Wrap Text
Interim Results (Unaudited) For The Six Month Period
Ended 30 June 2016 And Lace Mine Operational Update
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 2016 AND LACE MINE OPERATIONAL UPDATE
DiamondCorp plc, the Southern Africa focussed diamond mine development and exploration
company, releases its unaudited interim results for the six month period ended 30 June 2016 and an
operational update on the Lace mine.
FINANCIAL HIGHLIGHTS
After adjustments for a stronger Rand exchange rate, the pre-tax loss for the period was reduced
to £0.247 million compared with a loss of £3.159 million in the same period in 2015.
Administrative expenditure for the period increased to £0.893 million (£0.672 million in 2015).
The increase is primarily due to a timing change on audit remuneration, as well as additional
administrative expenses as the company is moving from development into production.
Total assets at 30 June were £39.227 million (£32.719 million in 2015) and liabilities were
£28.456 million (£25.219 million in 2015).
Cash at 30 June was £0.108 million. After the period end, a further £2.0 million was raised
through a share issue.
Fair value adjustment through profit and loss is calculated using the current share price of 6.63
pence (11.00 pence in 2015) and a foreign exchange rate of ZAR 19.7817 (ZAR 19.2023 in
2015).
OPERATIONAL UPDATE
The Company's diamond sales schedule has been reorganised to maximise attendance by clients
who have been absent from Antwerp during various religious holidays as well as the De Beers
August sale. The first tender will now be concluded on 17 September 2016 with results
announced on 20 September 2016. Subsequent monthly sales will be concluded around the middle
of each month.
Production from the first mining block on the 310m level was impacted during August by a
number of operational issues, discussed below, all of which have now been overcome.
In particular, development drilling for the return air pass from the production level intersected a
geological contact with significant water inflow which flooded the production level until pumps
were able to clear the level and specialist contractors were mobilised to seal the face.
As a consequence, a total of 9 days of production were lost in the first half of August. One of the
knock on effects of this lost production is that the September diamond sale will now be c.5700
carats, not 7,000 as previously planned.
An additional 8 days of production were lost in the second half of the month from further water
issues as the return air pass tunnel was advanced into the contact area then resealed. The return air
pass face now remains sealed from any serious water inflow.
In addition, mining in August included significant tonnage of lower grade kimberlites which
ingressed from old workings above into the 310m production draw point through old shafts
adjacent to the slot. This lower grade kimberlite had to be mined before the clean K4 trough
kimberlite could be accessed. This meant that not only was total tonnage for the month of August
approximately a third of what was planned, recovered grade for the month was diluted from the
budgeted 31 carats per hundred tonnes (cpht) to 18 cpht.
Management considers these operational issues are not unusual in the ramp up of underground
mining operations. Further, the financial impact of the operational issues is expected to be met by
existing cash and a new third party convertible debt facility. Several offers of new working capital
facilities are currently being assessed and management is confident that such facility will be in
place in the coming weeks.
Mining is now progressing in predominately high-grade K4 kimberlite and, importantly, will be
shortly clear of these old development workings. The Company's independent geological
consultants MPH Consulting Limited are closely monitoring the in-situ kimberlite facies being
mined. Importantly, MPH has concluded that reconciliation of in-situ kimberlite facies mined
during August demonstrated that recovered grades were in line with the geological model and are
confident we are not expected to encounter any significant rafts of low grade kimberlite in the
planned mining blocks not already incorporated in the geological model.
The diamonds yielded during August remain of a high quality, and four stones larger than 10
carats were recovered, including a 12.7 carat gem diamond. These diamonds will be sold in the
October sale.
In light of the ramp-up problems encountered to date, which management considers essentially
resolved, the production forecast for the remainder of 2016 has been re-budgeted for 20,000
tonnes in September, 25,000 tonnes in October and 30,000 tonnes in each of November and
December.
The Company's current diamond inventory is 7,003 carats. It takes between 30 and 45 days for
diamonds recovered to move from the mine to Antwerp and be sold. As a consequence, the
October sale will be relatively small but monthly sales are expected to build up to the 9,000 carat
base case in the budget by December.
13 September 2016
CONSOLIDATED INCOME STATEMENT
Six months ended Six months ended
30 June 2016 30 June 2015
(Unaudited) (Unaudited)
£ £
Other income 5 658 1 700
Operating expenses (897 039) (672 480)
Operating loss (891 381) (670 780)
Investment revenues 7 074 8 914
Fair value adjustments 642 388 (2 497 523)
Loss before tax (241 919) (3 159 389)
Tax (5 302) -
Loss for the financial year (247 221) (3 159 389)
Attributable to:
Equity holders of the parent (150 114) (3 098 379)
Non-controlling interest (97 107) (61 010)
(247 221) (3 159 389)
Basic and diluted loss per share (pence) (0.04) (0.98)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME & EXPENSES
Six months ended Six months ended
30 June 2016 30 June 2015
(Unaudited) (Unaudited)
£ £
Net loss (247 221) (3 159 389)
Other comprehensive loss:
Items that may be reclassified to profit and loss:
Exchange differences on translating foreign operations 1 910 260 (369 402)
Other comprehensive loss for the year net of taxation 1 663 039 (3 528 791)
Total comprehensive loss
Total comprehensive loss attributable to:
Equity holders of the parent 1 438 269 (3 348 102)
Non-controlling interest 224 770 (208 026)
1 663 039 (3 556 128)
CONSOLIDATED BALANCE SHEET
Six months ended Year ended 31
30 June 2016 December 2015
(Unaudited) (Audited)
£ £
Assets
Non-Current Assets
Property, plant and equipment 35 830 182 27 472 410
Goodwill 2 792 879 2 403 483
Rehabilitation trust fund 148 869 128 113
Restricted cash 54 997 60 913
38 826 927 30 064 919
Current assets
Inventories 385 306 627 535
Current tax receivable - 5 003
Trade and other receivables 295 814 371 120
Cash and cash equivalents 108 758 1 722 486
789 878 2 726 144
Total Assets 39 616 805 32 791 063
Equity and Liabilities
Equity
Equity Attributable to owners of the parent
Share capital 46 541 131 44 626 346
Reserves (4 327 766) (5 927 267)
Accumulated loss (28 453 633) (28 303 519)
13 759 732 10 395 560
Non-controlling interest (2 599 355) (2 824 126)
Total Equity 11 160 377 7 571 434
Liabilities
Non-Current Liabilities
Other financial liabilities 20 610 444 16 974 515
Provisions 602 274 518 301
21 212 719 17 492 816
Current Liabilities
Compound instruments - debt component 2 965 725 2 684 835
Compound instruments - derivative component 3 247 660 3 596 870
Trade and other payables 1 030 325 1 445 108
7 243 710 7 726 813
Total Liabilities 28 456 429 25 219 629
Total Equity and Liabilities 39 616 805 32 791 063
STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Non-
Total Retained Total attributable to
Total share capital controlling Total equity
Reserves losses owner of the parent
interest
£ £ £ £ £ £
GROUP
Restated balance as
at 1 January 2015
(audited) 37 161 667 (3 503 973) (26 048 922) 7 608 772 (2 147 363) 5 461 409
Loss for financial
year - - (3 098 379) (3 098 379) (61 010) (3 159 389)
Other
comprehensive
income - (249 723) - (249 723) (147 015) (396 738)
Total comprehensive
income - (249 723) (3 098 379) (3 348 102) (208 025) (3 556 127)
Warrants issued
79 192 (79 192) - - - -
Issue of share capital
3 415 755 - - 3 415 755 - 3 415 755
Total contributions
by and distributions
to owners of the
company recognised
directly in equity 3 494 947 (79 192) - 3 415 755 - 3 415 755
Balance at 30 June
2015 (unaudited) 40 656 614 (3 832 886) (29 147 301) 7 676 427 (2 355 388) 5 321 037
Loss for financial
year - 843 782 843 782 (94 420) 749 362
Other comprehensive
income - (2 124 167) - (2 124 167) (374 318) (2 498 485)
Total comprehensive
income - (2 124 167) 843 782 (1 280 385) (468 738) (1 749 123)
Issue of share capital
3 969 732 - - 3 969 732 - 3 969 732
Value attributed for
equity settled share
based payments - 29 788 - 29 788 - 29 788
Total contributions
by and distributions
to owners of the
company recognised
directly in equity 3 969 732 29 788 - 3 999 520 - 3 999 520
Balance at 31
December 2015
(audited) 44 626 346 (5 927 267) (28 303 519) 10 395 560 (2 824 126) 7 571 434
Loss for financial
year - - (150 114) (150 114) (97 107) (247 221)
Other
comprehensive
income - 1 588 383 - 1 198 986 321 877 1 520 863
Total comprehensive
income - 1 588 383 (150 114) 1 048 872 224 770 1 273 642
Issue of share capital
1 914 785 - - 1 914 785 - 1 914 785
Value attributed for
equity settled share
based payments - 11 118 - 11 118 - 11 118
Balance at 30 June
2016 (unaudited) 46 541 131 (4 327 765) (28 453 633) 13 370 337 (2 599 356) 10 770 979
CONSOLIDATED CASH FLOW STATEMENT
Six months ended Six months ended
30 June 2016 30 June 2015
£ £
(Unaudited) (Unaudited)
Cash flows from operating activities
Cash utilised in operations (1 182 486) 11 599
(Taxation paid) / refund received - 662
Finance cost - -
Net cash used in operating activities (1 182 486) 12 261
Cash flows from investing activities
Purchase of property, plant and equipment (539 682) (3 934 963)
Interest income 7 074 8 914
Net cash used in investing activities (532 608) (3 926 049)
Proceeds on share issue 1 914 785 3 415 755
Net cash from financing activities 1 914 785 3 415 755
Total cash movement for the year 199 691 (498 033)
Cash at the beginning of the year 1 722 486 2 531 420
Effect of exchange rate movement on cash balances (1 813 419) (89 525)
Total cash at end of the year 108 758 1 943 862
NOTES TO THE FINANCIAL STATEMENTS
Six months ended 30 June 2016
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 12 September 2016 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 2015 have been extracted from the statutory
financial statements of DiamondCorp plc.
A copy of the statutory accounts for the year ended 31 December 2015 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.
These interim financial statements have been prepared using the accounting policies set out in the
Group's 2015 statutory accounts.
Results for the six-month periods ended 30 June 2016 and 30 June 2015 have not been audited.
The comparative information presented in the income statement has been prepared for the period
1 January 2015 – 30 June 2015. 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 £150,114 for the six months ended 30 June 2016 (30 June 2015:
£3,098,379) and on 573,873,516 ordinary shares (30 June 2015: 321,462,540) being the
weighted-average number of ordinary shares in issue.
The Group presents an alternative measure of loss per share after excluding all capital gains and
losses from the loss attributable to ordinary shareholders (“Headline earnings / (loss)”). Due to
there being no adjustments headline loss per share and basic loss per share is the same.
30 June 2016 30 June 2015
(Unaudited) (Unaudited)
Basic and diluted loss per share (pence) (0.03) (0.98)
Basic and diluted loss per share (Rand) (R0.006) (R0.1882)
3. SHARE CAPITAL
DiamondCorp plc does not have an authorised share capital, in line with the provisions of the UK
Companies Act 2006. The Directors' authority to issue and allot shares in the Company is set
each year by the Company's shareholders at the Annual General Meeting. The level of
disapplication in respect of pre-emption authority is based on UK corporate governance
guidelines for AIM companies.
In May 2015, 5,000,000 ordinary shares of 0.1 pence were issued to a warrant holder following
the exercise of warrants over 5,000,000 ordinary shares at an exercise price of 9 pence.
In June 2015, 31,837,000 ordinary shares of 0.1 pence were issued at a price of 10 pence per
share to current and new shareholders of the Company.
In July 2015, 20,894,263 ordinary shares of 0.1 pence were issued at a price of 10 pence per share
to current and new shareholders of the Company. These shares were issued in response to the
Company's open offer where eligible shareholders were able to purchase 1 open offer share for
every 17 existing ordinary shares.
In December 2015, 32,337,000 ordinary shares of 0.1 pence were issued at a price of 6 pence per
share. This was the first tranche of a two stage placing.
In December 2015 a UK bondholder exercised his right to convert his bonds. The company issue
2,642,689 ordinary shares of 0.1 pence at a price of 5.6 pence per share to the holder.
In January 2016, 34,329,667 ordinary shares of 0.1 pence at a price of 6 pence per share were
issued as the second tranche of the two stage placing.
See note 5 for issued of shares after 30 June 2016.
Authorised 30 June 2016 30 June 2015
(Unaudited) (Unaudited)
Ordinary shares 355 202 478 355 202 478
Issue of ordinary shares 90 203 769 -
445 406 247 355 202 478
Reconciliation of number of shares issued after
reorganisation:
Ordinary shares of 0.1 pence each 345 406 247 355 202 478
Ordinary shares of 2.9 pence each 276 839 478 276 839 478
722 245 725 632 041 956
Issued
Ordinary shares of 0.1 pence each 445 407 355 203
Deferred ordinary shares of 2.9 pence each 8 028 344 8 028 344
Share premium 38 067 380 32 273 067
46 506 801 40 656 614
4. FAIR VALUE INFORMATION
Fair value hierarchy
The table below analyses assets and liabilities carried at fair value. The different levels are defined as follows:
Level 1: Quoted unadjusted prices in active markets for identical assets or liabilities that the group can access at
measurement date.
Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or
indirectly.
Level 3: Unobservable inputs for the asset or liability.
Levels of fair value measurements
Level 3
Group
2016 2015
£ £
(Unaudited) (Audited)
Liabilities
Financial liabilities at fair value through
profit or loss
Derivative financial instruments 3 247 660 3 596 870
Financial guarantees - -
Total 3 247 660 3 596 870
Carrying amount of loans and receivables, including cash and cash equivalents
approximate their fair values.
Transfers of assets and liabilities within levels of the fair value hierarchy
No transfers were made between levels in the fair value hierarchy in the 2015 or 2016 financial years.
Valuation techniques used to derive level 3 fair values
Valuation techniques and assumptions applied for the purposes of measuring fair value
The fair values of derivative instruments are calculated using quoted prices. Where such prices are not available, a
discounted cash flow analysis is performed using the applicable yield curve for the duration of the instruments for non-
optional derivatives, and option pricing models for optional derivatives. The fair value of the embedded derivative
component of the convertible bonds was determined using the Black Scholes (using the Barone-Adesi and Whaley
approximation technique) option pricing model. The table below outlines the fair value inputs used in the embedded
derivative valuation.
No changes have been made to the valuation technique.
Black Scholes Assumptions 30 June 31 December
2016 2015
Term range 5 years 5 years
Expected dividend yield Nil Nil
Risk free interest rate 0.98% 1.96%
Share price volatility 91.65% 90.70%
Share price at time of grant 6.6 pence 6.8 pence
Description of valuation method and inputs of another class of level 2 fair values.
5. EVENTS AFTER THE REPORTING DATE
In July 2016, 33,333,333 ordinary shares of 0.1 pence at a price of 6 pence per share were issued to current
and new shareholders.
6. CONTINGENT LIABILITIES
A claim was submitted by Acrux Resources (Pty) Ltd against Lace Diamond Mines (Pty) Ltd for an amount
of $207,229 plus interest during the 2015 financial year. The claim submitted is for the structuring fee of a
terminated contract between Acrux Resources (Pty) Ltd and Lace Diamond Mines (Pty) Ltd. The claim is
disputed by Lace Diamond Mines (Pty) Ltd and management is of the opinion that the claim will be
unsuccessful. Management anticipates that the outcome of the claim will only be resolved in 2017.
Contact details:
DiamondCorp plc
Paul Loudon, CEO
Tel: +27 56 216 1300
Euan Worthington, Chairman
Tel: +44 7753 862097
UK Broker & Nomad
Panmure Gordon (UK) Limited
Adam James/Atholl Tweedie
Tel: +44 20 7886 2500
JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker/Andrew Brady
Tel: +27 11 883 6358
The information communicated in this announcement is inside information for the purposes of
Article 7 of Market Abuse Regulation 596/2014 (“MAR”)
United Kingdom
13 September 2016
Sponsor: Sasfin Capital (a division of Sasfin Bank Limited)
Date: 13/09/2016 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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