1st Aug 2005 07:01
Petra Diamonds Ld01 August 2005 1st August 2005 Petra Diamonds Limited QUARTERLY ACTIVITIES REPORT FOR THE THREE MONTH PERIOD ENDED 30 JUNE 2005 Petra Diamonds Limited ("Petra" or "the Company"), the AIM-quoted and ASX-listeddiamond mining group, announces its quarterly activities report as required bythe ASX for the three month period ended 30 June 2005. As this is a quarterly report and, to assist with full disclosure, this reportincludes the operational performance of the Helam, Star and Messina/Dancarlmines for the full three month period, notwithstanding that Petra's effectivedate of control of the mines was 1 June 2005. The consolidated financial reportreflects the cash flow for Petra Diamonds Limited for the three and twelve monthperiods to 30 June 2005 and the consolidated Crown Diamonds NL cash flow for theone month period commencing on 1 June 2005. CORPORATE Highlights • Merger with Crown Diamonds NL completed • Placing undertaken for a total of £17.1 million at a placing price of 85p per share to primarily UK institutional investors • Enlarged Petra reports positive Net Operating Cash Flow for the quarter The merger with Crown Diamonds NL was completed effective from the 31 May 2005with the issue of 37,962,256 Petra shares for 303,695,868 Crown Diamonds NLshares pursuant to an order of the Supreme Court of Western Australia.Concurrent with the merger, a total of 20,084,352 shares were placed withinstitutional investors at 85 pence raising £17,071,699 (before costs). The cash flow movement for the quarter is set out in the attached Appendix 5B. REVIEW OF OPERATIONS Alto Cuilo, Angola Highlights • BHP Billiton elects to fund all exploration at Alto Cuilo • 59% of the 73 holes drilled to date intersect kimberlite - a very encouraging success rate • Review of geological and geophysical data with BHP Billiton identifies additional targets • Drilling identifies further kimberlite deposits • 115m tonne deposit now confirmed as diamondiferous • Higher kimberlite diamond valuation than previously expected BHP Billiton Joint VentureBHP Billiton has now elected to sole fund all kimberlite and alluvialexploration and related costs on behalf of Petra Diamonds Alto Cuilo Limited("PDAC", the Petra/BHP Billiton JV vehicle) for the entire Alto Cuiloconcession. From 1 January 2005 (the date at which BHP Billiton elected to fund kimberliteexploration within the ML Complex) to the end of June 2005, BHP Billiton hasadvanced funding of approximately US$3.6m to PDAC in respect of exploration atAlto Cuilo. BHP Billiton will start earning a direct interest in PDAC when ithas advanced funding of US$7.5m, which is expected to be the case later thisyear. DrillingDrilling in excess of 8,895m on 73 holes has been undertaken to date, with 43 ofthese holes intersecting kimberlite - a success rate of 59%. Drilling resultsindicate the presence of kimberlites with preserved crater zones that haveundergone very little erosion, thus underscoring the potential for large sizediscoveries. Some holes have intersected kimberlite to vertical depths of 280m,where drilling was stopped due to limitation of drilling capacity but thekimberlite continued. Re-classification of the geophysical and drilling data by Petra and BHP Billitonhas confirmed that 11 of the aeromagnetic anomalies tested are related tokimberlite pipes, with other targets prioritised for drilling. The current drilling programme will continue on the anomalies in the ML Complexthat have not yet been drilled with the expectation of significantly increasingthe number of kimberlite discoveries. Sample analysisThe results from the sample of over 1,000kg of kimberlitic material sent formicro diamond analysis at Lakefield Research Centre in Canada have now beenreceived. These samples were taken from three of the eleven kimberlitegroupings, including the 115m tonne deposit (announced by the Company on 7/12/04) and the kimberlite from which the 40 tonne bulk sample was previously takenand which yielded a grade of 47 carats per hundred tones ("cpht") (as announcedby the Company on 8/9/04). The results indicate that the macro and micro diamond populations do not fit"typical" micro diamond grade estimate curves, in that recoveries are skewedtoward the macro population. All three kimberlites were certified as beingdiamondiferous in nature and a full suite of kimberlite indicator minerals wasrecovered for each kimberlite intersection for mineral chemistry assessments.The presence of high chrome sub-calcic G10s and high sodium eclogitic garnetsindicates that lithologies typically associated with peridotitic and eclogiticdiamond sources have been sampled by these kimberlite pipes. The 65 tonnes per hour ("tph") diamond recovery plant (MB100 and DMS) continuesto be used mainly for the treatment of alluvial samples. A total of 4,987diamonds totaling 1,255 carats at an average stone size of 0.25 carats have beenrecovered to date. A pitting and trenching programme on the river flats andhillsides has started in order to further evaluate the potential foreconomically viable alluvial deposits within the ML Complex. BHP Billiton has completed a valuation of the diamonds recovered from thekimberlite and alluvial sampling. Based on a preliminary result obtained from310 carats, the diamonds recovered from the kimberlite samples averaged US$295per carat. This is in excess of Petra's previous estimates of US$200 per carat. Aeromagnetic programmeA Midas low-level helicopter aeromagnetic survey is underway. It is expectedthat, due to the sophistication of this system compared to the 1998 fixed wingsurvey executed by Petra and the use of twin sensors at closer line spacing,additional magnetic anomalies are likely to be detected. The aeromagnetic surveyaims to assist in the discovery of further kimberlite deposits as well as toaccurately define the magnetic signatures of the kimberlites discovered to dateand of the untested anomalies identified in the 1998 high-level aeromagneticprogramme. Kono Project, Sierra Leone Highlights • A 200kg sample taken by Petra returned a gem quality 0.22 carat diamond, supporting the previously indicated average grade of 94 cpht from Mano River Resources's sampling • Manufacture of 75 tph production plant to be completed by September 2005, to be commissioned on site during Q1 2006 • Diamond production from treatment of bulk samples expected Q1 2006 • Petra plans to accelerate expenditure and development of the project so as to bring production on line as early as possible Exploration developmentsPetra personnel visited the Kono site in April 2005 to plan for theestablishment of the 75 tph production plant as well as to undertake furthergeological work on the dykes. Dykes were opened up to depths of 10m and samplestaken. The strike length of the Kono kimberlite dykes exceeds the total strike lengthof Petra's South African kimberlite dyke operations and Petra believes the Konoproject has the potential to yield high grades of approximately 100 cpht. Site establishmentThe necessary equipment to establish initial facilities on site will be shippedfrom South Africa and is on track to be commissioned on site by Q4 2005. Petra'ssite establishment team will transfer to Sierra Leone in August and the sitefacilities should be fully established by November. Exploration/Production plansPetra is currently manufacturing the 75 tph production plant (DMS and crushingcircuit) at its facility in South Africa. Petra plans to ship the plant inOctober and it should be commissioned on site in Q1 2006. South African Operations Highlights • All mines achieve record US$ diamond prices • Strong carat sales and revenue for the 6 months to June 2005 • Operations on track to achieve production and revenue targets Star Mine, Theunissen District, Free State Province A total of 8,256 ROM fissure tons was delivered to the plant and returned 5,723carats at a grade of 69 cpht for the quarter. In the June 2004 quarter the ROMdelivered to the plant was 9,698 tons, from which 4,314 carats were recovered toyield a grade of 45 cpht. During the quarter, 5,641 carats were sold for an average price of $US240 percarat. June 2005 sales of 2,126 carats averaged selling prices of $US287 percarat. In calendar year 2004, the average price achieved was $US182 per carat. A 15th level at both Wynandsfontein and Burns has been established and both arein good ground conditions. At Burns the raise to the west has holed and stopinghas commenced whilst the raise to the east should hole during the first month ofthe next quarter. At Wynandsfontein the zero cross-cut has intersected fissureand raising in both directions has begun. Stope production of fissure shouldcommence during the next quarter. The establishment of these two levels hasgreatly enhanced our ability to achieve our production targets. The Burns 13E return ventilation airway holing to the 10 level has beenestablished through the bad ground conditions. This holing suffered temporarycollapse due to wet and poor ground during the quarter. It has however beenreopened, dried and robustly supported and should not suffer any furthercollapse. Additional ventilation is being planned in the form of raisebore holings so asto further secure the ventilation of the mine. The raiseboring operation shouldcommence during the next quarter. The ventilation holing from 10 to 9 levelsuffered continual collapse and has been abandoned. On 14 level the horizontal distance remaining between Burns east drive andWynandsfontein west drive is 645 metres (distance between the two shafts is1,400m). This represents approximately another 18 months before these twotunnels meet and we can abandon the high maintenance 10 level drive in theshales. Helam Mine, Swartruggens District, North West Province A total of 29,662 ROM fissure tons was delivered to the plant and returned26,907 carats at a grade of 90 cpht. An additional 797 tons of tailings wastreated, delivering 104 carats giving a total of 27,011 carats for the quarter. During the quarter, 27,148 carats were sold for an average price of $US88 percarat. June 2005 sales of 10,162 carats averaged selling prices of $US92.90 percarat. In 2004, the average price achieved since July 2004 was $US74 per carat. The mechanisation programme is progressing well, with the John main shaft nowequipped to the 18th level. The pilot raise from 20 to 19 level has beencompleted and slyping has commenced. The pilot raise from 21 to 20 level is now70% completed. All other aspects of this capital program are on schedule. The re-establishment of Second Lease as a separate mining entity is alsoprogressing well and on schedule. It is expected to see the first productionfrom this program during the last quarter of this year. At the Edward shaft the mechanisation process is progressing well, with allpreviously planned ore passes having been completed and commissioned. Inaddition to the originally planned programme, two ore passes have beenestablished between 13 and 14 level on the main shaft. This increases ourhoisting flexibility and ability to produce increased tonnes. Modifications tothe single-drum sub-shaft are being investigated so as to fill up the capacitycreated by establishment of the abovementioned ore passes. The plant upgrades are complete and no further changes are envisaged in the nearfuture. Messina and Dancarl Mines, Warrenton District, Northern Cape Province Mining at Sedibeng Joint Venture has progressed well with the delivery of 31,081ROM fissure tonnes from the combined operation, which were treated through theMessina plant, delivering 5,685 carats at a ROM grade of 18 cpht. Messina'sshare of the delivered carats was 4,235. The decreased production and grade at Sedibeng has been due to a number ofunforseen circumstances: 1. the redevelopment of 20 level necessitated the drawdown of large amounts of waste in the stop to re-establish ventilation 2. the re-establishment of 14 level on Dancarl also necessitated the drawdown of large amounts of waste-bearing material so as to re-establish ventilation, and 3. 14 level north on Dancarl only produced stringers for the first 30m of mining. These problems have now all been overcome and production is returning to theprojected levels. In the June 2004 quarter the ROM delivered was 26,114 tons, from which 6,018carats were recovered at a grade of 23 cpht. During the quarter, 6,324 carats were sold from the combined operation for anaverage price of $US271 per carat. June 2005 sales of 1,994 carats averagedselling prices of US$330 per carat. In calendar year 2004, the average priceachieved was $US259 per carat. At the Messina section, 23 level has been established and stope production hascommenced. Sinking of the shaft to 24 level has commenced and should be completeby year-end. On 20 level, development into the Dancarl section has progressedwell with seven cross-cuts now on fissure. Now that ventilation has beenre-established, production from this stope can commence. At the Dancarl section, progress has been good with the main and sub-shaftshaving been cleared to 15 level. Fissure raising to 14 level has begun andproduction should commence during the third quarter. The Dancarl tailings plantis now running at a comfortable 10,000tpm and yields a grade of approximately6cpht. A new 928G Caterpillar FEL has been purchased and is now operation infeeding this tailings plant. The throughput of this plant will now be graduallyincreased. Plans are being put in place to upgrade the Messina plant so as to take thetotal combined increased production from both Messina and Dancarl. DIAMOND PRODUCTION The combined diamond production for the fourth quarter to 30 June 2005 and thesix months to the 31 December 2004 is as follows:- Three month period Tonnes Total Diamonds Carats per to Total Tonnes Treated Recovered 100 tonnes Hoisted (carats) 31 Mar 05 - mined* 92,709 67,127 39,004 58 31 Mar 05 - - 10,517 1,054 - tailings30 June 05 - mined* 96,778 68,999 38,315 5530 June - tailings - 797 157 - Total 2005 189,487 147,440 78,530 30 Dec 04 87,014 60,812 33,221 55 30 Sep 04 86,887 62,032 31,922 51 Total 2004 173,901 122,844 65,143 \* This includes all the production at the Messina/Dancarl Mines. JOHAN DIPPENAARCHIEF EXECUTIVE OFFICER The information in this quarterly report that relates to Mineral Resources orOre Reserves is based on information compiled by Jim Davidson who is a Member ofthe Geological Society of South Africa (Registered Natural Scientist), a'Recognised Overseas Professional Organisation' ('ROPO'), included in a listpromulgated by the ASX from time to time. Jim Davidson is a full-time employeeof the Company and has sufficient experience which is relevant to the style ofmineralisation and type of deposit under consideration and to the activity whichhe is undertaking to qualify as a Competent Person as defined in the 2004Edition of the 'Australian Code for Reporting of Exploration Results, MineralResources and Ore Reserves'. Jim Davidson consents to the inclusion in thereport of the matters based on his information in the form and context in whichit appears. FURTHER INFORMATION Queries may be directed to Johan Dippenaar, the Company's Chief ExecutiveOfficer, or David Abery, the Company's Finance Director, during business hours. Petra Diamonds, South Africa Parkgreen Communications, LondonJohan Dippenaar /David Abery Justine Howarth / Annabel LeatherTel +27 11 467 6710 Tel +44 20 7493 3713 John Baillie, Perth Field PR, AdelaideTel +61 8 9381 8888 Kevin Skinner Tel +61 8 8234 9555 Mobile +61 414 822 631 Rule 5.3 Appendix 5B Mining exploration entity quarterly report* Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98,30/9/2001. Name of entityPetra Diamonds Limited ACN or ARBN Quarter ended ("current quarter") 114474574 30 June 2005 Consolidated statement of cash flows* Current Year toCash flows related to operating activities quarter date £'000 £'000 12 Months1.1 Receipts from product sales and related 846 846 debtors1.2 Payments for a) exploration and evaluation 63 (3,061) b) development - - c) production (155) (155) d) administration (614) (2,612)1.3 Dividends received - -1.4 Interest and other items of a similar nature 36 43 received1.5 Interest and other costs of finance paid (104) (198)1.6 Income taxes paid - -1.7 Other (provide details if material) - - Net Operating Cash Flows 72 (5,137) Cash flows related to investing activities 1.8 Payment for a) prospects - - b) equity investments - - c) other fixed assets (268) (1,333)1.9 Proceeds from sale of: (a) prospects - - (b) equity investments - - (c) other fixed assets 168 1681.10 Loans to other entities (12) (12)1.11 Loans repaid by other entities - -1.12 Other - - Net investing cash flows (112) (1,177)1.13 Total operating and investing cash flows (40) (6,314) (carried forward) * This consolidated financial report reflects the cash flow for Petra DiamondsLimited for the 3 and 12 month periods to 30 June 2005 and the consolidatedCrown Diamonds NL cash flow for the 1 month period commencing on 1 June 2005. 1.13 Total operating and investing cash flows (40) (6,314) (brought forward) Cash flows related to financing activities 1.14 Subscription for shares and notes - net of 15,164 18,108 costs1.14 Proceeds from capital raisings - -1.15 Proceeds from sale of forfeited shares - -1.16 Proceeds from long term borrowings 179 1791.17 Repayment of borrowing (414) (414)1.18 Dividends paid - -1.19 Other (provide details if material - see - - attached) Net financing cash flows 14,929 17,873Net increase (decrease) in cash held 14,889 11,5591.20 Cash at beginning of quarter/year to date 492 3,8221.21 Exchange rate adjustments to item 1.20 - -1.22 Cash at end of quarter 15,381 15,381 Payments to directors of the entity and associates of the directors. Payments to related entities of the entity and associates of the relatedentities Current quarter £'000 1.23 Aggregate amount of payments to the parties 131 included in item 1.2 1.24 Aggregate amount of loans to the parties included Nil in item 1.17 1.25 Explanation necessary for an understanding of the transactions Included in payments for administration is £62,000 for expenses paid during the quarter by Crown Diamonds NL for the proposed merger with Petra Diamonds Limited via a Scheme of Arrangement. Non-cash financing and investing activities 2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows During the quarter 85,000 Crown Diamonds NL November 2005 Convertible Notes ($A15,300) were converted to 12,883 ordinary Petra Diamonds Limited shares. 2.2 Details of outlays made by other entities to establish or increase their share in projects in which the reporting entity has an interest N/A Financing facilities available Add notes as necessary for an understanding of the position. Amount available Amount used £'000 £'0003.1 Loan facilities 900 3953.2 Credit standby arrangements Nil Nil Estimated cash outflows for next quarter £'000 4.1 Exploration and evaluation 3804.2 Development Nil Total 380 Reconciliation of cash Reconciliation of cash at the end of the Current quarter Previous quarterquarter (as shown in the consolidated £'000 £'000statement of cash flows) to the relateditems in the accounts is as follows.5.1 Cash on hand and at bank 3,776 4925.2 Deposits at call 12,000 -5.3 Bank overdraft (395) -5.4 Other (provide details) - - Total: cash at end of quarter (item 15,381 492 1.22) Changes in interests in mining tenements Tenement Nature of interest Interest Interest reference (note (2)) at at end of beginning quarter of quarter6.1 Interests in mining N/A N/A tenements relinquished, reduced or lapsed 6.2 Interests in mining N/A N/A tenements acquired or increased Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rightstogether with prices and dates. Total number Number Issue price Amount paid up per quoted per security security (see note (see note 3) 3) (pence) (pence)7.1 Preference + securities (description)7.3 +Ordinary securities 130,949,455 130,949,455 - -7.4 Changes during quarter (a) Increases 37,962,565 37,962,565 61.2 pence Scheme of through issues 20,084,352 20,084,352 85.0 pence Arrangement and conversions 12,883 12,883 50.6 pence Placement for which quoted Conversion of Con (b) Decreases Note through returns of capital, buy-backs 7.5 +Convertible debt 16,078,191 16,078,191 $A0.18 securities 11% pa Nov 2005 7.6 Changes during quarter (a) Increases Nil through issues (b) Decreases 85,000 through conversion7.7 Options (description and conversion factor 6,397,625 Nil See below - see details below) 7.8 Issued during 2,250,000 Nil 85 pence quarter 7.9 Exercised during Nil Nil Nil quarter 7.10 Expired during Nil N/A quarter Options 200,000 Options exercisable in 50,000 tranches at 30p, 35p, 40p and 45p by 22 July 2005 276,375 Employee Incentive Options expiring various dates, exercisable at $A1.12 each 86,250 Employee Incentive Options expiring various dates, exercisable at $A1.36 each 400,000 Director incentive Options expiring 11 April 2007 with exercise price of 30p, 35p, 40p and 45p for each 100,000 tranche. 1,500,000 Director incentive Options expiring 5 September 2013 with exercise price of 44p. 750,000 Director incentive Options expiring 28 June 2014 with exercise price of 54.5p. 2,250,000 Director incentive Options expiring 16 June 2015 with exercise price of 85p. 385,000 Employee incentive Options expiring 5 September 2013 with exercise price of 44p 500,000 Employee incentive Options expiring 28 June 2014 with exercise price of 54.5p 50,000 Employee incentive Options expiring 13 September 2014 with exercise price of 56.75p Warrants over ordinary shares Exercise Expiry Price 1,500,000 30p 31 December 2007 1,000,000 100p 31 December 2007 1,666,666 55.85p 14 August 2006 Petra and Societe Diamantaire Finkelstein Ch & CO NV have granted each other a mutual put and call option for Finkelstein to subscribe for $US1.75 million of Ordinary shares. The options are exercisable once the market value of Petra exceeds 75 p for 15 consecutive days. The subscription price will be equal to a 5% discount to that market price. The option is renewable at the Company's choice on an annual basis. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Petra Diamonds