Wrap Text
Interim Results (unaudited) for the six month period ended 30 June 2012
DiamondCorp plc
JSE share code: DMC
AIM share code: DCP
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
(‘DiamondCorp’ or ‘the Company’ or ‘the Group’)
Interim Results (unaudited) for the six month period ended 30 June 2012
DiamondCorp plc, a southern Africa focussed diamond mine development and
exploration company, releases its unaudited interim results for the six month
period ended 30 June 2012.
HIGHLIGHTS
• SRK Consulting (South Africa) completed an independent engineering report
on the proposed 47 level block cave development at the Lace diamond mine
and concluded that:
- the continuous trough block caving method is an appropriate mining method
for the Lace mine to achieve 1.2 million tonnes a year of kimberlite
production.
- the proposed twin decline access and conveyor system is a sound approach
which will be quicker and cheaper than refurbishing the collapsed shaft
system.
- the existing mine engineering infrastructure has been designed, installed
and operated to a high standard.
• Furthermore, SRK reviewed DiamondCorp’s capital and operating cost
estimates and were satisfied that they were reasonable. These included,
inter alia:
- the peak funding requirement (including working capital and 15%
contingency) is estimated to be in month 25 at R286 million (£21.3
million).
- The project net present value of after tax cash flow in the agreed life
of mine financial model using a 10% discount rate is R1,452 million (£108.4
million). DiamondCorp’s 74% share of this is £80 million, but in addition,
the Company is due to be repaid shareholder loans and interest which
currently stand at around R273 million (£20 million).
• DiamondCorp’s 74%-owned subsidiary, Lace Diamond Mines (Proprietary)
Limited and the Industrial Development Corporation of South Africa Limited
(“IDC”) reached agreement and signed loan documentation whereby the IDC
will provide a project loan facility for R220 million (approximately £16.4
million), representing approximately 77% of the forecast peak funding
requirement for the 47 level block cave development.
- the term of the loan is 7 years with an interest rate of 2% over the
South African Prime Rate (which is currently 8.5%).
- interest on the loan is to be capitalised for the first two years from
the initial drawdown date (which is any time up to 31 July 2014) and
payable semi-annually in arrears thereafter.
- there will be a two year moratorium on loan repayments from the initial
drawdown date.
• It has been agreed with the IDC that DiamondCorp shall arrange an
additional R100 million (approximately £7.5 million) funding for Lace prior
to the initial drawdown of the IDC facility. Therefore, the total funding
available for the project will be R320 million (£23.8 million),
representing a 33% contingency on the forecast peak funding requirement.
• In order to complete the total financing package for the Lace development,
DiamondCorp has engaged Rand Merchant Bank and PSG Capital in South Africa
as advisers and arrangers of up to R150 million of additional funding
through the issuance of convertible bonds which, at the sole discretion of
DiamondCorp, may be settled in shares or the cash equivalent.
• In order that investors outside of South Africa may participate, the
Company's UK brokers Fairfax I.S. plc and Ocean Equities Limited have also
agreed to market an issue of convertible bonds denominated in UK sterling,
which are expected to be on parallel terms to the South African bond issue.
• From 15 March 2012 until the end of May 2012 the Company treated 55,391
tonnes of tailings for a recovery of 4060.97 carats. This represented a
recovered grade of 7.33 carats per hundred tonnes (cpht), which was 47%
above budget and included an 8.3 carat good quality white gem diamond.
Tailings retreatment costs in May averaged R28.70 per tonne, 14% below the
budgeted R33.40 per tonne.
• Weakening of diamond prices in the July-August period in response to
macroeconomic challenges in Europe and the US resulted in management taking
a decision to shut down the Lace processing plant and commencing the
required plant upgrades while diamond prices were weak. As a consequence,
full scale production of diamonds from tailings retreatment will not resume
until the first quarter of 2013.
• Modifications are required to the existing DMS (dense media separation)
processing plant at Lace to ensure 200 tph of kimberlite can be treated
without the scrubber section being overloaded. These modifications are
budgeted for in the 47 level block cave capital costs and will take six
months to complete.
• A total of 5,312 carats of diamonds recovered from tailings retreatment
prior to shutting down the plant are currently held in inventory. The
proposed sale of these diamonds by tender in September has been postponed
due to market conditions and will be sold when management see a recovery in
diamond prices.
• In addition, the Company holds 2,168 carats of diamonds recovered from
underground bulk sampling, which management will retain for evaluation by
potential off-take partners.
• Net loss for the six months ended 30 June 2012 was £1,556,701 (30 June 2011
£1,168,179).
Commenting on the results, DiamondCorp CEO Paul Loudon said: ”The period under
review saw us make significant steps towards our goal of being a long-term
diamond producer. Having secured the majority of the project finance required for
the Lace underground development, we look forward to finalising the balance of
the financing and commencing underground development as soon as possible.”
27 September 2012
London
CONSOLIDATED INCOME STATEMENT
Six months ended 30 June 2012
Six months Six months
ended 30 June ended 30 June
2012 (£) 2011 (£)
Administrative expenses (1,192,493) (663,568)
Depreciation and amortisation expense (387,165) (491,194)
OPERATING LOSS (1,579,658) (1,154,762)
Investment revenues – interest on bank 22,957 5,120
deposits
Interest expense - (99,861)
Foreign exchange gain / (loss) on loan - 109,076
payable
LOSS BEFORE TAX (1,556,701) (1,140,427)
Tax - (27,752)
LOSS FOR THE FINANCIAL PERIOD (1,556,701) (1,168,179)
ATTRIBUTABLE TO:
EQUITY HOLDERS OF THE PARENT (1,325,656) (1,046,064)
NON CONTROLLING INTEREST (231,045) (122,115)
(1,556,701) (1,168,179)
BASIC & DILUTED LOSS PER SHARE £0.006 £0.006
HEADLINE LOSS PER SHARE £0.006 £0.006
All of the activities of the Group are classed as continuing.
STATEMENT OF CHANGES IN EQUITY
Six months Six months
ended 30 June ended 30 June
2012 (£) 2011 (£)
Opening balance 16,601,837 18,006,470
Loss for the financial period
Attributable to equity holders of (1,325,656) (1,046,064)
the parent
Attributable to non-controlling (231,045) (122,115)
interest
New equity share capital subscribed - 590,817
Premium on new equity share capital - 1,823,378
subscribed
Translation reserve (539,168) (733,054)
Value attributed to warrants granted - -
Closing balance 14,505,968 18,519,431
CONSOLIDATED BALANCE SHEET
30 June 2012 31 December
(£) 2011 (£)
NON-CURRENT ASSETS
Goodwill 4,606,026 4,606,026
Other intangible assets 4,933,098 4,641,801
Property, plant and equipment 4,200,616 4,609,284
13,739,740 13,857,111
CURRENT ASSETS
Inventories 614,900 442,433
Other receivables 221,238 182,350
Cash and cash equivalents 296,575 2,632,760
1,132,713 3,257,543
TOTAL ASSETS 14,872,453 17,114,654
CURRENT LIABILITIES
Other payables (352,861) (498,876)
Provisions (13,624) (13,941)
(366,485) (512,817)
NET ASSETS 14,505,968 16,601,837
EQUITY
Share Capital 7,268,041 7,268,041
Share premium 26,702,502 26,702,502
Warrant reserve - 505,877
Share option reserve 429,066 429,066
Translation reserve (140,692) 398,476
Retained losses (18,833,701) (18,013,922)
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS 15,425,216 17,290,040
OF THE PARENT
NON CONTROLLING INTEREST (919,248) (688,203)
TOTAL EQUITY 14,505,968 16,601,837
CONSOLIDATED CASH FLOW STATEMENT
Six months Six months
ended 30 June ended 30 June
2012 (£) 2011 (£)
Operating loss for the period (1,579,658) (1,173,299)
Depreciation and amortisation 387,165 491,194
Gain on disposal of property, plant - (2,071)
and equipment
Other non-cash charges 5,051 (109,076)
Increase in receivables (38,888) (32,924)
(Increase) / Decrease in inventories (172,467) 14,683
(Decrease) / Increase in other (146,332) 89,244
payables
NET CASH USED IN OPERATING ACTIVITIES (1,545,129) (722,249)
INVESTING ACTIVITES
Purchase of intangible assets (454,744) (2,330,615)
Disposal of property, plant and - 86,492
equipment
Purchase of property, plant and (81,443) (340,435)
equipment
Interest received 22,957 5,120
NET CASH USED IN INVESTING ACTIVITIES (513,230) (2,579,438)
FINANCING ACTIVITIES
Proceeds on issue of ordinary shares - 2,414,195
Repayment of capital on long term loan - (1,029,999)
Interest payment on long term loan - (99,861)
NET CASH FROM FINANCING ACTIVITIES - 1,284,335
NET (DECREASE) / INCREASE IN CASH AND (2,058,359) (2,017,352)
CASH EQUIVALENTS
CASH AND CASH EQUIVALENTS AT BEGINNING 2,632,760 4,293,185
OF PERIOD
Effect of foreign exchange rate (277,826) 106,750
changes
CASH AND CASH EQUIVALENTS AT END OF 296,575 2,382,583
PERIOD
NOTES TO THE FINANCIAL STATEMENTS
Six months ended 30 June 2012
1. ACCOUNTING POLICIES
These interim financial statements have been prepared using accounting policies
consistent with International Financial Reporting Standards (IFRSs). The same
accounting policies, presentation and methods of computation are followed in
the condensed interim financial information as applied in the Group's latest
annual audited financial statements. The financial figures included in this
half-yearly report have been computed in accordance with IFRSs applicable to
interim periods.
These interim financial statements were approved by the Board on 27 September
2012 and do not constitute statutory financial statements within the meaning of
Section 435 of the Companies Act 2006. The results for the year ended 31
December 2011 have been extracted from the statutory financial statements of
DiamondCorp plc.
A copy of the statutory accounts for the year ended 31 December 2011 has been
delivered to the Registrar of Companies. The auditors’ report on those accounts
was not qualified and did not contain statements under Section 498 (2) or (3)
of the Companies Act 2006; however the auditor’s report did contain an emphasis
of matter in respect of the material uncertainty around the company’s ability
to continue as a going concern.
These interim financial statements have been prepared using the accounting
policies set out in the Group’s 2011 statutory accounts.
Results for the six-month period ended 30 June 2012 and 30 June 2011 have not
been audited.
The comparative information presented in the income statement has been prepared
for the period 1 January 2011 – 30 June 2011. This has been performed in order
to comply with the AIM rules and is presented solely for this purpose.
2. LOSS PER SHARE
IAS 33 “Earnings per share” requires presentation of diluted earnings per share
when a company could be called upon to issue shares that would decrease net
profit or increase net loss per share. For a loss-making company with
outstanding share options, net loss per share would only be decreased by the
exercise of out-of-money options. Since it seems inappropriate to assume that
option holders would exercise out-of-money options, no adjustment has been made
to basic loss per share for out-of-money share options.
The calculation of basic and diluted loss per ordinary share is based on the
loss attributable to equity holders of the parent of £1,325,656 for the six
months ended 30 June 2012 (30 June 2011: £1,046,064) and on 242,268,048
ordinary shares (30 June 2011: 184,852,905) being the weighted-average number
of ordinary shares in issue.
The Group presents and alternative measure of loss per share after excluding
all capital gains and losses from the loss attributable to ordinary
shareholders (“Headline earnings / (loss)”). The impact of this is as follows:
2012 2011
Basic loss per share £0.006 £0.006
Effect of gain on disposal of property, plant and equipment - -
Effect of impairment of intangible assets - -
Headline loss per share £0.006 £0.006
3. SHARE CAPITAL
30 June 2012 31 December 2011
No. £ No. £
Called up, allotted and 203,567,533 6,107,026 203,567,533 6,107,026
fully paid Ordinary
shares of 3 pence each
There were no changes to share capital during the current period.
4. GOING CONCERN
In determining the appropriate basis of presentation of the interim financial
statements, the Directors are required to consider whether the Group can
continue in operational existence for the foreseeable future, this being a
period of not less than 12 months from the date of the approval of the
financial statements. During the next 12 months the Group intends to be in a
mine-development phase and Company announcements have stated that the Group
will have insufficient resources to meet all its development goals and meet all
its resulting financial obligations during this period without access to
further funds. The raising of additional finance is deemed to be a material
uncertainty which casts doubt over the ability of the Group to continue as a
going concern.
The Group will be required to (i) supplement its current cash resources by
accessing the capital markets in 2012-2013 or by sale of assets or,
alternatively, (ii) to modify its development plan to preserve cash.
After making enquiries, given the agreement reached by the Company’s
subsidiary, Lace Diamond Mines (Pty) Ltd, and the Industrial Development
Corporation of South Africa Limited ("IDC") (see note 5), assuming that the
Group adheres to its development plan, the Directors have a reasonable
expectation that additional funds will be available within the next 12 months.
Accordingly the Directors continue to adopt the going concern basis of
presentation of the financial statements.
The financial statements therefore do not include the adjustments that would
result if the Group were not able to continue as a going concern.
5. POST BALANCE SHEET EVENTS
On 21 September 2012, the Company announced that its subsidiary, Lace Diamond
Mines (Pty) Ltd, and the Industrial Development Corporation of South Africa
Limited ("IDC") had reached agreement and signed loan documentation whereby it
had been agreed that the IDC shall provide a project loan facility for the
amount of R220 million (approximately £16.4 million), representing
approximately 77% of the forecast R285 million peak funding requirement for the
47 Level block cave development, which includes a 15% contingency.
Further, it has been agreed that the Company shall arrange additional funding
of R100 million (approximately £7.5 million) for Lace prior to the initial
drawdown of the IDC facility. The total funding available for the project will
then be R320 million, representing a 33% contingency on the Company`s forecast
funding requirement.
Contact details:
AIM Nomad: Fairfax I.S. plc
AIM Brokers: Fairfax I.S. plc and Ocean Equities Limited
JSE Sponsor: PSG Capital (Pty) Limited
DiamondCorp plc, Paul Loudon +44 20 3151 0970
Fairfax I.S. plc, Ewan Leggat/Laura Littley +44 207 598 5368
Ocean Equities Limited, Guy Wilkes +44 207 4370
PSG Capital (Pty) Limited, John-Paul Dicks +27 21 887 9602
Russell & Associates, Charmane Russell/Marion Brower +27 11 880 3924
Date: 28/09/2012 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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