RNS Number:6644J
KimCor Diamonds plc
29 September 2006
29 SEPTEMBER 2006
KIMCOR DIAMONDS
(AIM:KIM)
MAIDEN PRELIMINARY RESULTS
FOR THE PERIOD ENDING 31 MARCH 2006
KimCor Diamonds plc ("KimCor" or the "Company"), the diamond producing and
exploration company with properties in South Africa, is pleased to announce
maiden preliminary results for the period ending 31 March 2006.
HIGHLIGHTS
*The Company was admitted to the AIM market of The London Stock Exchange
on 6 March 2006 and raised #3.3 million through a placing of 22.3 million
ordinary shares at 15 pence each;
*The Bellsbank operation went into commercial scale production in
mid-September 2006. At the time of this report the Bellsbank plant was
already operating with diamonds being produced;
*Two properties of merit have been secured to date - namely the Riviera
and Koffiefontein Licences;
*KimCor has also acquired a 50% equity holding in Anmic - a long
established South African enterprise with a diamond manufacturing licence to
cut and polish diamonds for retail sales; and
*KimCor's strategy remains focused on the discovery and acquisition of
advanced exploration or near term production projects.
Commenting on today's results, Martyn Churchouse, CEO of KimCor, said: "In 2006,
the Company has made excellent progress and established itself as a diamond
producer. On the exploration front the Company has expanded its portfolio of
properties with excellent potential for new discoveries.
"We continue to devote our time and effort to investigating further
opportunities that we identify and have every confidence that we will continue
to add value to the Company through the acquisition of new projects that can be
brought into production quickly and at low entry costs."
Enquiries:
KimCor Diamonds plc Tel: 020 7318 5780
Martyn Churchouse
www.kimcordiamonds.com
Hanson Westhouse LLP Tel: 020 7601 6100
Bill Staple
Martin Davison
Bishopsgate Communications Ltd Tel: 020 7430 1600
Nick Rome
Fran Read
CHAIRMAN'S STATEMENT
It is with great pleasure that we report to our shareholders in this, KimCor
Diamonds plc's first annual report. KimCor has made considerable progress during
the period and has established itself as a London AIM listed specialist
business, focussed on diamond production and exploration primarily in South
Africa.
The Company was incorporated in March 2005 to acquire and exploit
diamond-bearing exploration and mining assets and tailings dumps principally in
South Africa. The Company acquired certain diamondiferous tailings dumps
generated by former underground mining activities at the Bellsbank mine, through
its wholly owned subsidiary, Free State Diamond Mines (Proprietary) Limited. The
Bellsbank tailings dumps are located approximately 60 kilometres north-west of
Kimberley, in the Northern Cape Province, South Africa. The Bellsbank mine has a
long history of producing high quality diamonds and it is expected that future
production from the Bellsbank tailings dumps will continue this trend.
Admission to AIM
The Company was admitted to the AIM market of The London Stock Exchange on 6
March 2006 and raised #3.3 million through a placing of 22.3 million ordinary
shares at 15 pence each. As part of the placing, 11.2 millions warrants were
issued and were admitted for trading to AIM on 16 March 2006. The funds raised
have been used to construct and commission a new diamond recovery plant at
Bellsbank, finance the Company's exploration programme, investigate potential
acquisition opportunities and provide working capital.
Mining and production
The Bellsbank operation went into commercial scale production in mid-September
2006. At the time of this report the Bellsbank plant was already operating with
diamonds being produced.
Exploration
On the exploration front, work on our exploration licences progresses steadily.
The Company continues with its strategy of encouraging its exploration team to
operate its programmes and preliminary evaluation of projects in such a manner
that a number of potential projects can be selected or discarded with a high
degree of confidence and at low cost. In this vein, the Company has decided that
the Van Zoelens project merits no further work as potential resources are too
small to warrant further expenditure.
KimCor's strategy remains focussed on the discovery and acquisition of advanced
exploration or near term production projects such as the recently announced
Koffiefontein project, over which the Company has provisionally secured rights
subject to final due diligence. The Koffiefontein project represents an advanced
stage exploration asset with a significant number of targets of merit.
Future outlook
Looking ahead to the coming year the Company will continue to develop its
strategy through identification of projects which can lead to early production
with a view to growing the Company into a substantial diamond mining and
exploration business. Through the commissioning of the Bellsbank plant, KimCor
has developed a significant in-house skills base, which will serve the Company
well for pilot testing and developing new production projects.
Finally, I would like to thank all the Company staff for their dedication and
achievement on the work programme carried out over the last year. As a result,
we can all look forward with confidence to the continuing growth of the Company
during the next twelve months.
Gordon P Riddler
Chairman
CHIEF EXECUTIVE'S REVIEW
In the six months since listing on AIM the Company has successfully completed
the construction of the Bellsbank plant and commenced diamond mining and
production in early September 2006. On the exploration front the Company has
expanded its portfolio of properties with excellent potential for new
discoveries.
In 2006, the Company has made excellent progress and established itself as a
diamond producer.
Significant emphasis has been placed on the need for KimCor to build on the
success of the Bellsbank operation by making further acquisitions aimed at
providing mid to long-term growth prospects. In this regard, two properties of
merit have been secured, namely the Riviera and Koffiefontein licences. We
continue to devote our time and effort to investigating further opportunities
that we identify and have every confidence that we will continue to add value to
the Company through the acquisition of new projects that can be brought into
production quickly and at low entry costs.
BELLSBANK MINE
Bellsbank Plant Commissioned
The Bellsbank operation is situated 60 kilometres North West of Kimberley in the
Northern Cape region of South Africa. In 2005, the Company acquired a tailing
dump resource of over 3 million tonnes derived from over 60 years of mining and
processing of underground high-grade diamondiferous fissures in the Bellsbank
area.
Following a 6 month pilot plant trial, the Company raised funds to construct a
720,000 tonne per annum diamond recovery plant with a view to commencing
production in 2006.
The Bellsbank plant was constructed and commissioned within five months of the
Company's admission to AIM, significantly under budget and ahead of schedule.
Commissioning commenced in late August, 2006, and production was steadily ramped
up beginning in early September 2006 with a view to operating at full capacity
by late October, 2006.
Bellsbank Plant
The Bellsbank plant is a standard diamond recovery plant relying on
well-established and simple technology that has been traditionally utilised in
the industry for many years. Based on the pilot plant trials together with
in-house experience in dump processing, the plant has been adapted to maximise
diamond recoveries. Improved water quality for the final recovery section of the
plant together with the introduction of a 9 meter long mill for scrubbing and
communition of tailing feedstock has been proven to increase diamond recovery.
The plant is operated according to best industry practice and its operation is
both approved by the Inspector of Mines and routinely monitored by an
independent health and safety consultant appointed by the Company.
RIVIERA PROJECT
The Company signed a two year option agreement in May 2006 over two farms
covering an area of approximately 5,300 hectares located within the Barkly West
district of the Northern Cape, 13km from the Bellsbank operation.
The option allows for the exploration and evaluation of kimberlite pipes and
fissures. The Riviera project is situated south west of the Bellsbank and
Messina mines in a prospective locality where sub-parallel fissures to the
Bellsbank group are evident. It has been well documented that the Bellsbank
group of fissures have sustained mining operations over a 60 year period based
on in-situ diamond grades of between 25 and 70cpht.
The Riviera project falls within an area of high provenance for diamonds, as
evidenced by the number of nearby mines that include Messina - Dan Carl, Loxton,
Frank Smith, Sover, Newlands and the former Bellsbank underground mine.
Riviera Targets
Historical prospecting on Riviera has located the presence of kimberlite
fissures. The Company more recently completed the interpretation of an airborne
magnetic survey that indicates a number of additional magnetic targets that may
be indicative of kimberlite. These are currently being investigated in the field
by means of detailed sampling programmes. Depending on the mineral indicator
counts for each target, percussion drilling and trenching is scheduled to
commence later in the year. Drill chips will be sampled and screened to
establish the presence of positive indicator minerals after which the targets
will be trenched for bulk sampling. As the properties are only 13km from
KimCor's Bellsbank operations, the Company will utilise its pilot plant
facilities at the nearby Bellsbank site, to enable the rapid and efficient
testing of bulk samples from Riviera.
KOFFIEFONTEIN PROJECT
In August 2006, subject to final due diligence, the Company agreed to acquire
the rights to three adjoining exploration licences collectively known as the
Koffiefontein Project situated in the Northern Cape of South Africa, 50
kilometres south of Kimberley and approximately 16 km to the north of the
historical Koffiefontein mine. The Koffiefontein mine, owned by DeBeers and
opened in 1870, produced 7.3 million carats from an 11 Ha pipe.
The project comprises three separate prospecting licences ("Licence Area")
covering 18 farms that coincide with surface owner agreements. Exploration is at
an advanced stage and the whole Licence Area has been flown with magnetics and
radiometrics by Geoscience of South Africa resulting in a number of targets
characteristic of kimberlite pipes and fissures being located.
KimCor considers this acquisition to be a major coup for the Group as it offers
the scope for the discovery and development of a number of diamondiferous
kimberlites and their subsequent development subject to on-going exploration and
evaluation.
Terms of Acquisition
A memorandum of understanding ("MOU") was signed on 24 August 2006 between Free
State, KimCor's wholly owned subsidiary and CFM Diamonds CC ("CFM").
The MOU facilitates a sale of assets agreement between the parties. CFM is a
holding company which also owns the prospecting licences coinciding with the
surface owner agreement.
VAN ZOELENS PROJECT
Following the completion of a regional airborne geophysical survey, KimCor has
elected to withdraw its right to acquire the licence and purchase the farm. The
survey confirmed the presence of the K1 kimberlite pipe but indicated that the
pipe was restricted at depth resulting in a very modest resource volume.
ANMIC (PTY) LIMITED
KimCor has acquired a 50% equity holding in Anmic (Pty) Ltd ("Anmic"), a long
established South African enterprise with a diamond manufacturing licence to cut
and polish diamonds for retail sales. KimCor retains an exclusive option to
acquire the outstanding 50% of the issued equity in Anmic during the next 12
months, based upon an independent valuation of the business.
Anmic was originally established as a Closed Corporation in 1990, and has since
been prominent in the South African diamond cutting and polishing business,
operating for third parties on a commission basis and by purchasing uncut stones
on the open market for beneficiation purposes.
Typically, the cutting and polishing of diamonds adds significant value on a per
carat basis.
Anmic has well established business relationships with selected diamond dealers
in both the United States and Europe for polished diamonds bigger in size than
0.8Cts, and also in Cape Town, South Africa, for polished diamonds smaller in
size than 0.8Cts.
Anmic provides KimCor with the means to develop an integrated business model
that will ultimately benefit shareholders through the value added from
beneficiation initially from Bellsbank diamond production as well as any future
operations.
RESULTS FROM OPERATIONS
The results of the Group represent its first period of operation, which largely
related to the acquisition and commissioning of the Bellsbank operation and the
admission of the Company's shares to AIM.
Martyn Churchouse
Chief Executive Officer
Consolidated income statement for the period ended 31 March 2006
Period ended
31 March
2006
#
Revenue 33,080
Other operating income 260,883
Administrative expenses (961,725)
--------
Loss from operations (667,762)
Finance expense (1,181)
Finance income 4,003
--------
Loss for the period before taxation (664,940)
Tax (13,682)
--------
Loss for the period after taxation (678,622)
--------
Basic and diluted loss per share (2.07)p
--------
All amounts relate to continuing activities.
Consolidated Balance sheet as at 31 March 2006
31 March
2006
#
ASSETS
Non - current assets
Property, plant and equipment 240,663
Mining properties 2,033,837
Other non-current receivables 9,355
--------
2,283,855
--------
Current assets
Other receivables 121,897
Cash and cash equivalents 2,533,137
--------
2,655,034
--------
Total assets 4,938,889
--------
LIABILITIES
Current liabilities
Trade and other payables 237,399
Current tax payable 13,682
Accruals 88,779
--------
339,860
--------
Non-Current liabilities
Deferred tax liability 448,746
--------
448,746
--------
Total liabilities 788,606
Consolidated Balance sheet as at 31 March 2006 (continued)
Equity attributable to equity holders of the parent
Share capital issued 317,400
Share premium reserve 3,411,416
Foreign exchange reserve 43,028
Warrant reserve 111,600
Merger reserve 935,000
Retained earnings (668,161)
--------
4,150,283
--------
Total equity and liabilities 4,938,889
--------
Consolidated Statement of Changes in Equity for the period ended 31 March 2006
------- ------- ------- ------- -------- ------- -------
Share Share Warrant Merger Retained Foreign Total
capital premium reserve reserve earnings exchange
reserve
------- ------- ------- ------- -------- ------- -------
# # # # # # #
Opening - - - - - - -
balance
Issue of
share
capital 317,400 3,755,100 - 935,000 - - 5,007,500
Issue of
warrants - - 111,600 - - - 111,600
Issue costs - (343,684) - - - - (343,684)
Foreign
exchange on
translation
of
foreign
operation - - - - - 43,028 43,028
Net loss
for
the period - - - - (678,622) - (678,622)
Equity
settled
share-based
payments - - - - 10,461 - 10,461
------- ------- ------- ------- -------- ------- -------
Balance as
of 317,400 3,411,416 111,600 935,000 (668,161) 43,028 4,150,283
31 March
2006
======= ======= ======= ======= ======== ======= =======
Consolidated Cash flow statement for the period ended 31 March 2006
Period from
incorporation
to 31 March 2006
#
CASH FLOW FROM OPERATING ACTIVITIES
Loss from operating activities (667,762)
Adjustments for:
Depreciation 276
Income resulting from the loan waiver (260,069)
Equity settled share-based payment expense 10,461
Foreign exchange difference 6,963
Net cash flow from operating activities before
changes in working capital (910,131)
Increase in payables 326,178
Increase in receivables (111,487)
Net cash flow from operating activities (695,440)
INVESTING ACTIVITIES
Purchase of property, plant and equipment (166,666)
Loan issued to subsidiary before acquisition (400,000)
Interest received 4,003
Cash held in subsidiary at the date of acquisition 37,005
Net cash flow from investing activities (525,658)
FINANCING ACTIVITIES
Proceeds from issue of ordinary shares 3,987,500
Proceeds from issue of warrants 111,600
Issue costs (343,684)
Proceeds from loans raised 60,000
Re-payment of loan (60,000)
Interest paid (1,181)
Net cash flow from investing activities 3,754,235
--------
NET INCREASE IN CASH AND CASH EQUIVALENTS AND AT END
OF PERIOD 2,533,137
--------
NOTES:
1. The financial information for the year ended 31 March 2006 is audited and was
approved by the Board of Directors on 26 September 2006. The audited group
financial information incorporates the audited financial information of the
Company and all its subsidiaries for the financial year ended 31 March 2006.
2. The financial information set out above does not constitute the Group's
statutory accounts for the year ended 31 March 2006 but is derived from these
accounts. Statutory accounts for the period ended 31 March 2006 will be
delivered to the Registrar of Companies in England and Wales following the
Company's annual general meeting.
The figures included in this announcement have been prepared on the basis of the
accounting policies set out below:
Revenue recognition
Revenue and associated costs from the sale of diamonds are recognised when
effective control together with the risks and rewards of ownership are
transferred to the customer, and the amount of revenue and costs can be reliably
measured, as long as it is probable that the economic benefits associated with
the transaction will flow to the entity.
Business combinations
Business combinations are accounted for using the purchase method.
The cost of the acquisition is measured at the aggregate of the fair values at
the date of exchange, of assets given, liabilities incurred or assumed, and
equity instruments issued by the Group in exchange for control of the acquiree,
plus any costs directly attributable to the business combination. The acquiree's
identifiable assets, liabilities and contingent liabilities that meet the
conditions for recognition under IFRS 3 are recognised at their fair value at
the acquisition date.
Any excess of the cost of acquisition over the fair values of the identifiable
net assets acquired is recognised as goodwill. Any deficiency of the cost of
acquisition below the fair values of the identifiable net assets acquired (i.e.
discount on acquisition) is credited to the income statement in the period of
acquisition.
Foreign currency
Transactions entered into by individual group companies in currencies other than
the currency of the primary economic environment in which it operates (the
"functional currency") of the entity involved in the transaction are recorded at
the rates of exchange prevailing on the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are denominated in
foreign currencies are retranslated at the rates prevailing on the balance sheet
date. Non-monetary assets and liabilities carried at fair value, that are
denominated in foreign currencies are translated at the rates prevailing at the
date when the fair value was determined. Gains and losses arising on
retranslation are included in net profit or loss for the period, except for
exchange differences arising on non-monetary assets and liabilities where the
changes in fair value are recognised directly in equity.
On consolidation, the assets and liabilities of the Group's overseas operations
are translated at exchange rates prevailing on the balance sheet date. Goodwill
and fair value adjustments arising on the acquisition of a foreign entity are
treated as assets and liabilities of the foreign entity and translated at the
closing rate. Income and expense items are translated at the average exchange
rates for the period unless exchange rates fluctuate significantly. Exchange
differences arising, if any, are classified as equity and transferred to the
Group's translation reserve. Exchange differences recognised in the income
statement of group entities' separate financial statements on the translation of
long-term monetary items forming part of the group's net investment in the
overseas operation concerned are reclassified to the foreign exchange reserve.
On disposal of a foreign operation, the cumulative exchange differences
recognised in the foreign exchange reserve relating to that operation up to the
date of disposal are transferred to the income statement as part of the profit
or loss.
Property, plant and equipment
Items of property, plant and equipment are initially recognised at cost. As well
as the purchase price, cost includes directly attributable costs and estimated
present value of any future costs of dismantling and removing items. The
corresponding liability is recognised within provisions.
Property, plant and equipment is stated at cost less accumulated depreciation
and any impairment losses.
Depreciation is provided on all property, plant and equipment, to write down the
cost, less residual value, by equal instalments over their estimated useful
lives as follows:
Fixtures, fittings, tools and equipment - 20% per annum
Plant, machinery and vehicles - 20% per annum
The depreciation charge for each period is recognised in the income statement,
unless it is included in the carrying amount of another asset.
Subsequent expenditure relating to an item of property, plant and equipment is
capitalised when it is probable that future economic benefits from the use of
the asset will be increased. All other subsequent expenditure is recognised as
an expense in the period in which it is incurred.
Repairs and maintenance which neither materially add to the value of assets nor
appreciably prolong their useful lives are charged against income. The gain or
loss arising from the de-recognition of an item of property, plant and equipment
is included in the income statement when the item is de-recognised.
The gain or loss arising from the de-recognition of an item of property, plant
and equipment is determined as the difference between the net disposal proceeds,
if any, and the carrying amount of the item.
The carrying values of property, plant and equipment are reviewed for impairment
when events or changes in circumstances indicate the carrying value may not be
recoverable.
Assets under construction are carried at cost less any recognised impairment.
Borrowing costs attributable to assets under construction are recognised as an
expense as incurred.
Mining properties
Mining properties are stated at cost of acquisition less accumulated
amortisation and any impairment loss.
Mining properties are amortised on a unit of production basis.
Evaluation and exploration costs
Evaluation and exploration costs incurred prior to the decision to acquire a
property are written off in the year in which they are incurred.
Impairment of tangible and intangible assets
The Group assesses at each reporting date whether there is an indication that an
asset may be impaired. If any such indication exists, or when annual impairment
testing for an asset is required, the Group makes an estimate of the asset's
recoverable amount. An asset's recoverable amount is the higher of an asset's or
cash generating unit's fair value less costs to sell and its value in use and is
determined for an individual asset, unless the asset does not generate cash
inflows that are largely independent of those from other assets or groups of
assets. Where the carrying amount of an asset exceeds its recoverable amount,
the asset is considered impaired and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to
their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset.
Impairment losses of continuing operations are recognised in the income
statement in those expense categories consistent with the function of the
impaired asset.
An assessment is made at each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such indication exists, the recoverable amount is
estimated. A previously recognised impairment loss is reversed only if there has
been a change in the estimates used to determine the asset's recoverable amount
since the last impairment loss was recognised. If that is the case the carrying
amount of the asset is increased to its recoverable amount. That increased
amount cannot exceed the carrying amount that would have been determined, net of
depreciation, had no impairment loss been recognised for the asset in prior
years. Such reversal is recognised in profit or loss unless the asset is carried
at revalued amount, in which case the reversal is treated as a revaluation
increase. After such a reversal the depreciation charge is adjusted in future
periods to allocate the asset's revised carrying amount, less any residual
value, on a systematic basis over its remaining useful life.
Financial Instruments
Derivative financial instruments
The company does not use derivative financial instruments.
Non-derivative financial instruments
Trade and other payables
Trade and other payables are not interest-bearing and are stated at cost.
Trade and other receivables
Trade receivables are recognised and carried at original invoice amount less an
allowance for any uncollectible amounts. Where the time value of money is
material, receivables are carried at amortised cost.
Loans receivable
Loans receivable are held at amortised cost using the effective interest method
where maturity is fixed. Where maturity is not fixed, such assets are held at
cost.
Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, deposits held on call with
banks, and investments in money market instruments, net of bank overdrafts, all
of which are available for use by the company unless otherwise stated. Cash and
cash equivalents are measured at fair value, based on the relevant exchange
rates at balance sheet date.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds received,
net of direct issue costs.
Income taxes
Tax on the profit or loss for the period comprises current and deferred tax. Tax
is recognised in the income statement except to the extent that it relates to
items recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts
of assets and liabilities for financial reporting purposes and the amounts used
for taxation purposes. The following temporary differences are not provided for:
the initial recognition of assets or liabilities that affect neither accounting
nor taxable profit other than in a business combination, and differences
relating to investments in subsidiaries to the extent that they will probably
not reverse in the foreseeable future. The amount of deferred tax provided is
based on the expected manner of realisation or settlement of the carrying amount
of assets and liabilities, using tax rates enacted or substantively enacted at
the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilised.
Inventories
Inventories, which include rough diamonds, are stated at the lower of
cost-of-production or estimated net realisable value. Cost price includes direct
labour, other direct costs and related production overheads. Net realisable
value is the estimated selling price in the ordinary course of business, less
marketing costs.
Share-based payments
The Group utilises share options and warrants. The exercise price is determined
by the directors and is fixed at the date of grant. Where share options are
awarded to employees (including Directors) and consultants providing similar
services, the fair value of the options at the date of grant is charged to the
income statement over the vesting period. Non-market vesting conditions are
taken into account by adjusting the number of equity instruments expected to
vest at each balance sheet date so that, ultimately, the cumulative amount
recognised over the vesting period is based on the number of options that
eventually vest.
Where the terms and conditions of options are modified before they vest, the
increase in the fair value of the options, measured immediately before and after
the modification, is also charged to the income statement over the remaining
vesting period.
Provisions and contingencies
Provisions are recognised when the company has a present legal or constructive
obligation as a result of past events, for which it is probable that an outflow
of economic benefits will occur, and where a reliable estimate can be made of
the amount of the obligation. Where the effect of discounting is material,
provisions are discounted. The discount rate used is a pre-tax rate that
reflects current market assessments of the time value of money and, where
appropriate, the risks specific to the liability. Where discounting is used, the
increase in the provision due to unwinding the discount is recognised as a
finance cost.
Provisions are not recognised for future operating losses.
Contingent assets and contingent liabilities are not recognised.
Rehabilitation provisions
An obligation to incur restoration, rehabilitation and environmental costs
arises when environmental disturbance is caused by the development or ongoing
production of a mine. The obligation to restore environmental damage caused
through operations is raised as the relevant operations take place. The
estimated cost of environmental rehabilitation is based on current legal
requirements and existing technology. Costs for such restoration are provided
for at their net present values and charged to the income statement as
production progresses.
New standards and interpretations
During the year, the IASB and IFRIC have issued a number of new standards,
interpretations and amendments to existing standards which have an effective
date of 1 January 2006 or later. Management, do not anticipate that the adoption
of these standards and interpretations will have a material impact on the
Group's financial statements in the period of initial application. The Group has
adopted IFRS 6 'Exploration for and Evaluation of Mineral Resources' early from
the date of incorporation.
3. Basic and Diluted loss per share
Basic loss per share amounts are calculated by dividing net loss for the period,
attributable to ordinary equity holders of the parent, by the weighted average
number of ordinary shares outstanding during the period.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
Net loss attributable to equity holders of the parent # 678,622
No diluted loss per share has been calculated as the Group has incurred a loss
for the period.
Basic weighted average number of shares (excluding treasury shares) was
32,736,320.
4. Post balance sheet events
Koffiefontein
A memorandum of understanding ("MOU") was signed on 24 August 2006 between Free
State Diamond Mines (Proprietary) Limited ("Free State"), KimCor's wholly owned
subsidiary, CFM Diamonds CC ("CFM") and Mr. Louis Reyneke.
The MOU facilitates a Sale of Assets agreement between the parties. CFM is a
holding company owned by Mr. Reyneke which also owns the prospecting licences
coinciding with the surface owner agreement.
A new company ("Newco") will be formed to hold the assets. Free State will own
69 per cent of the issued share capital of Newco while a Black Economic
Empowerment Partner ("BEE Partner") and Mr. Reyneke will hold 26 per cent and 5
per cent respectively.
The purchase price payable by Free State to CFM in consideration of the asset
sale is ZAR1,400,000 (approximately #103,000) payable in two tranches.
ZAR100,000 was paid in August 2006 and a further ZAR1,300,00 will be payable to
CFM by Free State upon completion of an in depth exploration programme which
will run for a period of two years. The exploration programme will be funded
entirely by Free State.
All Department of Minerals and Energy ("DME") approvals have been granted to CFM
and will be transferred to Newco subject to Ministerial approval, and a BEE
Partner being in place.
Under the terms of the MOU, Mr. Reyneke will grant a call option over his shares
in Newco to Free State, exercisable within 30 days of Free State making
application to the DME for a mining licence. The value attributable to his
shares will be determined by independent experts.
Exercise of warrants
On 18 April 2006 the Company has issued and allotted 833,333 ordinary shares of
0.5p each, at a price of 18.75p per share, pursuant to an exercise of warrants.
The shares rank pari passu with the existing ordinary shares of 0.5p each and
trading of these shares commenced on AIM on Monday 24 April 2006. The total
number of ordinary shares in issue following this exercise of warrants was
64,313,333
Riviera Project
In May 2006 the Company signed a two year option agreement (the "Option") over
two farms covering an area of approximately 5,300 hectares located within the
Barkly West district of the Northern Cape, 13km from the Bellsbank operation.
The Option allows for the exploration and evaluation of kimberlite pipes and
fissures. The Riviera project is situated south west of the Bellsbank and
Messina mines in a prospective locality where subparallel fissures to the
Bellsbank group are evident. It has been well documented that the Bellsbank
group of fissures have sustained mining operations over a 60 year period based
on in-situ diamond grades of between 25 and 70cpht.
The Riviera project falls within an area of high provenance for diamonds, as
evidenced by the number of nearby mines that include Messina - Dan Carl, Loxton,
Frank Smith, Sover, Newlands and the former Bellsbank underground mine.
ANMIC Agreements
A memorandum of agreement ("ANMIC MOA") was signed on 21 July 2006 between Free
State, ANMIC Diamonds CC ("ANMIC") and Ms. Nora Smeenk.
At the date of signature of the ANMIC MOA the entire member's interest in ANMIC
was held by MS. Nora Smeenk. The ANMIC MOA facilitates a sale of 50% of member's
interest and loan account (if any) to Free State after a conversion of ANMIC to
a private company. The purchase consideration for the member's interest and loan
account is ZAR 50,000 in cash. In addition Metal Resources Limited will be paid
#90,000 for the provision of advisory and deal broking services relating to the
acquisition to be settled in either cash or through the issue of equity at the
market price.
At the date of conversion of ANMIC to a private company the appointed directors
shall be Mr. Martyn Churchouse and Ms. Nora Smeenk.
A memorandum of agreement ("MOA") was signed on 28 July 2006 between Free State
Diamond Mines (Proprietary) Limited ("Free State"), KimCor's wholly owned
subsidiary, ANMIC Diamonds CC ("ANMIC") and South African Gems (Proprietary)
Limited ("SAG"). The MOA facilitates the appointment of SAG as Free State's sole
purchaser of all its diamonds and an appointment of ANMIC as SAG's exclusive and
preferred provider of diamond cutting and polishing services.
Under the terms of the MOA, SAG will be submitting to ANMIC all diamonds
acquired from Free State for sorting, grading and cleaning and for having
selected stones cut and polished.
In accordance with this agreement SAG grants to ANMIC a discretionary concession
to sell or market in compliance with South African law all small rough stones
delivered to ANMIC and considered by ANMIC as being unsuitable for cutting and
polishing.
Van Zoelens Project
Following the completion of a regional airborne geophysical survey, KimCor has
elected to withdraw its right to acquire the licence and purchase the farm, Van
Zoelens. The survey confirmed the presence of the K1 kimberlite pipe but
indicated that the pipe was restricted at depth resulting in a very modest
resource volume. Diamond grades in the region are unlikely to be high enough to
accommodate the capital cost required to develop a mine of such small tonnage.
5. Copies of the published accounts of the Group will be sent to all
shareholders on 29 September 2006 and will be available free of charge for one
month from that date during normal business hours from the offices of KimCor
Diamonds plc at 18 Upper Brook Street, London, W1K 7PU.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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