LEAD AUDITOR'S INDEPENDENCE DECLARATION FOR THE HALF-YEAR ENDED
31 DECEMBER 2006
28 February 2007
Dear Shareholders
KIMBERLEY DIAMOND COMPANY MOVES FORWARD
- Capital works near completion.
- Annualised production moving from 2.2 mtpa (2006 financial year) to 8 mtpa
- Unit operating costs continue to fall.
- Strengthening US$ diamond prices.
With increased production, reducing unit costs and escalating US$ diamond
prices, the Company is poised to capitalise on its substantial mining and
exploration assets.
An enormous amount has been achieved since July 2006 with the completion of a
new 4.4 million tonne per annum processing plant at Pipe 4, an accommodation
village to house up to 440 people, 80 kilometres of roads and borefields
extending over 20 kilometres. Two separate diamond recovery buildings with six
Flow Sort x-ray machines have now been built, with a tailings storage facility
of 138 hectares.
During the six month period to 31 December 2006, the Company produced 157,000
carats worth an estimated A$30 million. 67,000 carats were held over and sold
in the buoyant New Year market achieving 6 percent better than valuation.
It is important to recognise the site gross loss for the period was less than
$1.2 million during a time of significant expansion activity.
Kimberley's Appendix 4D and Interim Financial Report for the half year ended
31 December 2006 are attached.
Kind regards
MILES KENNEDY
CHAIRMAN
Kimberley Diamond Company NL
Appendix 4D
Half year report
6 months ended 31 December 2006
Period being reported: 6 months ended 31 December 2006
Previous corresponding period: 6 months ended 31 December 2005
Results for announcement to the market
A$'000
2.1 Revenue from ordinary activities Up 33% to 19,833
2.2 (Loss) from ordinary activities after tax Up 128% to (10,404)
attributable to members
2.3 Net (loss) for the period attributable to Up 128% to (10,404)
members
2.4/2.5 It is not proposed to pay dividends for the period. No dividend was
paid or proposed in the previous corresponding period.
2.6 Refer to the attached Interim Financial Report for analysis of the
performance of the consolidated entity during the 6 month period to 31
December 2006. A `Review of Operations' is included in the Directors' Report
within the Interim Financial Report.
A$
3 Net tangible assets per Reporting period 0.45
security
Previous corresponding period 0.30
4 Refer Note 6 of the attached Interim Financial Report for details of
entities over which control has been gained during the period.
5/6 It is not proposed to pay dividends for the period. No dividend was paid
or proposed in the previous corresponding period. The consolidated entity does
not have dividend or distribution reinvestment plans.
7 The consolidated entity does not have associates or joint venture
operations.
8 The consolidated entity is not a foreign entity.
9 The financial report for the period being reported is not subject to audit
dispute or qualification. The financial report (attached) includes the
Auditors' Independent Review Report.
INTERIM FINANCIAL REPORT
FOR THE HALF-YEAR ENDED 31 DECEMBER 2006
ASX CODE: KIM
Directors' Report 1
Lead Auditor's Independence Declaration 4
Consolidated Interim Income Statement 5
Consolidated Interim Balance Sheet 6
Consolidated Interim Statement of Changes in Equity 7
Consolidated Interim Statement of Cash Flows 8
Notes to the Consolidated Interim Financial Statements 9
Directors' Declaration 12
Auditor's Independent Review Report 13
The directors present their report together with the consolidated financial
report for the half-year ended 31 December 2006 and the review report thereon.
Directors
The directors of the Company at any time during or since the end of the
half-year are:
Name Period of directorship
Executive
Mr Miles A Kennedy (Chairman) Director since September 1993
Mr Karl M Simich (Managing Director since November 1993
Director)
Non-Executive
Mr Peter D Danchin Director since July 2002
Mr Graeme J Hutton Director since April 1998
Independent Non-Executive
Mr Kevin C Somes Director since March 2004
Mr Robert J Still Director since April 2005
Review of operations
The principal activities of the consolidated entity during the period
consisted of diamond mining, processing, marketing and exploration.
PRODUCTION AND SALES
- Record half year ore processed (2.1 million tonnes) and treated (2.0 million
tonnes).
- Record half year carat production of 157,000 carats (152,000 carats for the
full year 2005/2006).
- Sale of 94,500 carats at an average of US$158/ct (60 percent of production
for the period).
- Diamond inventory build-up (to some 67,000 carats) to maximise the potential
value of goods sold by completing direct and tender sales during the
historically strong demand period during January and February each year.
Diamonds on hand at 31 December 2006 valued at $11.6 million.
- $25 million of diamond sales budgeted for the March 2007 quarter.
- Implementation of new marketing methods that involves the splitting of
run-of-mine production and targeting of selective customers, enabling
Kimberley to further maximise prices across the full range of its product.
EXPANSION PROJECTS
Completed - South Plant
- New stand-alone mining and processing operation at Ellendale Pipe 4 to treat
4.4mtpa (South Plant), located 16km south of its existing operations at Pipe
9.
- Extension of the ROM pad for improved wet season stockpile management.
In progress - East Plant Upgrade
- Upgrade to increase its capacity from 2.2mtpa (300tph) to 3.3mtpa (450tph).
- Design issues have delayed commissioning and slowed plant ramp up.
- Studies have been completed to rectify these issues and have confirmed that
the operational difficulties with the plant can be rectified by re-introducing
the scrubbers and minor re-engineering over the next couple of months.
- Delays have affected throughput and carat recovery for the six month period
ended 31 December 2006.
- New front end bin section designed to take capacity up to 600tph and to
improve wet season processing performance and avoid a re-occurrence of the
processing difficulties experienced during the heavy monsoon season of
2005/2006.
Planned for 2007
- Studies underway on plant optimisation initiatives to further increase
Ellendale 4 production to 700-800tph.
- Initial structural work in place and further studies underway to allow the
further upgrade of the East Plant to 4.4mtpa (600tph) planned for the second
half of calendar 2007.
- The objective of the final stage expansion studies is to take long term
production levels to around 10mtpa at the fully expanded Ellendale Project by
the end of 2007.
INTERNATIONAL DIAMOND MARKET
- Strong results from New Year diamond sales, with the first tender sale of
2007 achieving prices 6% above Kimberley's valuation and significantly higher
for premium fancy yellow goods.
- Independent report commissioned by Kimberley concluded that the short-term
outlook for the diamond market is positive, with retail demand increasing
steadily and a decrease in supply expected to underpin price increases in 2007
for both rough and polished goods.
- Strong long-term outlook for the diamond market over the next 5-7 years with
retail demand growth expected to outstrip supply.
- The upper end of the market, which tended to be insulated against last
year's market fluctuations, continues to perform strongly with record demand
for better quality larger and specialty diamonds. This is strategically
important for Kimberley, given that Ellendale produces a significant
proportion of the world's fancy yellow stones.
OPERATING COSTS AND ECONOMIES OF SCALE
- New 4-year mining contract awarded with a total value of $120 million to
Macmahon Holdings Limited covering operations at Ellendale 9 and Ellendale 4.
A 10% reduction in unit rates was achieved as a result of the expanded scale
of this contract.
- 15% reduction in unit operating costs from historical levels achieved with
potential for further reductions as throughput increases to design capacity.
The Ellendale Mine expansion program, begun in 2003, is delivering economies
of scale in direct and indirect cost areas.
- Acquisition of a combined 3 per cent private royalty interest at Ellendale,
for $19.2 million in Kimberley shares, and reduced government royalty rate
from 7.5% to 5%.
- The combined royalty reduction has reduced the total royalty commitment from
10.5 per cent to 5 per cent of gross sales.
WET SEASON PREPARATIONS
- In the lead-up to the wet season and in light of the expanded scale of
operations the Company has built ore stockpiles to the end of December 2006 at
a cost of $9.6 million to allow continued processing during the wet season
while mining activity ceases. In addition to these stockpiles significant
quantities of diesel fuel, critical spares and other consumables have been
purchased and stored on site to reduce the operational risk of the wet season.
CORPORATE
- 20 million shares issued at $1.00 per share to raise $20 million.
- Share Purchase Plan completed resulting in the issue of 4.0 million shares
raising $3.45 million.
- 30 million shares issued at $0.85 per share to raise $25.5 million.
- Funds have and are to be used as part of a build up of working capital to
support the Company's significantly expanded operations.
- The Company's ordinary shares were listed on the AIM market of the London
Stock Exchange on 28 July 2006.
FINANCIAL POSITION
- Current assets reflect a build up of working capital, including cash assets,
diamond inventory and wet season preparation for stockpiles and consumables.
- Current liabilities include the $11m fully drawn working capital facility
(reviewed annually, next in April 2007) and the first three $5 million
scheduled Ellendale 4 Project debt repayments due 1 April, 1 July and 1
October 2007.
- Current payables reflect the liabilities incurred during wet season
preparations for stockpiles and consumables required for the expanded
business.
Events Subsequent To Reporting Date
Equity movements - Kimberley Diamond Company NL
- On 12 February 2007 the Company announced the issue of 2,000,000 ordinary
shares to Mine Plant Construction Pty Ltd ("MPC"). The shares were issued to
MPC in full and final settlement of the Ellendale 4 construction contract,
following the successful commissioning of the Ellendale 4 diamond processing
plant.
Equity movements - Blina Diamonds NL
- Subsequent to period end, the Company's partly controlled entity, Blina
Diamonds NL ("Blina"), announced the issue of 70,000 ordinary shares from the
exercise of unlisted options at an exercise price of $0.40 expiring on 31
January 2008.
- Subsequent to period end, Blina announced the issue of 50,000 ordinary
shares from the exercise of unlisted options at an exercise price of $0.40
expiring on 30 April 2007.
lead auditor's independence declaration under section 307c of the corporations
act 2001
The lead auditor's independence declaration is set out on page 4 and forms
part of the director's report for the half-year ended 31 December 2006.
Rounding Off
The consolidated entity is of a kind referred to in ASIC Class Order 98/100
dated 10 July 1998 and in accordance with that Class Order, amounts in the
financial report and directors' report have been rounded off to the nearest
thousand dollars, unless otherwise stated.
Dated at West Perth this 28th day of February 2007.
Signed in accordance with a resolution of the directors:
MILES KENNEDY KARL M SIMICH
CHAIRMAN MANAGING DIRECTOR
PLEASE NOTE THE LEAD AUDITOR'S INDEPENDENCE DECLARATION CAN BE VIEWED ON THE
COMPANY'S WEBSITE (www.kimberleydiamondco.com.au - Half-yearly Reports).
CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 31 DECEMBER 2006
31 Dec 2006 31 Dec 2005
$'000 $'000
Revenue from sale of product 19,833 14,895
Cost of product sold
Site costs (34,781) (18,989)
Marketing (505) (333)
Royalties (553) (1,549)
Restoration and environmental (259) (190)
Inventory movement 15,078 6,876
Total cost of product sold (21,020) (14,185)
Gross profit/(loss) (1,187) 710
Fair value movement on hedges 1,858 47
Administrative expenses (3,024) (1,791)
Share option issue expenses (976) (160)
Other expenses - (111)
Earnings/(Loss) before interest,
taxes, depreciation and amortisation (3,329) (1,305)
(EBITDA)
Depreciation and amortisation (5,884) (2,654)
Loss before net financing and tax (9,213) (3,959)
Financial income 393 107
Financial expenses (1,891) (531)
Net financing costs (1,498) (424)
Loss before tax (10,711) (4,383)
Income tax (expense)/benefit - -
Net loss for the period (10,711) (4,383)
Attributable to:
Equity holders of the parent (10,404) (4,570)
Minority interests (307) 187
Net loss for the period (10,711) (4,383)
Basic loss per share attributable ($0.029) ($0.017)
to ordinary equity holders
The consolidated entity is in a loss making position and it is
unlikely that the conversion to, calling of, or subscription for, ordinary
share capital in respect of potential ordinary shares would lead to a diluted
earnings per share that shows an inferior view of the earnings per share. For
this reason, the diluted loss per share has not been disclosed.
The consolidated interim income statement is to be read in conjunction with
the accompanying notes.
CONSOLIDATED INTERIM BALANCE SHEET AS AT 31 DECEMBER 2006
31 Dec 2006 30 June 2006
Note
$'000 $'000
Current Assets
Cash and cash equivalents 8 17,353 25,538
Trade and other receivables 4,579 2,392
Inventories 26,109 8,416
Total Current Assets 48,041 36,346
Non-Current Assets
Other receivables 550 331
Investments 1,076 1,287
Property, plant and equipment 9 180,346 132,088
Exploration and evaluation assets 30,921 22,993
Total Non Current Assets 212,893 156,699
Total Assets 260,934 193,045
Current Liabilities
Trade and other payables 24,241 19,725
Interest bearing liabilities 25,725 11,719
Provisions 894 854
Total Current Liabilities 50,860 32,298
Non-Current Liabilities
Interest bearing liabilities 19,465 29,342
Deferred tax liability 186 186
Provisions 7,475 6,104
Total Non-Current Liabilities 27,126 35,632
Total Liabilities 77,986 67,930
Net Assets 182,948 125,115
Equity
Issued capital 259,604 192,494
Reserves 4,902 3,531
Accumulated losses (93,245) (82,841)
Total equity attributable to equity 171,261 113,184
holders of the parent
Minority interest 11,687 11,931
Total Equity 182,948 125,115
The consolidated interim balance sheet is to be read in conjunction with the
accompanying notes.
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS
ENDED 31 DECEMBER 2006
Minority Total
Attributable to equity holders of the parent interest equity
Share-based Foreign
Payments Currency Option
Issued Accumulated Reserve Translation Fair Hedging Premium
Capital Losses $'000 Reserve Value Reserve Reserve Total
$'000 $'000 $'000 Reserve $'000 $'000 $'000 $'000 $'000
$'000
FOR THE SIX MONTHS
ENDED 31 DECEMBER 2006
Opening balance 192,494 (82,841) 3,966 20 100 (555) - 113,184 11,931 125,115
at 1 July 2006
Net gain/(loss) - (260) - -
on available-for-
sale financial assets - - - (260) (225) (485)
Currency translation (8) - - -
differences - - - (8) - (8)
Derecognition of - - - - - 555 - 555 - 555
hedge as effective
Loss for the period - (10,404) - - - - - (10,404) (307) (10,711)
Total recognised - (10,404) - (8) (260) 555 - (10,117) (532) (10.649)
income and expense
for the period
Issue of share capital 68,155 - - - - - - 68,155 - 68,155
Issue of shares by 315 - (20) - - - - 295 287 582
controlled entity - Blina
Share transaction (1,360) - - - - - - (1,360) - (1,360)
costs
Cost of share-based - - 1,104 - - - - 1,104 1 1,105
payments
Closing balance 259,604 (93,245) 5,050 12 (160) - - 171,261 11,687 182,948
at 31 December 2006
FOR THE SIX MONTHS
ENDED 31 DECEMBER 2005
Opening balance 131,656 (66,678) 1,990 - - 272 133 67,373 5,647 73,020
at 1 July 2005
Effective portion - - - - - (930) - (930) - (930)
of cash flow hedges
Currency translation - - - 2 - - - 2 - 2
differences
Loss for the period - (4,570) - - - - - (4,570) 187 (4,383)
Total recognised income - (4,570) - 2 - (930) 133 (5,498) 187 (5,311)
and expense for the period
Issue of share capital 12,500 - - - - - - 12,500 - 12,500
Exercise of options 10,269 - - - - - - 10,269 - 10,269
Share transaction costs (1,501) - - - - - - (1,501) - (1,501)
Cost of share-based - - 177 - - - - 177 4 181
payments
Transfer from option 103 - - - - - (103) - - -
premium reserve
Closing balance at 153,027 (71,248) 2,167 2 - (658) 30 83,320 5,838 89,158
31 December 2005
The consolidated interim statement of changes in equity is to be read in
conjunction with the accompanying notes.
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS FOR THE SIX MONTHS
ENDED 31 DECEMBER 2006
31 Dec 2006 31 Dec 2005
Note
$'000 $'000
Cash flows from operating
activities
Cash receipts from customers 19,833 15,499
Cash paid to suppliers and employees (30,691) (20,426)
Cash generated from operations (10,858) (4,927)
Interest paid - (379)
Interest received 393 107
Net cash inflow/(outflow) from (10,465) (5,199)
operating activities
Cash flows from investing activities
Payments for exploration, evaluation and (7,497) (4,118)
development expenditure
Payments for property, plant and equipment (36,336) (35,739)
Payments for deferred stripping costs (3,339) (5,905)
Net cash inflow/(outflow) from (47,172) (45,762)
investing activities
Cash flows from financing activities
Proceeds from issue of shares and options:
Kimberley Diamond Company NL 48,955 22,769
Blina Diamonds NL 297 1
Transaction costs from issue of shares and
options:
Kimberley Diamond Company NL (1,360) (1,501)
Proceeds from borrowings 4,000 32,924
Interest received from related entity 37 -
Payment for environmental bonds (170) -
Finance lease payments (108) (131)
Interest and other costs of finance paid (2,199) (420)
Net cash inflow/(outflow) from 49,452 53,642
financing activities
Net increase/(decrease) in cash and cash (8,185) 2,681
equivalents
Cash and cash equivalents at the 25,538 8,044
beginning of the period
Cash and cash equivalents at the 8 17,353 10,725
end of the period
The consolidated interim statement of cash flows is to be read in conjunction
with the accompanying notes.
CONDENSED NOTES TO THE CONSOLIDATED INTERIM STATEMENTS FOR THE HALF-YEAR
ENDED 31 DECEMBER 2006
1. REPORTING ENTITY
Kimberley Diamond Company NL (the "Company") is a Company domiciled in
Australia. The consolidated interim financial report of the Company as at the
end of the six months ended 31 December 2006 comprises the Company and its
subsidiaries (together referred to as the "consolidated entity").
The consolidated annual financial report of the consolidated entity as at and
for the year end 30 June 2006 is available upon request from the Company's
registered office at 12 Walker Avenue, West Perth 6005 or at
www.kimberleydiamondco.com.au.
2. STATEMENT OF COMPLIANCE
The consolidated interim financial report is a general purpose financial
report which has been prepared in accordance with AASB 134: Interim Financial
Reporting, [IAS34: Interim Financial Reporting] and the Corporations Act 2001.
The consolidated interim financial report does not include all of the
information required for a full annual financial report, and should be read in
conjunction with the consolidated annual financial report of the consolidated
entity as at and for the year ended 30 June 2006. The consolidated interim
financial report was approved by the Board of Directors on 28 February 2006.
The consolidated entity is of a kind referred to in ASIC Class Order 98/100
dated 10 July 1998 and in accordance with that Class Order, amounts in the
financial report have been rounded off to the nearest thousand dollars, unless
otherwise stated.
3. FINANCIAL POSITION
The consolidated loss attributable to equity holders of the parent entity for
the half year ended 31 December 2006 was $10,404,000, which included non-cash
depreciation and amortisation charges of $5,584,000 and expensing the fair
value of share option issues of $976,000. The consolidated entity has recorded
an EBITDA loss of $3,329,000 for the reporting period. The net cash outflow
from operating activities of $10,465,000 resulted from the incurring of
operating losses as well as the restriction on cash receipts with the
deliberate build up of diamond inventory at the end of the period.
Operating performance during the period was impacted by plant upgrades and the
effects of capital programs. Improved performance is expected from the
expanded operations through reduced unit costs resulting from economies of
scale as well as a strong outlook for international diamond prices.
At 31 December 2006 the consolidated entity had a net working capital deficit
of $2,819,000. The consolidated entity has $15,000,000 of current interest
bearing debt as at 31 December 2006 representing the first three $5,000,000
scheduled Ellendale 4 Project debt repayments due 1 April, 1 July and 1
October 2007. Positive cash flows are expected from the newly expanded
operation to fund this and subsequent scheduled facility repayments. A further
$11,000,000 is included in current interest bearing liabilities as drawn from
the working capital facility. This facility is subject to annual review (next
in April 2007) and is therefore disclosed as a current liability. The
directors expect this facility to be renewed. Accordingly, the directors
believe that the going concern basis of preparation for this interim financial
report is appropriate.
4. SIGNIFICANT ACCOUNTING POLICIES
The Accounting policies applied by the consolidated entity in this
consolidated interim financial report are the same as those applied by the
consolidated entity in its consolidated financial report as at and for the
year ended 30 June 2006.
5. ESTIMATES
The preparation of the interim financial report requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing this consolidated interim financial report, the significant
judgements made by management in applying the consolidated entity's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial report as at and for the year ended
30 June 2006.
6. SEGMENT REPORTING
The consolidated entity operates in Western Australia, in the diamond mining
and exploration industry.
7. CONTROLLED ENTITIES
Country of Interest
Note Incorporation
Dec 2006 June 2006
Parent entity:
Kimberley Diamond Company NL Australia
Controlled entities:
Blina Diamonds NL (i) Australia 50.69% 51.05%
Kimberley Diamonds Australia BVBA Belgium 100% 100%
Kimberley Mining Services Pty Ltd Australia 70% 70%
Kimphil Pty Ltd Australia 100% 100%
Kimroy Pty Ltd (ii) Australia 100% -
Royell Pty Ltd (ii) Australia 100% -
(i) During the financial period the Company's ownership interest in the
ordinary shares of Blina Diamonds NL ("Blina") were diluted. Details of the
dilution were as follows:
- The Company's ownership interest of Blina reduced by 0.14% as a result of
the issue of 500,000 Blina ordinary fully paid shares, at fair value of
$285,000 in accordance with the terms and conditions of a Heads of Agreement
between Resource and Investment NL and Caldera Resources Inc with regard to
Ellendale East and South tenements.
- The Company's ownership interest of Blina fell a further 0.21% as a result
of the issue of 700,000 Blina ordinary fully paid shares from the exercise of
700,000 unlisted options at an exercise price of $0.40 per share, expiring 30
April 2007.
- The Company's ownership interest of Blina reduced a further 0.01% as a
result of the issue of 42,500 Blina ordinary fully paid shares from the
exercise of 42,500 unlisted options at an exercise price of $0.40 per share,
expiring 31 January 2008.
(ii) At the general meeting held on 25 September 2006, the Company's
shareholders approved the acquisition of a combined 3 per cent private royalty
interest at Ellendale via the purchase of the entire issued capital of Kimroy
Pty Ltd ("Kimroy"), formerly a controlled entity of Faustus Nominees Pty Ltd
("Faustus"), and Royell Pty Ltd ("Royell"), formerly a controlled entity of
Weybridge Pty Ltd ("Weybridge"), for total consideration of $19,200,000. The
consideration payable was satisfied via the issue of 20,072,071 fully paid
ordinary shares in the Company on 6 October 2006, 10,036,035 to Faustus and
10,036,036 to Weybridge. The issue represented a payment of $9,600,000 to
Kimroy and $9,600,000 to Royell. The acquisition had the following effect on
the consolidated entity's assets and liabilities.
Recognised Fair value Pre-acquisition
values on adjustments carrying
acquisition amounts
Property, plant and equipment 16,920,000 16,920,000 -
Exploration and evaluation 2,280,000 2,280,000 -
assets
Net identifiable assets and 19,200,000 19,200,000 -
liabilities
Consideration paid, satisfied 19,200,000
via issue of shares
Neither entity would have contributed revenue of profits to the consolidated
entity if the acquisition had acquired on 1 July 2006.
8. CASH AND CASH EQUIVALENTS
31 Dec 2006 30 Jun 2006
$'000 $'000
Cash at bank 12,935 14,314
Bank short term deposits 1,500 6,000
Restricted cash account (i) 2,918 5,224
17,353 25,538
(i) These funds relate to a debt service reserve account, use of which is
restricted by the Company's project financiers.
9. PROPERTY, PLANT AND EQUIPMENT
During the period ended 31 December 2006, the consolidated entity acquired and
constructed property, plant and equipment with a cost of $48,258,000,
including the acquisition of $17,973,000 in relation to Stage 1 of the
Company's Ellendale 9 East Expansion Project and the acquisition of
$16,920,000 in mine properties in relation to the private vendor royalty
buyout. For further details relating to the acquisition of the private vendor
royalty, refer to notes 7 and 10.
10. RELATED PARTIES
Key management personnel transactions with the Company or its controlled
entities
A number of key management persons, or their related parties, hold positions
in other entities that result in them having control or significant influence
over the financial or operating policies of those entities. A number of these
entities transacted with the Company or its subsidiaries in the reporting
period. The terms and conditions of these transactions with management persons
and their related parties were no more favourable than those available, or
which might be reasonably expected to be available, on similar transactions to
non-director related entities on an arm's length basis.
Details of significant transactions during the period are as follows:
(i) At the general meeting held on 25 September 2006, the shareholders of the
Company approved the acquisition of a combined 3 per cent private royalty
interest at Ellendale, via the purchase of the entire issued capital of Kimroy
Pty Ltd ("Kimroy"), formerly a controlled entity of Faustus Nominees Pty Ltd,
and Royell Pty Ltd ("Royell"), formerly a controlled entity of Weybridge Pty
Ltd, for total consideration of $19,200,000. The consideration payable was
satisfied via the issue of 20,072,071 fully paid ordinary shares in the
Company on 6 October 2006, 10,036,035 to Faustus and 10,036,036 to Weybridge.
The issue represented a payment of $9,600,000 to Kimroy and $9,600,000 to
Royell. Mr G J Hutton is a director of Faustus and is a director of the
Company.
(ii) During January and February 2006, the Company's controlled entity, Blina
Diamonds NL ("Blina"), lent and advanced a total of $1,000,000 under agreement
with Resource and Investment NL ("RNI"), a company of which Messrs MA Kennedy
and PD Danchin are directors. Under the terms of the agreement Blina held the
right, at its sole discretion, to receive ordinary shares in RNI in
satisfaction of the loaned funds. During April 2006, $726,000 of the loan
balance was repaid to Blina through the issue of 24,185,573 ordinary shares in
RNI at $0.03 each. At 30 June 2006, a further $307,000 was repayable by RNI to
Blina, represented by $274,000 in remaining principal and $33,000 in interest.
During the current period, and in accordance with a resolution of RNI
shareholders, Blina received an additional 8,427,984 ordinary shares at
$0.03256 each in RNI in full satisfaction of the remaining principal and
$37,000 in cash, representing interest payments.
Other arrangements with related parties continue to be in place. For details
on these arrangements, refer to 30 June 2006 annual financial report.
11. SUBSEQUENT EVENTS
Equity movements - Kimberley Diamond Company NL
- On 12 February 2007 the Company announced the issue of 2,000,000 ordinary
shares to Mine Plant Construction Pty Ltd ("MPC"). The shares were issued to
MPC in full and final settlement of the Ellendale 4 construction contract,
following the successful commissioning of the Ellendale 4 diamond processing
plant.
Equity movements - Blina Diamonds NL
- Subsequent to period end, the Company's partly controlled entity, Blina
Diamonds NL ("Blina"), announced the issue of 70,000 ordinary shares from the
exercise of unlisted options at an exercise price of $0.40 expiring on 31
January 2008.
- Subsequent to period end, Blina announced the issue of 50,000 ordinary
shares from the exercise of unlisted options at an exercise price of $0.40
expiring on 30 April 2007.
DIRECTOR'S DECLARATION FOR THE HALF-YEAR
ENDED 31 DECEMBER 2006
In the opinion of the directors of Kimberley Diamond Company NL ("the
Company"):
1. the financial statements and notes set out on pages 5 to 11, are in
accordance with the Corporations Act 2001 including:
(a) giving a true and fair view of the financial position of the consolidated
entity as at 31 December 2006 and of its performance, as represented by the
results of its operations and cash flows for the half-year ended on that date;
and
(b) complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001; and
2. there are reasonable grounds to believe that the Company will be able to
pay its debts as and when they become due and payable.
Dated at West Perth this 28th day of February 2007.
Signed in accordance with a resolution of the directors:
KARL M SIMICH
MANAGING DIRECTOR
AUDITOR'S INDEPENDENT REVIEW REPORT FOR THE HALF-YEAR
ENDED 31 DECEMBER 2006
PLEASE NOTE THE AUDITORS' INDEPENDENT REVIEW REPORT CAN BE VIEWED ON THE
COMPANY'S WEBSITE (www.kimberleydiamondco.com.au - Half-yearly Reports).
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