Elkedra Diamonds NL
ABN 42 092 334 220
Level 1, 130 Hay St, Subiaco, Western Australia 6008
P O Box 8035, Subiaco East, Western Australia 6008
Telephone: +61-8-6380 2855; Facsimile: +61-8-6380 1644
E-mail: elkedra@elkedra.com.au Web Site: www.elkedra.com.au
QUARTERLY REPORT TO SHAREHOLDERS
31 March 2007
Listed on ASX and AIM (Code EDN)
HIGHLIGHTS
BRAZIL
Chapada Diamond Project
5,775 carats of diamonds produced for the quarter
Revenue of US$2,202,084 generated from sales in the quarter.
Record number of carats and record carat values achieved in April 11th
valuation
Plant running for extended periods at 10% above design capacity
New mining method improves mining production and reduces mining costs
AUSTRALIA
Diamond Exploration
Magnetic anomalies identified in Tiwi Islands project areas
CORPORATE
5,028,900 shares issued from early exercise of AIM listed warrants at 12 pence
sterling raises A$1,508,480
Uranium and base metal prospects to be spun out into a new ASX listed company.
OVERVIEW
1.0 BRAZIL
CHAPADA DIAMOND PROJECT - Elkedra 100%
PRODUCTION
Diamond production and key operating statistics since commencement of
operations through to 31 March are shown in the following Table 1.
TABLE 1 - PRODUCTION STATISTICS
Average
Plant Average Diamonds Average Stone Value
Production Recovered Size
Month Throughput Grade per Carat
(cts/stone)
(bcm)1 (US$)
Stones Carats
Total - Start
up 114,707 0.038 10,114 4,338 0.43 382
to 30 Sep 06
Total - Dec 154,630 0.038 10,581 5,974 0.56 406
Qtr
January 49,352 0.036 3,158 1,761 0.56 374
February 48,155 0.037 3,182 1,774 0.56 419
March 58,429 0.038 3,881 2,240 0.58 517
Total - Mar 155,936 10,221 5,775 0.57 443
Qtr 0.037
Year to Date 425,273 0.038 30,916 16,087 0.52 413
1. "bcm" means "bank cubic metre" of insitu gravel in mining benches and plant
throughput is based on total run of mine production including all under and
oversize material.
By the end of the March quarter the plant de-bottlenecking modifications were
completed and the processing plant is now running for extended periods of time
at up to 10% above its throughput design capacity.
The processing plant's design throughput capacity is 50,000 bcm per month, or
approximately 200 tonnes per hour, of alluvial gravels which equates to
approximately 1.4 million tonnes of gravels per annum. With the plant
debottlenecking now completed the processing plant is continuing to run at
around 220 tonnes per hour for lengthy periods of time. Plant availability
(i.e. the actual hours the plant is available for production each month) at the
end of March was a very pleasing 86% compared to the original design target of
82%.
The second x-ray sorter imported from South Africa was installed during the
quarter . This has eliminated the throughput bottleneck being experienced
previously in the final diamond recovery section of the plant.
The Chapada region's wet season during the months of January, February and the
early part of March caused some loss in mining productivity by the mining
contractor A new mining method trialled in January and February was fully
implemented in March resulting in improved productivity and substantially
reduced overburden mining costs.
Average grade achieved during the March quarter was 0.037 carats/bcm compared
to the reserve grade of 0.05 carats/bcm. The overall mining reserve at Chapada
is made up of a number of gravel terraces stepping down in elevation towards
the rivers to the east and west. For the most part of the quarter, mining has
only progressed in the higher level terraces however during the second half of
the month of March gravels from a terrace closer to the river were blended with
those of higher terraces resulting in an increase in the number of larger
stones.
During the month of March the Chapada project commenced operating at full
capacity. On an annual basis over 4 million tonnes per annum of diamondiferous
gravels and sand overburden is expected be mined at Chapada.
SALES
The total diamond production from the Chapada operations is sold under
agreement to the Leviev Diamond Group on a monthly basis. Under the terms of
the sales agreement the price for each diamond sale is determined by a mutually
agreed London based independent diamond valuer.
This monthly off-take arrangement with Leviev not only reduces the security
risk but also provides regular cash flow and allows the Company to deploy
capital to areas which provide growth opportunities rather than funding
inventory levels.
During the quarter three independent diamond valuations, generating sales
revenue of US$2,202,084, were undertaken on the following dates
* 10th January 2007
* 7st February 2007
* 7th March 2007
Subsequent to the end of the quarter, on 12 April 2007, a record sale was
achieved comprising 2,924 carats selling at an average price per carat of
US$532. This sale alone generated revenue of US$1,555,599 which will be
reported in the revenues for the June 2007 quarter. Including this sale, the
Chapada project has, to date, sold a total of 17,103 carats (33,395 stones) for
a total value of US$7,177,038.
The run of mine production continues to achieve around 90% gem quality diamonds
and the average stone size is achieving 0.52 carats/stone. Both of these
achievements are in line with expectations. The stone size distribution
indicates that recovery of larger size stones (+5 carats) continues to steadily
increase. The +5 carat stones accounted for 10% of the carats produced and 43%
of the diamond revenue during the March quarter.
The increased number of larger stones recovered in the March quarter is
reflected in the higher average stone size (0.57 carats/stone compared to 0.56
in the last quarter) and average carat value of US$443 per carat compared to
average carat value of US$406 achieved during the December quarter.
Diamonds falling into the specials category during the March quarter are noted
as follows:
Stones in 11+ Carat Specials Category
Valuation Average Total Highest Value
Date No. of Value Value
Stones Stone
(2007) US$ US$
11.93 carats, US$54,973 @
10 Jan 2 3,437 87,277 US$4,608/carat
12.12 carats, US$42,420 @
7 Feb 3 2,026 74,423 US$3,500/carat
7 Mar 3 2,033 70,491 11.48 carats, US$51,660 @
US$4,500/carat
The most recent valuation (on 14 April) reflected a significant increase in the
number of special high value stones as listed in the following table:
Stone size (carats) Value/carat (US$) Total stone value (US$)
27.35 7,500 205,125
25.95 3,500 90,825
20.05 1,000 20,040
16.85 1,250 21,013
15.65 2,100 32,865
15.04 2,250 33,840
11.21 2,500 28,025
Kimberley Certification PROCESS
There have been no further problems with the Kimberley Certification process.
The bureaucratic processes required under Brazil's revised Kimberley
Certificate legislation are now operational and recent monthly certificates
have been received within 7 - 10 days of applications being made.
Exploration - Brazil
The Company commenced implementation of its Brazilian exploration activities
during the March 2007 quarter on the tenements it already holds surrounding the
existing Chapada operations, which include some 270km2 of highly prospective
ground. Activities are being concentrated on the Casca tenement where access
agreements with land owners are already in place over the majority of the
area. Results from these exploration activities should commence to be reported
during the latter part of the June quarter.
The current declared probable reserves are contained within tenements covering
only 15 km2 and the additional 270 km2 tenement holdings provide good
exploration potential to fast track the expansion of the Chapada Project. The
Company's medium term objective is to increase its reserves to sustain a mine
life in excess of 20 years and increase production to 100,000 carats per annum.
BRAZILIAN TENEMENTS AND RESERVES
The Chapada Project Tenements in Brazil cover a total area of approximately
285 km2.
Current Reserves
The Chapada Project has a current probable reserve of 5.4 million bcm of
diamondiferous gravels at a grade of 0.05 carats per bcm. This reserve is
sufficient to sustain a mine life of 9 years based on the proposed initial rate
of gravel processing of 600,000 bcm (1.4 million tonnes) per annum, with
expected annual diamond production of more than 30,000 carats. The diamonds
recovered during bulk sampling are of a high gemstone quality with an average
size of 0.5 carats. Based on an independent assessment of the sales data from
previous sales of bulk sampling production an average selling price of above
US$400 per carat is expected to be realised. The latest sales prices support
this expectation.
This current probable reserve of gravels is contained on two tenements,
"Quilombo", for which mining licences have been granted, and the adjacent "Peba
Lagoinha" tenement, for which a development installation licence is being
progressed. These two tenements together give an expected mine life of 9 years
and cover an area of only 15 km2.
Exploration Tenements
Elkedra holds a further seven granted exploration tenements covering some
270 km2 within the surrounding Chapada basin region. Historical exploration
activities have shown these areas to also contain diamondiferous gravel
deposits. If ongoing exploration work indicates economic resources in these
tenements then low capital cost satellite mining operations can be established
at these tenements providing a gravel concentrate back to the Chapada process
plant for final diamond recovery.
No tenements were applied for or relinquished in Brazil during the quarter.
2.0 AUSTRALIA
AUSTRALIAN TENEMENTS
During the quarter no new tenement applications were made. EL 25367 in the Mt
Skinner project area near the Sandover Highway was granted on 21 February 2007
The Company's total tenement holding in the NT and Queensland is currently
12,789 km2, including both granted tenements and pending applications.
Diamonds - Elkedra 100%
Tiwi Islands Diamond Project (NT)
Elkedra is investigating the potential for on-shore Tertiary-age lamproite
pipes in the Tiwi Islands analogous to the numerous 30 million year old
lamproite diatremes known in the Timor Sea some 200 km offshore. Final data
products from an NT Government aerial magnetic survey over the Tiwi Islands
have been received and preliminary work indicates about 20 dipolar anomalies of
moderate priority are present. The targets will be modelled in the next quarter
to enable them to be ranked for further exploration activities.
During the quarter Elkedra made a submission to the Tiwi Land Council under the
Aboriginal Land Rights Act (ALRA) to seek consent to explore. Elkedra will
negotiate a comprehensive exploration agreement with the Tiwi Land Council once
specific target areas have been delineated.
Thorntonia Diamond Project (Queensland)
Planning is underway for an indicator mineral sampling program in the 2007
field season.
Altjawarra Diamond Project (Queensland/NT)
Planning is underway for an indicator mineral sampling program in the 2007
field season.
Base Metals and Uranium - Elkedra 100%
EL25367 in the Mt Skinner project area, which covers uranium and base metal
prospects north of Alice Springs, was granted on 21 February 2007. An
application was made to the Aboriginal Areas Protection Authority (NT) for
sacred site clearances over parts of EL25366 and EL25367 (Mt Skinner Project)
and EL24693 (Field River) to enable exploration work for uranium and base
metals to begin this field season.
On 12 March 2007 the Company announced its intention to spin-off its uranium
and base metal prospects located in the Georgina Basin (see Figure 13).
Further details of the proposed spin off are provided in the corporate section
of this report.
CORPORATE
URANIUM AND BASE METALS SPIN OFF
The Company's uranium and base metal prospects are to be transferred to a new
company and following the completion of an initial public offering the new
company will apply for listing on the Australian Stock Exchange.
The new company's tenement package is expected to comprise approximately
7,900 km2, nearly all of which is located in the Northern Territory. Elkedra
will retain the diamond rights on the tenements it transfers to the new
company.
Elkedra plans to hold an investment in the order of 38.5% in the new company
which, subject to any regulatory approvals, it intends to distribute in specie
to Elkedra shareholders within 12 months of a successful float.
A further announcement on the proposed spin-off will be made when the details
have been finalised.
SECURITIES
The total issued capital of the company is 99,474,903 shares.
The number of unlisted convertible notes on issue at 31 March 2007 is 496,612.
These notes mature on 24 June 2007 and each note converts into 10 ordinary
shares. The conversion price is the equivalent of A$0.36 per share. If all
the notes are converted, 4,966,120 ordinary shares will be issued during the
June 2007 quarter. These notes have a face value of A$1.20 each and any notes
not converted will be redeemed at face value on the maturity date.
During the quarter 5,028,900 new shares were issued for 5,028,900 warrants
exercised at 12 pence. These issues raised A$1,508,480
A total of 1,540,390 options exercisable at A$0.75 expired during the quarter.
As at 31 March 2007 a total of 12,133,334 unlisted options exercisable at
between A$0.35 and A$1.20 are on issue, in addition to 3,339,632 warrants
exercisable at 12 pence listed on AIM in the UK.
The Company retained A$3.1 million in cash as at 31 March 2007.
The Company regularly updates its Web Site at www.elkedra.com.au
For and on behalf of the Board
M.D.J. Cozijn
Director/Company Secretary
24 April 2007
The resource information on the Brazilian Chapada Alluvial Diamond Project has
been prepared in accordance with the 2004 edition of the Australasian Code for
Reporting Exploration Results, Mineral Resources and Ore Reserves (the "JORC
Code"). The term "Probable Reserve" is used as per its definition in the JORC
Code (available at www.jorc.org). The information is based on data compiled by
and reported upon by Mr Hugh Durey of Hugh Durey & Associates Pty Ltd.
Mr Durey is a member of the Australasian Institute of Mining & Metallurgy and
qualifies as a Competent Person as defined in the JORC Code. Mr Durey consents
to the inclusion in this report of the matters in the form and context in which
it appears.
The geological information on the Australian projects is based on information
compiled by and reported upon by Dr Wayne Taylor, Elkedra's Chief Mineralogist,
who is a member of the Australian Institute of Geoscientistsand qualifies as a
Competent Person as defined in the JORC Code. Dr Taylor consents to the
inclusion in this report of the matters in the form and context in which it
appears.
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 entity
ELKEDRA DIAMONDS NL
ABN Quarter ended ("current quarter")
ABN 42 092 334 220 31 March 2007
Consolidated statement of cash flows
Current Year to
quarter date
Cash flows related to operating activities $A'000 (9 months)
$A'000
1.1 Receipts from product sales and related debtors 2,801 7,244
1.2 Payments for: (a) exploration and evaluation (107) (385)
(net)
(46) (873)
(b) development
(3,152) (6,967)
(c) production
(854) (2,197)
(d) administration
(net)
1.3 Dividends received
1.4 Interest and other items of a similar nature 68 113
received
1.5 Interest and other costs of finance paid (215) (711)
1.6 Income taxes paid
1.7 Other
- Movement in inventory (160) (898)
- Security & Maintenance (320) (947)
Net Operating Cash Flows (1,985) (5,621)
Cash flows related to investing activities
1.8 Payment for purchases of: (a) prospects
(b) equity investments
(10) (34)
(c) other fixed assets
1.9 Proceeds from sale of: (a) prospects
(b) equity investments
(c) other fixed assets
1.10 Loans to other entities
1.11 Loans repaid by other entities
1.12 Other (provide details if material)
Net investing cash flows (10) (34)
1.13 Total operating and investing cash flows (carried (1,995) (5,655)
forward)
1.13 Total operating and investing cash flows (brought (1,995) (5,655)
forward)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. (net) 1,508 5,912
1.15 Proceeds from sale of forfeited shares
1.16 Proceeds from borrowings 500
1.17 Repayment of borrowings (557) (1,576)
1.18 Dividends paid
1.19 Other - Trade Creditors/etc.. 94 (300)
Net financing cash flows 1,045 4,536
Net increase (decrease) in cash held (950) (1,119)
1.20 Cash at beginning of quarter/year to date 4,016 4,235
1.21 Exchange rate adjustments to item 1.20 35 (15)
1.22 Cash at end of quarter 3,101 3,101
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related
entities
Current
quarter
$A'000
1.23 Aggregate amount of payments to the parties included in 117
item 1.2
1.24 Aggregate amount of loans to the parties included in item -
1.10
1.25 Explanation necessary for an understanding of the transactions
1.23 Being Executive Directors salaries and superannuation plus
Director's fees and superannuation.
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
None
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
None
Financing facilities available
Add notes as necessary for an understanding of the position.
Amount available Amount used
$A'000 $A'000
3.1 Loan facilities 8,000 8,000
3.2 Credit standby arrangements 2,000 -
Estimated cash outflows for next quarter
$A'000
4.1 Exploration and evaluation 100
4.2 Development -
Total 100
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in Current Previous
the consolidated statement of cash flows) to the related items quarter quarter
in the accounts is as follows.
$A'000 $A'000
5.1 Cash on hand and at bank 476` 938
5.2 Deposits at call 2,625 3,078
5.3 Bank overdraft
5.4 Other (provide details)
Total: cash at end of quarter (item 1.22) 3,101 4,016
Changes in interests in mining tenements
Tenement Nature of Interest at Interest
reference interest beginning of at end of
(note (2)) quarter quarter
6.1 Interests in mining Refer covering
tenements relinquished, quarterly report
reduced or lapsed attached hereto
6.2 Interests in mining
tenements acquired or
increased
Issued and quoted securities at end of current quarter
Description includes rate of interest and any redemption or conversion rights
together with prices and dates.
Total Number Issue price per Amount paid up
number quoted security (see per security
note 3) (cents) (see note 3)
(cents)
7.1 Preference +
securities
(description) - - -
7.2 Changes during
quarter
- - -
(a) Increases
through issues
(b) Decreases
through returns of
capital, buy-backs,
redemptions
7.3 +Ordinary securities
after (1) for (3) 99,474,903 99,474,903
consolidation
7.4 Changes during
quarter
(a) Increases
through issues
9,900 9,900 Exercise of 12p (A$0.30)
Options
5,000,000 5,000,000 Exercise of 12p (A$0.30)
Options
19,000 19,000 Exercise of 12p (A$0.29)
Options
(b) Decreases
through returns of
capital, buy-backs
7.5 +Convertible debt
securities (1) for
(3) consolidation 496,612 - $3.60/
convertible
into 10 shares
@ 36c
7.6 Changes during
quarter
(a) Increases
through issues - -
(b) Decreases
through securities
matured, converted - -
7.7 Options Exercise price Expiry date
1,250,000 Exercisable @ Expire 30/11/
40c 2009
1,250,000 - Exercisable @ Expire 30/11/
60c 2009
333,334 - Exercisable @ Expire 3/09/2008
45c
3,238,085 - Exercisable @ Expire 31/8/2007
12p
101,547 - Exercisable @ Expire 31/8/2007
12p
6,250,000 - Exercisable @ Expire 30/9/2008
40c
400,000 - Exercisable @ Expire 30/11/
35c 2009
2,000,000 - Exercisable @ Expire 31/05/
90c 2010
200,000 - Exercisable @ Expire 31/05/
$1.20 2010
200,000 - Exercisable @ Expire 31/12/
65c 2009
250,000 - Exercisable @ Expire 31/12/
65c 2009
7.8 Issued during quarter
7.9 Exercised during 9,900 9,900 12p (A$0.30) 12p (A$0.30)
quarter
5,000,000 5,000,000 12p (A$0.30) 12p (A$0.30)
19,000 19,000 12p (A$0.29) 12p (A$0.29)
7.10 Cancelled during 1,540,390 1,540,390 Exercisable @ Expired 14/03/
quarter 75c 2007
7.11 Debentures - -
(totals only)
7.12 Unsecured notes - -
(totals only)
Compliance statement
1 This statement has been prepared under accounting policies which comply
with accounting standards as defined in the Corporations Act or other standards
acceptable to ASX.
2 This statement doesgive a true and fair view of the matters disclosed.
Date: .*. 24 April 2007*....
--(Director/Company Secretary)
.Max D.J. Cozijn...............
END
END
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