3rd Quarter Activities Report
April 13 2007 - 3:00AM
UK Regulatory
KIMBERLEY DIAMOND COMPANY NL
Quarterly Report
For the Period Ended 31 MARCH 2007
asx code: kim
AIM CODE: KDC
1. Production Statistics
* 1,250,000 tonnes treated for the March quarter (including Ellendale 9 East
Plant commissioning period).
* 111,000 carats recovered (December quarter: 98,000 carats) at an average
grade of 8.9 carats per hundred tonnes (cpht) (December quarter: 8.4cpht).
* Record carat production for the month of March with 40,000 carats
recovered.
* Year-to-date production of 268,000 carats from processing of 3,282,000
treated tonnes at an average grade of 8.2cpht.
* 18.5 carat yellow diamond recovered from Ellendale Pipe 4 and record grade
of 11.5cpht achieved for the month of March, providing indications of a
"nugget effect" in production from this pipe. The 18.5 carat stone is the
largest diamond ever recorded anywhere in the Ellendale Field, eclipsing a
14 carat diamond which sold previously for over A$400,000. Such large
diamonds were never envisaged in feasibility studies.
* Significant increase in average diamond weights recovered at Ellendale Pipe
4, from an average drill indicated weight of 0.14-0.16 carats per stone to
a recent average of 0.21 carats per stone. The average stone size for the
month of March was 0.23 carats per stone, continuing this upward trend,
with the higher than expected grade of 11.5cpht accompanied by larger stone
sizes.
* Continued reduction in unit operating costs during the quarter with
increasing plant throughput. Unit operating costs are running at around
$13-14/tonne with a medium term target of approximately $11/tonne once the
current expansion projects achieve steady state production.
2. South Plant at Ellendale 4
* A program of minor enhancements was completed at the newly commissioned
4.4mtpa Ellendale 4 South Plant which has improved plant throughput.
* Studies are nearing completion on plant optimisation initiatives to further
increase Ellendale 4 production to 700-800tph (5-6mtpa). Work on these
initiatives is expected to begin once the Ellendale 9 East Plant reaches
steady state throughput.
3. Ellendale 9 East Plant Expansion
* Kimberley took full control of the final stages of the Ellendale 9 East
Plant commissioning to rectify delays experienced in completing the ramp-up
to 450tph.
* The ramp up to 450tph on this plant continues with the Ellendale 9 East
Plant currently running at 370tph.
* 600tph front end to the Ellendale 9 East Plant commissioned at the end of
the Quarter with an immediate positive impact on plant throughput,
especially in treating wet ore due to the use of a vibrating grizzly and
apron feeder.
* Formwork has been completed for the scrubbers with concrete to be poured as
soon as weather permits access by concrete trucks via the Gibb River Road,
to enable the re-installation of the scrubbing circuit to alleviate
bottlenecks in the crushing and screening circuits. Once again, wet weather
conditions caused by recent cyclones have adversely affected construction,
but not operations. The Gibb River Road, which is the only access road to
Mine Site, has been closed to vehicles weighing over three tonnes since the
beginning of February 2007 which has delayed the arrival of the concrete
trucks. The cost of this delay to the Company in terms of reduced revenue,
arising from the failure of the Ellendale 9 East Plant to run at design
capacity of 450tph, is estimated at an additional $3 million per month and
will continue until the rectification program is completed, hopefully by
the end of May 2007. The Company is examining a number of options to cover
these losses.
On a more positive note, throughput production has averaged over 18,000 tonnes
a day for the past seven days in April, with operating cash flow remaining
positive since the beginning of March 2007.
* Successful re-installation of the scrubbing circuit is expected to enable
the ramp-up to 450tph to be completed relatively rapidly, with the
Ellendale 9 East Plant expected to be running at full design capacity
during June.
4. Marketing
* Diamond sales of 158,600 carats at an average realised price of US$127/
carat (A$166/carat) completed for the March quarter, realising revenue of
A$26.4 million (exceeding the target of A$25.0 million for the quarter).
* Year-to-date sales of 253,200 carats at US$139/carat (A$182/carat),
realising revenue of A$46.2 million.
* Strong value result from all four direct sales and two tenders in the March
quarter, highlighting the positive upward trend in the global diamond
market and the benefit of the Company's deferred sales and marketing
strategy designed to take advantage of firmer New Year conditions in the
global diamond market.
* The most recent tender sale averaged 12% above Kimberley's book valuation,
with the March quarter reaching prices equal to the all-time record prices
of 2005.
* Particularly strong prices achieved for Kimberley's high quality Kimberley
Yellow stones, reflecting the strength of the premium sector of the
international diamond market.
* March quarter sales included a product mix abnormally weighted towards the
lower value Ellendale 4 diamonds due to the East Plant upgrade shutdown and
extended commissioning in late 2006 and early 2007.
5. Blina Diamonds NL (40% owned) (Blina)
* Blina announced during the quarter:
* recent operations on the Western Channel at Ellendale 9 North have so far
resulted in the recovery of 12,060 diamonds weighing over 4,500 carats, at
an average grade of 15.90 cpht;
* a grade of 22.11 cpht at an average diamond size of 0.44 carats has been
recorded from the E9N-EB-002 mining block;
* the diamonds recovered include an exceptional 8.15 carat, intense
fancy-yellow gemstone valued at US$58,000. This is the most valuable
diamond so far produced by Blina.
* $9.94 million profit realised from the sale of 20 million ordinary fully
paid shares in Blina Diamonds for $10.8 million ($0.54 per share) to a
European-based fund, reducing Kimberley's shareholding from 51% to 40%. The
funds realised were used to reduce bank project debt as outlined below.
* Kimberley remains a major shareholder of Blina Diamonds and will continue
to fully support Blina as it works towards developing its diamond
exploration and mining programmes.
6. Corporate
* Reduction of net bank project debt by $15.8 million to $27.2 million
through the sale of shares in Blina Diamonds and the scheduled facility
repayment for $5 million completed in March 2007 together with all interest
due thereon. Further debt reductions are scheduled by July 2007 which will
reduce total net bank debt to $22 million in that time.
7. Operating Update
Production Statistics - Quarter
Plant Performance Ellendale 9 Ellendale Total
4
East Plant West South
(Ramp-up) Plant Plant
Ore processed (tonnes)
March Quarter - ore processed 314,000 125,000 844,000 1,283,000
- ore treated 313,000 94,000 843,000 1,250,000
Carats recovered 17,000 6,000 88,000 111,000
Treated grade (cpht) 5.4 6.5 10.4 8.9
Production Statistics - Year to Date
Plant Performance Ellendale 9 Ellendale Total
4
East West South
Plant Plant Plant
Ore processed (tonnes)
Year to Date - ore processed 1,138,000 404,000 1,850,000 3,392,000
- ore treated 1,124,000 312,000 1,846,000 3,282,000
Carats recovered 60,000 23,000 185,000 268,000
Treated grade (cpht) 5.3 7.4 10.0 8.2
8. Mining Tenements
Schedule of Mining Tenements - 31 March 2007
Tenement Area Date of Kimberley
(km2) Grant Interest
Ellendale Mining Lease M04/372 123.9 23/11/99 100%
1L04/26 1.6 01/12/04 100%
1L04/48 2.3 18/02/05 100%
Blina Project 2ELA/1098 176.1 Application 100%
1Miscellaneous Licences covering Roberts Road access to the Mining Lease.
2Application (purchased by Blina Diamonds NL) will be transferred 12 months
after grant.
MILES KENNEDY
CHAIRMAN
13 April 2007
The geological information in this report that relates to exploration results
is based on information compiled by the Company's Chief Geologist, David Jones
of Ascidian Prospecting Pty Ltd, who is a corporate member of The Australasian
Institute of Mining and Metallurgy. He has sufficient experience which is
relevant to the style of mineralisation and type of deposit under consideration
and to the activity which he is undertaking to qualify as a Competent Person as
defined in the December 2004 edition of the "Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves" (JORC Code). Mr Jones
consents to the inclusion in the report of the matters based upon his
information in the form and context in which it appears.
The Australian Stock Exchange has not reviewed and does not accept
responsibility for the accuracy or adequacy of this release.
KIMBERLEY DIAMOND COMPANY NL ABN 91 061 899 634
12 WALKER AVENUE WEST PERTH 6005 WESTERN AUSTRALIA PO BOX 806 WEST PERTH
WESTERN AUSTRALIA 6872
TEL (08) 9321 5887 FAX (08) 9321 5884 EMAIL general@kimres.com.au WWW
www.kimberleydiamondco.com.au
END
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