13th Sep 2007 07:01
Gem Diamonds Limited13 September 2007 Gem Diamonds Limited Interim Results Announcement 13 September 2007 Gem Diamonds (LSE: GEMD) announces the Company's maiden Interim Results for thesix months ended 30 June, 2007. Gem Diamonds is a diamond mining company with a balanced portfolio of assetsincluding three producing mines: a kimberlite mine in Lesotho and alluvial minesin Democratic Republic of Congo (DRC) and Indonesia, exploration and developmentprojects in Botswana, DRC, Angola and Central African Republic and potentially aproducing lamproite mine in Australia. Highlights • Listed on LSE in February 2007, raising US$635 million • Since listing announced three key acquisitions • Gope deposit acquired for US$34 million • BDI Mining acquired for US$80.1 million • Kimberley Diamond Company under offer for US$263 million • Significant increase an diversification in Group diamond resource • Operating profits for the period of US$16.8 million, on revenue of US$69.8 million • Letseng Mine continues to produce ahead of plan with second plant on schedule for commissioning early 2008 • Gem Diamonds expected to enter FTSE 250 Index on 21 September 2007 • 494 carat exceptional diamond recovered on 7 September 2007 at Letseng Mine Commenting on the interim results announcement, Chief Executive Officer,Clifford Elphick said: "Good progress has been made in executing Gem Diamonds' strategy of creatingshareholder value through considered acquisitions and the development ofexisting assets. Funds raised on the IPO have largely been spent or allocatedto major capital projects. Our operations now also encompass Botswana,Indonesia and potentially Australia. The Group's diamond resource has beensignificantly increased over the period. As such these first six months form asolid base from which to achieve our ambition of becoming one of the world'sleading diamond companies." For further information: Gem Diamonds LimitedClifford ElphickT: +44 203 043 0280 Gem Diamond Technical Services (Pty) LimitedAngela ParrTel: +27 83 578 3885 Pelham PRCandice SgroiTel: +44 207 743 6376 About Gem Diamonds Gem Diamonds is a diamond mining company with a balanced portfolio of aproducing kimberlite mine, two producing alluvial mines, development projectsand long-term prospects. Established in July 2005, Gem Diamonds is pursuing anaccelerated growth strategy and aims to become one of the world's leadingdiamond companies. Gem Diamonds currently has one producing kimberlite mine, Letseng, in Lesotho, two producing alluvial mines - Cempaka in Indonesia andMbelenge in the Democratic Republic of Congo (DRC), a kimberlite developmentproject in Botswana, two development projects in the DRC, one in the CentralAfrican Republic and an option to develop the Chiri kimberlite concession inAngola. The Company recently made an offer to Kimberley Diamond Company's shareholdersto acquire their shares in this company, which owns the Ellendale Mine in northwestern Australia. Gem Diamonds has a specific focus towards higher value diamonds, a segment ofthe market that its management believes will deliver superior long term returns. Chairman and Chief Executive Officer's Review Gem Diamonds was established in July 2005 and these Interim Results to end June2007 (the period) represent the Company's first formal report to shareholderssince listing on the London Stock Exchange in February of this year. The Company raised US$635 million in its initial public offering (IPO). Thesefunds have been committed to organic and acquisitive growth. Accordingly GemDiamonds remains on track to fulfil its stated objective of becoming a leadingglobal diamond mining company. Geographical expansion and diversification over the period to Indonesia,Botswana and Australia has enhanced the Group's profile. The Group now operatesthree mines with a potential fourth in Australia in the acquisition pipeline.The total in situ diamond resource of the Group has increased over the reviewperiod from 14.9 million carats to 36.8 million carats (148%) whilst the reserveportion thereof has increased from 1.31 million to 1.52 million carats. The Group has an increasingly strong pipeline for delivering production, withnew mines coming on stream and significant production increases expected fromfour different operations over the medium term. The end of this periodtherefore sees the Group with the bulk of its capital strategically employed inthe enhancement of existing assets, development of new assets and theacquisition of producing mines around the globe. All this aimed at creatinglong term shareholder value. Lesotho Letseng, Gem Diamonds' 70% owned mine in the Kingdom of Lesotho continues toperform well. A total of 1.9 million tonnes were mined and treated from theMain and Satellite Pipes over the six months, representing a 20% increase involume over the comparative period. A total of 37 869 carats were recovered. Efforts directed at maximising the quality and quantity of diamonds recovered onmaterial sourced from the Satellite Pipe are delivering good results, with boththe grade recovered and average price per carat having improved. Grade from theSatellite Pipe is running at 2.26 cpht, 14% ahead of the expectations inSeptember 2006's CPR, and rolling average six month diamond prices have risen toUS$1 894/ ct compared to US$1 608/ ct forecast in the CPR. A total of 226diamonds of over 10.8 carats were recovered during the period. From February2007, weathered kimberlite from the Main Pipe was mined and treated with arecovered grade of 1.37 cpht. A 58 carat diamond was recovered from the MainPipe and sold for US$2.1 million, which bodes well for the that pipe's capacityto deliver in terms of the estimated values included in the CPR. An independentresource update by competent persons Venmyn Rand, completed in July 2007,resulted in the value per carat for the combined Letseng resource increasingfrom US$1 307 to US$1 488. On 7 September 2007, post the period end, a 494 carat exceptional diamond wasrecovered at the Letseng Mine, just over a year after the recovery of the 603carat Lesotho Promise in August 2006. It is a rare jewel and will rank withinthe top 20 largest diamonds ever recovered. Letseng Diamond Sales Tender results for the period are as follows: Tenders Carats sold Total tender value Achieved US$/ct US$ millions 6 months to 6 months to 6 months to June 6 months to June 6 months to 6 months to June 2007 June 2006 2007 2006 June 2007 June 2006Satellite 33 153 26 488 62.8 33.9 1 894 1 281PipeMain Pipe 6 050 6.8 1 128Alluvial 4 061 4.1 1 135ZonesTotal 39 204 30 549 69.6 38.0 1 776 1 244 The Life of Mine at Letseng (LOM), after the resource update conducted in 2006at acquisition, was 70 years. Gem Diamonds therefore took the decision todouble up the mine's processing capacity with the construction of a secondplant. Combined with the current 2.64 million tpa processing plant, the twoplants will process 5.28 million tpa. The LOM has therefore been reduced to 35years, enhancing the assets' net present value. The construction of the second plant at Letseng is progressing well and will becommissioned during the first quarter of 2008. Full production is scheduled forthe second quarter of 2008. Cost forecasts are within 15% of the initialestimated US$45 million budget despite material scope changes which have beenimplemented during the construction phase. This is a good achievement in anenvironment where mining projects globally are experiencing significant costoverruns. Strong production and high diamond prices have allowed Letseng tofund this expansion project without any external financing. Botswana In May of this year, the Company acquired Gope Exploration Company from De Beersand Xstrata for US$34 million. Gope is a kimberlite deposit in central Botswanaon a feasibility study has been conducted. Since Gem Diamonds acquired Gope,the resource has been increased by 23% to 97 million tonnes at an indicatedlevel of confidence; hosting some 18.8 million carats. Gope is an attractiveasset that will add significant value to Gem Diamonds. An updated feasibilitystudy for a 6mtpa open pit mine at Gope is underway. This represents a 50%increase in throughput from the previous feasibility study. A revisedEnvironmental Impact Assessment (EIA) has commenced. The EIA will includeconsultation with all interested and affected parties. Should the BotswanaGovernment grant Gope a mining license, the asset is expected to be developedinto a mine producing approximately one million carats per annum for 15 years. Indonesia Gem Diamonds acquired AIM traded BDI Mining in May 2007 at a cost of US$80.1million. BDI Mining owns 80% of the producing Cempaka alluvial diamond mine inIndonesia and, at the time of the acquisition, owned 100% of the Woodlark GoldProject in Papua New Guinea. Woodlark was considered a non-core asset and wassubsequently sold for US$26.5 million, thus reducing the effective acquisitionprice of Cempaka to US$53.6 million. The management team at Cempaka has beenrestructured and Neil Kaner, formerly Letseng Diamonds Consulting MiningEngineer has been appointed as Managing Director whilst Lee Spencer, the formerCEO, has been appointed as New Business and Development Director. Prior to the acquisition, production at Cempaka for the first half of 2007 wasadversely affected by a lack of working capital. Accordingly, production waslow at 8 441 carats. With an effective acquisition date of 29 May, only a monthof these results are reflected in Gem Diamonds' consolidated results. Aninitial investment of US$16 million is being made at Cempaka to improve miningefficiencies, infrastructure and plant. This investment will allow productionto ramp up to 80 000 bcm per month. The resource at Cempaka has been increased from the previously estimated totaldiamond resource of 1.3 million to 2.6 million carats post the period end.Furthermore the level of confidence in this deposit has improved with reservesincreased from 1.8% to 8.6% of the resource. This resource increase lendssupport to the Company's plans to initiate mass mining operations at Cempaka.In this regard specialist consultants were engaged to investigate thefeasibility of dredging and a decision on the most appropriate mining method isexpected to be made by the end of the financial year. Democratic Republic of Congo Gem Diamonds has interests in four projects in the DRC at Mbelenge, Lubembe,Longatshimo and Tshikapa and good progress was made over the period. At Mbelenge, in which the Company holds a 49.99% interest, the target depositwas defined and a mining plan delineated whereafter the earthmoving fleet andplant were delivered to site. Commissioning of the 100 tph plant commencedahead of schedule. The development of this mine represents a significantachievement under highly challenging circumstances. Initial plant feedcomprised low grade gravel and to date limited carats have been recovered.Commissioning challenges have resulted in an extension of the build up period. After delineation of diamond trapsites in the river at Lubembe, trial dredgemining was undertaken with 7,571 carats recovered. Whilst this was below theexpected half year target of 10 500 carats, the results confirmed the Company'sexpectations of the deposit's grade. Diamonds recovered from Lubembe were soldat an average price of US$88/ct; in line with the expectations outlined in theCPR. A process of upscaling this operation is now underway. This will nothowever achieve initial planned levels of production during 2007. Pit sampling continued at Longatshimo. Based on these results, combined withthe historical production data from the area, a trial mining programme isexpected to commence in late 2008; earlier than originally planned. In relation to kimberlite exploration in the area, a follow-up helimagneticsurvey was conducted. This process generated 56 geophysical anomalies in theLubembe area and 23 in the Longatshimo area. Of these, 21 have been drilled todate of which two have been identified for follow-up ground geophysics. Central African Republic In the Central African Republic, Gem Diamonds' 75% held Gem DiamondsCentrafrique SA progressed exploration at Mambere. The pit sampling programmewas completed at Le Buckle. Four pits returned positive results from threedifferent terrace levels. A bulk sampling programme was then initiated, using asmall earthmoving fleet and a newly installed 15 tph DMS which was commissionedin April. By the end of July, some 154 carats had been recovered from 14 109tonnes which represented a lower than expected grade. The resource estimate hasbeen updated accordingly from a previously estimated deposit of 1.5 millioncarats down to 0.9 million carats. Alongside this, the exploration programme hasbeen extended along the Mambere River where dredges will be used to recovergravels. In addition, reconnaissance exploration will commence further upstreamin the Mambere Valley to the north of Le Buckle. To date, approximately US$11million has been invested by Gem Diamonds in the CAR. Angola In January of 2007, a Co-operation Agreement was signed with Avantis Angola inrelation to the Chiri Kimberlite Concession Angola. Avantis Angola and itsassociated companies hold a 45% interest in this concession. In terms of theagreement Gem Diamonds is committed to spending up to US$7.5 million onevaluation and a pre-feasibility study on the exposed Chiri kimberlite. Shouldthe results of the study be positive, the Company has an option to buy an 11.25%interest in the Chiri Concession for US$10 million. Gem Diamonds will then becommitted to spend up to a further US$12.5 million to complete a bankablefeasibility study. A built-in acquisition mechanism affords Gem Diamonds thepossibility of increasing its share by a further 8.75% thereafter. An initialsite visit has been conducted, a Technical Committee meeting held and teamsappointed. The project budget is in its final stages of approval and oncecompleted, mobilisation of resources will commence. Australia On 19 July 2007, Gem Diamonds announced its intention to acquire ASX listeddiamond miner Kimberley Diamond Company (Kimberley) at a price of 70 Australiancents per share, valuing the company at US$263 million and making it GemDiamonds' largest acquisition to date. We believe that Kimberley represents astrong strategic fit within the Group; due to geographic diversification itcontributes and its high value fancy yellow diamond production. Scope exists toimprove operations at Kimberley's Ellendale Mine in north-western Australia,increasing throughput, reducing costs and improving the diamond prices achieved. A Bidders' Statement was distributed to Kimberley shareholders on 17 August2007 detailing the offer and a circular to Gem Diamonds' shareholders isexpected to be published later this month. It is anticipated that thistransaction will close by the end of the financial year. Health, Safety, Social and Environmental Responsibility Gem Diamonds is committed to establishing a high level of corporateresponsibility in the health, safety and social investment spheres. Significantongoing efforts have been expended on establishing capabilities in these areasand good progress has been made. Appointments In line with the commitment made to shareholders at the time of the Company'slisting, the Board of Gem Diamonds has appointed former Senior non-ExecutiveDirector Roger Davis, to the position of non-Executive Chairman, a positionpreviously combined with that of the Chief Executive. The Board has beenfurther strengthened by the appointment of Lord Renwick as a non-ExecutiveDirector. Both appointments are effective 24 September 2007. Post the period end Alan Ashworth was appointed to join Gem Diamonds as ChiefOperating Officer. Alan is a mining engineer by profession with over 26 yearsexperience in the diamonds mining industry. Most recently Alan held theposition of Managing Director of Goldfields' operations in Ghana and prior tothat of Chief Operating Officer of De Beers Consolidated Mines. Alan'sappointment is effective late November. Terry Stewart will assume an exclusivetechnical consulting role. FTSE 250 Index inclusion The FTSE Nationality Committee has deemed the Company's domicile for purposes ofinclusion to be the UK and subsequently confirmed the Company's potentialinclusion in the FTSE 250 Index from 21 September 2007. Conclusion In conclusion, the Company achieved a number of significant milestones in itsdevelopment during the period. For the remainder of the financial year, GemDiamonds is committed to the finalisation of the Kimberley acquisition, furtherdevelopment of its mines in Indonesia and the DRC and the completion ofconstruction of the second plant at the Company's flagship operation Letseng. I would like to take this opportunity to thank all of Gem Diamonds' staffworldwide for their hard work and contributions to the Company's success duringthe period. Furthermore I would like to thank our shareholders for theconfidence and support shown in the Company and its management. CLIFFORD ELPHICKChairman and Chief Executive Officer Chief Financial Officer's Review The Group's 2007 Interim Results reflect the strong performance from its 70%owned subsidiary Letseng Diamonds where the number of carats sold and pricesachieved have improved significantly and consequently the Group is able toreport a net profit to shareholders in its first six months since listing on theLondon Stock Exchange in February this year. Earnings attributable to shareholders for the six months were US$7.9 millionequating to 15 US cents per share on a weighted average basis. Revenue earned of US$69.8 million was predominantly from diamond sales at Letseng Diamonds where 39 204 carats of diamonds were sold at an average price percarat of US$1 776. Whilst diamonds were recovered at operations in the DRC andIndonesia, diamond sales from these operations only occurred after the periodend. Cost of sales of US$33.9 million is once again largely attributable to onmine costs at Letseng Diamonds. Corporate expenses relate to central costs as well as overheads at theoperations. Of the US$10.1 million, US$1 million relates to Letseng Diamonds.As a result, the net margin before tax at Letseng Diamonds is 50%. Centralcosts incurred by Gem Diamonds and its services subsidiary Gem Diamond TechnicalServices amounted to US$8.4 million. Central costs are expected to be US$15million on an annualised ongoing basis. As set out in the Company's Prospectus, share based payments to non-ExecutiveDirectors (US$11 million) and staff (US$3.2 million) amounted to US$14.2million. The Company is authorised to issue up to 2.5% of shares in issue atIPO (i.e. 2.5% of 57 865 209) to non-Executive Directors of which 1.5% have beenallocated. It is anticipated that the balance of the allocation will be issuedbefore the end of 2008. Going forward the Company intends to make awards toExecutive Directors and other senior employees of up to 1% of the total sharesin issue in any one financial year. A foreign exchange gain of US$5.1 million was earned as a result of theCompany's decision to convert capital raised on IPO in Sterling into US Dollars. This decision was made on the basis that the Company's functional currency isUS Dollars. Gem Diamonds does not take active positions in the currencymarkets. Net finance income received reflects the interest accrued on thecapital raised at IPO in mid-February, which earned an average 5.05% annualised. US$6.6 million of tax charges relate to income and withholding taxes paid bythe Group to the Lesotho Revenue Authority the balance of US$4.1 million beingdeferred tax. Minority interests of 30% in Letseng Diamonds which is held by the Company'spartner, the Government of Lesotho, are reflected under this line item. Property, plant and equipment of US$326.7 million relates predominantly tomining assets, processing plants and capital work in progress at LetsengDiamonds and BDI Mining's Cempaka mine. Intangible assets relate to goodwill onthe acquisitions of Letseng Diamonds and BDI Mining. The asset classified asheld for sale is the Woodlark Gold Project which was sold for U$26.5 millionpost the period end. Non-current financial liabilities on the balance sheet of US$18 million mainlyrelates to outstanding corporate bonds issued in October 2006 that are yet to beredeemed or converted. These bonds earn a coupon of 6% paid six monthly. Thebonds can be converted at the holders' discretion into ordinary shares in theCompany. The bonds expire on 2 October 2009 at which time the bonds will beredeemed at 100% of their nominal value. Deferred taxation of US$70.8 million relates predominantly to mining assets atLetseng Diamonds and Cempaka. The major elements of trade and other payables of US$31.5 million are asfollows: • US$12.9 million in Letseng Diamonds trade creditors and creditors related to the construction of the second plant at that mine; • US$9.2 million in Cempaka trade creditors of which US$5 million is a provision; and • US$4.1 million owing on the purchase price of BDI Mining. The Group started the period with US$51.9 million in cash resources. This wassupplemented by cash raised of US$606 million, proceeds of which were arrived atas follows: • 30 000 000 shares issued on 14 February 2007 at £9.50; • A further 4 100 000 shares issued on 23 February 2007 in the greenshoe allocation at £9.50; and • Less cash costs incurred in the raising of this capital of US$28.3 million. During the period US$106.4 million of this cash was applied to the acquisitionof new assets Gope and BDI Mining. US$32.1 million was invested in property,plant and equipment at existing operations and US$14.8 million of loans andreceivables were granted to associates in the DRC. The Group enters the second half of the year with a cash resource of US$524million which is expected to be applied as follows: • US$60 million for the development of assets in Botswana, Indonesia, the DRC and CAR; • US$4.1 million in the final settlement of the BDI Mining acquisition; • US$263 million in the proposed offer to shareholders of Kimberley of which US$39 million was expended in acquiring the Group's current holding of 14.9% in Kimberley Diamonds; and • US$8.25 million in a loan to Kimberley to fund working capital requirements. This leaves the Group with US$188.5 million in unallocated cash resources toapply to the acquisition of further assets and the development of large scalemining projects. KEVIN BURFORDChief Financial Officer INTERIM CONSOLIDATED INCOME STATEMENTFor the six months ended 30 June 2007 30 June 30 June 31 December(US$'000) Note 2007 2006 2006Revenue 69 800 - 50 441Cost of sales (33 915) - (24 709)GROSS PROFIT 35 885 - 25 732Corporate expenses (10 073) (2 975) (7 809)Share-based payments (14 190) (2 362) -Foreign exchange gain/(loss) 5 060 132 (9 284)Other income 78 12 4OPERATING PROFIT/(LOSS) 16 760 (5 193) 8 643Net finance income/(costs) 10 762 352 (235)Finance costs (1 303) - (3 589)Finance income 12 065 352 3 354Share of loss in associate (507) (181) (525)PROFIT/(LOSS) BEFORE TAXATION 27 015 (5 022) 7 883Income tax expense (10 676) (187) (7 543)PROFIT/(LOSS) FROM CONTINUING OPERATIONS 16 339 (5 209) 340Loss after tax for the period relating toDisposal group held for sale (18) - -PROFIT/(LOSS) FOR THE PERIOD 16 321 (5 209) 340Attributable to:Equity holders of parent 7 872 (5 209) (5 120)Minority interest 8 449 - 5 460PROFIT/(LOSS) FOR THE PERIOD 16 321 (5 209) 340Earnings/(loss) per share (US$) 2 0.15 (0.38) (0.24)Basic and diluted - for profit/(loss) for theperiod attributable to equity holders of theparent INTERIM CONSOLIDATED balance sheetAs at 30 June 2007 30 June 30 June 31 December(US$'000) Note 2007 2006 2006ASSETSNon-current assetsProperty, plant and equipment 326 692 4 322 192 332Intangible assets 44 723 409 27 958Investment in associate 16 787 18 719 20 044Loan to associate 30 979 3 040 14 783Other assets 1 211 188 -Deferred tax assets 1 138 12 481 421 530 26 690 255 598Current assetsInventories 8 241 10 7 315Trade and other receivables 9 001 709 13 017Loans and receivables 1 370 3 400 8 719Cash and cash equivalents 524 421 23 750 51 907 543 033 27 869 80 958Assets of disposal group classified as held for 26 093 - -sale 569 126 27 869 80 958TOTAL ASSETS 990 656 54 559 336 556EQUITY AND LIABILITIESEquity attributable to equity holders of theparentIssued share capital 624 170 253Share premium 786 819 59 705 162 775Treasury shares (4) - -Other reserves 19 150 2 313 4 724Accumulated losses (7 111) (9 863) (14 983) 799 478 52 325 152 769Minority interest 60 819 - 45 319TOTAL EQUITY 860 297 52 325 198 088Non-current liabilitiesFinancial liabilities 18 042 - 52 050Provisions 4 400 - 2 584Deferred tax liabilities 70 755 - 46 759Other payables 381 - 317 93 578 - 101 710Current liabilitiesFinancial liabilities 2 437 900 8 268Trade and other payables 31 462 1 135 21 735Income tax payable 2 831 199 6 755 36 730 2 234 36 758Liabilities directly associated with the assets 51 - - classified as held for sale 36 781 2 234 36 758TOTAL LIABILITIES 130 359 2 234 138 468TOTAL EQUITY AND LIABILITIES 990 656 54 559 336 556 INTERIM CONSOLIDATED CASH FLOW STATEMENT For the six months ended 30 June 2007 30 June 30 June 31 December(US$'000) Note 2007 2006 2006CASH FLOWS FROM OPERATING ACTIVITIES 21 603 (3 836) 14 698Cash receipts from customers 73 817 - 15 996Cash paid to suppliers and employees (50 918) (4 193) (1 790)Cash generated from/(applied to) operations 22 899 (4 193) 14 206Finance income 12 065 352 3 354Finance costs (1 793) - (2 258)Tax paid (11 568) 5 (604)CASH FLOWS FROM INVESTING ACTIVITIES (148 634) (24 691) (138 614)Purchase of property, plant and equipment (32 091) (4 207) (7 911)Purchase of intangible assets (71) (409) (439)Loans and receivables granted (10 058) (1 887) (11 740)Investment in associate - (18 000) -Acquisitions (106 414) (188) (118 524)CASH FLOWS FROM FINANCING ACTIVITIES 599 592 49 875 151 364Proceeds on share capital issued 634 563 52 500 108 461Proceeds on issue of bonds - - 52 500Transaction costs on share capital/bonds (28 294) (2 625) (8 047)Dividends paid to minorities (3 300) - -Financial liabilities settled (3 377) - (1 550) Net increase in cash and cash equivalents 472 561 21 348 27 448Cash and cash equivalents at the beginning of the 51 907 2 416 23 750periodForeign exchange revaluations (47) (14) 709Cash and cash equivalents at end of the period 524 421 23 750 51 907 INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2007 Issued Share Treasury Other reserves Accumulated Minority Total share Premium shares losses Interest capital Foreign Share Currency based translation equity reserve reserve(US$'000)Balance at 1 253 162 775 - 2 362 2 362 (14 983) 45 319 198 088January 2007Share capital 371 665 290 (4) - - - - 665 657issuedTotal recognised - - - 236 - 7 872 8 449 16 557income and expensesfor the periodProfit for the - - - - - 7 872 8 449 16 321periodForeign currency - - - 236 - - - 236translation reserveTransaction costs - (41 246) - - - - - (41 246)on share capitalissuedAcquisition of - - - - - - 10 351 10 351subsidiariesShare-based - - - - 14 190 - - 14 190paymentsDividends paid - - - - - - (3 300) (3 300)Balance at 30 June 624 786 819 (4) 2 598 16 552 (7 111) 60 819 860 2972007Balance at 1 100 9 900 - 1 - (4 654) - 5 347January 2006Share capital 70 52 430 - - - - - 52 500issuedTotal recognised - - - (50) - (5 209) - (5 259)income and expensesfor the period(Loss) for the - - - - - (5 209) - (5 209)periodForeign currency - - - (50) - - - (50)translation reserveTransaction costs - (2 625) - - - - - (2 625)on share capitalissuedShare-based - - - - 2 362 - - 2 362paymentsBalance at 30 June 170 59 705 - (49) 2 362 (9 863) - 52 3252006 INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six months ended 30 June 2007 Issued Share Treasury Other reserves Accumulated Minority Total share Premium shares losses Interest capital Foreign Share Currency based translation equity reserve(US$'000)Balance at 1 July 170 59 705 - (49) 2 362 (9 863) - 52 3252006Share capital issued 83 108 378 - - - - - 108 461Total recognisedincome andExpenses for the - - - 2 411 - (5 120) 5 413 2 704period(Loss)/profit for - - - - - (5 120) 5 460 340the periodForeign currencyTranslation reserve - - - 2 411 - - (47) 2 364Transaction costs onshareCapital issued - (5 308) - - - - - (5 308)Acquisition of - - - - - - 42 527 42 527subsidiariesDividends declared - - - - - - (2 621) (2 621)Balance at 31 253 162 775 - 2 362 2 362 (14 983) 45 319 198 088December 2006 NOTES TO THE FINANCIAL STATEMENTS Segment Information The primary segment reporting format is geographical as the Group's risks andrates of return are affected predominantly by differences in the geographicalregions of the mines and areas in which the Group operates. Other regions whereno direct mining activities take place are combined into a single geographicalregion. The main geographical regions are: • Botswana • BVI and South Africa (Group function and provision of technical and administrative services) • CAR • DRC • Indonesia • Lesotho Inter-segment transactions are entered into under normal arm's length terms in amanner similar to transactions with third parties. Segment revenue, segmentexpense and segment results include transactions between segments. Thosetransactions are eliminated on consolidation. Primary reporting - geographical segments: The following table presents revenue and profit and certain asset and liabilityinformation regarding the Group's geographical segments for the periods. (US$'000) Botswana BVI and CAR DRC Indonesia Lesotho Total South AfricaPeriod ended 30 June 2007SalesTotal sales - 6 960 - - - 69 624 76 584Inter-segment sales - (6 784) - - - - (6 784)Sales to external - 176 - - - 69 624 69 800customersSegment results 20 (16 978) (1 515) (439) 63 35 649 16 760Net finance income 10 762Share of loss in (507)associateProfit before taxation 27 015Income tax expense (10 676)Profit from continuing 16 339operationsPeriod ended 30 June 2006SalesTotal sales - - - - - - -Inter-segment sales - - - - - - -Sales to external - - - - - - -customersSegment results - (5 193) - - - - (5 193)Net finance income 352Share of loss in (181)associateLoss before taxation (5 022)Income tax expense (187)Loss from continuing (5 209)operations Period ended 31 December2006SalesTotal sales - 3 458 - - - 50 330 53 788Inter-segment sales - (3 347) - - - - (3 347)Sales to external - 111 - - - 50 330 50 441customersSegment results - (14 465) (202) (823) - 24 133 8 643Net finance cost (235)Share of loss in (525)associateProfit before taxation 7 883Income tax expense (7 543)Profit from continuing 340operations 1. BASIS OF PREPARATION The information in this interim results announcement has been extracted from theGroup's interim condensed consolidated financial statements for the six monthsended 30 June 2007 which have been prepared in accordance with IAS 34 InterimFinancial Reporting and on a basis consistent with the accounting policiesapplied for preparation of financial statements included in the Group'sprospectus published on 14 February 2007. 2. EARNINGS/(LOSS) PER SHARE Earnings per share amounts are calculated by dividing profit for the periodattributable to ordinary equity holders by the weighted average number ofordinary shares outstanding during the period. Diluted earnings per share is calculated taking into account future potentialconversion and issue rights associated with the ordinary shares. As theconvertible bonds have an anti-dilutive effect on the earnings of the Group, nodiluted earnings per share value has been disclosed. The impact of additionalshares to be awarded to the Non-Executive Directors on the anniversary oflisting has no impact on the diluted earnings per share. The following reflects the income and share data used in the basic and dilutedearnings per share computations Profit/(loss) for the period 16 321 (5 209) 340Less: Minority interests (8 449) - (5 460)Net profit/(loss) attributable to equity holders of the parent 7 872 (5 209) (5 120)Weighted average number of ordinary shares in issue during the 52 932 13 845 21 011period ('000)Profit/(loss) per share US$ 0.15 (0.38) (0.24) There have been no other transactions involving ordinary shares or potentialordinary shares between the reporting date and the date of completion of thisinterim results announcement. 3. DIVIDENDS PAID AND PROPOSED The directors do not intend recommending the declaration of a dividend. Thedirectors will reconsider the Company's dividend policy as the Company advancesthe development of its operations. The directors envisage that, at such time, the Company's dividend policy will bedetermined based on, and dependant on, the results of the Group's operations,its financial condition, cash requirements, future prospects, profits availablefor distribution and other factors deemed to be relevant at the time. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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