TIDMDCP
RNS Number : 3874N
Diamondcorp Plc
28 September 2012
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
(GBP21.3 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 (GBP108.4 million). DiamondCorp's 74% share of this
is GBP80 million, but in addition, the Company is due to be repaid
shareholder loans and interest which currently stand at around R273
million (GBP20 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 GBP16.4 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 GBP7.5 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 (GBP23.8 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
GBP1,556,701 (30 June 2011 GBP1,168,179).
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 Six months
ended 30 June ended 30 June
2012 (GBP) 2011 (GBP)
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 GBP0.006 GBP0.006
HEADLINE LOSS PER SHARE GBP0.006 GBP0.006
All of the activities of the Group are classed as
continuing.
STATEMENT OF CHANGES IN EQUITY
Six months Six months
ended 30 June ended 30 June
2012 (GBP) 2011 (GBP)
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
(GBP) 2011 (GBP)
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 Six months
ended 30 June ended 30 June
2012 (GBP) 2011 (GBP)
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
GBP1,325,656 for the six months ended 30 June 2012 (30 June 2011:
GBP1,046,064) 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 GBP0.006 GBP0.006
Effect of gain on disposal of property, plant and - -
equipment
Effect of impairment of intangible assets - -
Headline loss per share GBP0.006 GBP0.006
3. SHARE CAPITAL
30 June 2012 31 December 2011
No. GBP No. GBP
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 GBP16.4 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 GBP7.5 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 Limited
JSE Sponsor: PSG Capital (Pty) Limited
DiamondCorp plc, Paul Loudon +44 20 3151 0970
Fairfax I.S. plc, Ewan Leggat/Laura Littley +44 207 598 5368
Ocean Equities Limited, Guy Wilkes +44 207 4370
PSG Capital (Pty) Limited, John-Paul Dicks +27 21 887 9602
Russell & Associates, Charmane Russell/Marion Brower +27 11
880 3924
This information is provided by RNS
The company news service from the London Stock Exchange
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