nomad: Fairfax I.S. plc
AIM Brokers: Fairfax I.S. plc and Ocean Equities LimitedJSE Sponsor: PSG Capital (Pty) LimitedDiamondCorp plc, Paul Loudon +44 20 3151 0970Fairfax I.S. plc, Ewan Leggat/Laura Littley +44 207 598 5368Ocean Equities Limited, Guy Wilkes +44 207 4370
PSG Capital (Pty) Limited, John-Paul Dicks +27 21 887 9602Russell & Associates, Charmane Russell/Marion Brower +27 11 880 3924
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