| Mon 15 Oct 2007, 13:00 | | DMR - Diamond Core - Abridged Annual Results For T |
|
DMR
DMR
DMR - Diamond Core - Abridged Annual Results For The Year Ended 30 June 2007
DIAMOND CORE RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
Share code: DMR & ISIN: ZAE000076956
("Diamond Core" or "the Company")
Abridged annual results for the year ended 30 June 2007
FINANCIAL RESULTS
CONSOLIDATED INCOME STATEMENT
Reviewed Audited
year year
ended ended
30 June 30 June
2007 2006
R `000 R `000
Revenue - -
Cost of sales - -
Gross loss - -
Other operating income 220 19
Profit on disposal of assets 3 -
Exploration costs (241) (1,315)
Other operating expenses (27,107) (9,681)
Impairment losses (505) 1,233
Impairment of excess goodwill
on acquisition of subsidiary - (53,296)
Operating loss (27,630) (63,040)
Investment income 11,226 2,714
Finance costs (16) (7)
Net loss before taxation (16,420) (60,333)
Taxation (918) -
Net loss for the period (17,338) (60,333)
Attributable to:
Minorities (288) -
Ordinary shareholders (17,050) (60,333)
(17,338) (60,333)
Number of shares in issue (`000) 296,218 294,276
Weighted average number
of shares in issue (`000) 295,009 126,719
Weighted average number of shares
in issue for diluted earnings
(`000) 296,444 134,446
Headline loss per share (cents) (5.61) (6.53)
Loss per share (cents) (5.78) (47.61)
Reconciliation of loss and headline loss:
Attributable loss for the period (17,050) (60,333)
Profit on disposal of fixed assets (3)
Impairment of mining assets 505 (1,233)
Impairment of excess goodwill
on acquisition of subsidiary - 53,296
Headline loss (16,548) (8,270)
CONSOLIDATED BALANCE SHEET
ASSETS
Non-current assets 243,258 109,194
Mining assets 119,779 7,004
Intangible assets 699 -
Mineral rights 102,864 101,864
Exploration costs 19,916 326
Current assets 82,220 220,217
Inventories 1,560 -
Trade and other receivables 3,270 514
Cash and cash equivalents 77,390 219,703
Total assets 325,478 329,411
EQUITY AND LIABILITIES
Total equity 283,311 285,415
Share capital 3 3
Share premium 320,689 319,198
Shares to be issued 48,366 48,366
Share based payments reserve 26,674 24,826
Accumulated loss (124,028) (106,978)
Shareholders` interest 271,704 285,415
Minority interest 11,607 -
Non-current liabilities 29,518 29,593
Non-interest bearing borrowings - 1,075
Rehabilitation provision 3,900 2,900
Deferred taxation 25,618 25,618
Current liabilities 12,649 14,403
Obligation to minorities - 11,895
Trade and other payables 11,731
Taxation 918 2,508
Total equity and liabilities 325,478 329,411
Net asset value per share (cents) 91.72 96.99
Net tangible asset value per share (cents) 58.69 70.97
CONSOLIDATED CASH FLOW STATEMENT
Cash flow from exploration and mining
activities (4,574) (6,887)
Cash utilised by exploration and mining
activities (15,784) (9,594)
Investment income 11,226 2,714
Finance costs (16) (7)
Cash flows from investment activities (138,156) (2,024)
Mining assets acquired (117,816) (2,144)
Intangible assets acquired (792) -
Exploration costs capitalised (19,590) (326)
Investments in subsidiaries - 446
Proceeds on disposal of mining assets 42 -
Cash flow from financing activities 417 221,320
Net proceeds from shares issued 1,491 223,544
Increase in outside shareholders interest 1 -
Loans settled (1,075) (2,224)
Net (decrease)/increase in cash and cash
equivalents (142,313) 212,409
Net cash and cash equivalents at beginning
of period 219,703 7,294
Net cash and cash equivalents at end of
period 77,390 219,703
STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Share capital and share premium 320,692 319,201
Balance at beginning of year 319,201 65,776
Share issue 1,491 253,425
Shares to be issued 48,366 48,366
Balance at beginning of year 48,366 -
Samadi acquisition - 48,366
Share-based payments reserve 26,674 24,826
Balance at beginning of year 24,826 491
Capital raise options - 19,335
Samadi options - 5,000
Staff share options 1,848 -
Accumulated loss (124,028) (106,978)
Accumulated loss at beginning of period (106,978) (46,645)
Net loss for the period (17,050) (60,333)
271,704 570,830
COMMENTARY
Diamond Core has grown over the past year into a fully-fledged diamond
exploration company with the support of a diversified shareholder base and the
requisite level of technical and management expertise to implement our
development strategy.
Paardeberg East
Bulk sampling operations of the PK1 and PK3 kimberlite bodies is currently
underway at the Paardeberg East site following the commissioning of the plant
earlier in the year. The plant at Paardeberg East has been designed to serve
as
a regional bulk sampling facility for the exploration activities of the
Company
which are aimed at discovering new sources of primary diamonds. Due to the
variable nature of the results achieved thus far in the bulk sampling
programme, the Company intends to complete its exploration programmes at
Paardeberg East before reporting a holistic result to shareholders in
accordance with the SAMREC Codes.
Silverstreams
Bulk sampling operations have commenced at Silverstreams with all plant and
equipment having been commissioned. Several trenches spanning the channel
feature have been excavated. The Company has created the necessary
infrastructure and lodged the requisite deposits and connection fees with
Eskom, who have advised that power will only be provided in January 2008. At
present power is being provided by generators at a premium to the Eskom rate
and at an additional cost to the Company. This remains the final obstacle to
optimising the rate of feed to the recovery plant.
Other projects
The rights to the diamondiferous Sanddrift project, acquired from Southern Era
/Minex and located to the immediate north of Silverstreams, are in the process
of being ceded to a subsidiary of the Company in partnership with Selang
Resources (Pty) Ltd. Sampling operations at both the De Kalk and Uitdraai
projects are in the process of being initiated.
BEE requirements
Diamond Core has committed itself to Black Economic Empowerment (BEE) and
strives to build a meaningful and participative relationship with our BEE
partners, as well as communities in the areas in which the Company is active.
In both the circular to shareholders dated 3rd February 2006 and the 2006
Annual Report, the Memorandum of Understanding whereby the Sefalana Consortium
would have an effective 15% economic interest in certain subsidiary companies
was described. Final agreements based on the original published Memorandum of
Understanding were signed in October 2006. The Board of Directors has reviewed
the obligations of the parties, obtained legal opinion thereon and after due
regard to the opinion and the advice of both counsel and senior counsel, it
has been concluded that the agreements are void ab initio as a direct
consequence of the Sefalana Consortium not having met the conditions precedent
to the preference share agreements, as well as other provisions. The Company
has sought legal counsel with regards to both the shareholder agreements and
the mineral rights which are the subject of the agreements. Legal counsel is
of the opinion that the Company enjoys substantial rights in terms of the
agreements and that these mineral rights will not be affected.
In determining the appropriate accounting treatment arising from the Sefalana
issue, management have elected to report outside shareholders at the 15%
economic interest level, and not at the current 50% equity interest holding
which arose due to the incomplete implementation of the transaction .
The Company is seeking with a resolution to the Sefalana matter and is
actively examining all avenues in bringing the impasse to conclusion.
Proposed merger with BRC Diamonds
The intention to merge with BRC Diamonds to create a growth-focused, African
diamond explorer and developer was announced in June 2007. With in-house
technical knowledge, managerial skills and access to capital markets the
merged entity will be capable of delivering a premier growth focused African
company.
BRC is a Canadian based exploration company with extensive assets in the
Democratic Republic of Congo.
FINANCIAL REVIEW
Review
The preliminary report has been reviewed by Charles Orbach & Company and their
qualified review report is available for inspection at the company`s
registered office. Their report has been qualified on the basis of the
uncertainty relating to the percentage holding of the minority shares of
losses and the minority interest, as detailed in this preliminary report.
Statement of compliance
This report has been prepared in accordance with International Financial
Reporting Standards in compliance with IAS 34, Interim Financial Reporting,
and the Companies Act of South Africa, 1973.
Basis of preparation
This report is prepared using accounting policies and methods of computation
that are consistent with the prior year.
Significant accounting policies
Exploration for and Evaluation of Mineral Resources - IFRS 6
This standard specifies the financial reporting for the exploration of and
evaluation of mineral resources. It permits an entity to develop an accounting
policy for exploration and evaluation assets without specifically considering
the requirements of paragraphs 11 and 12 of IAS 8. Thus, an entity adopting
IFRS 6 may continue to use the accounting policies applied immediately before
adopting the standard. This includes continuing to use recognition and
measurement practices that are part of those accounting policies. The standard
requires entities recognising exploration and evaluation assets to perform an
impairment test on those assets when facts and circumstances suggest that the
carrying amounts of the assets may exceed their recoverable amount. The
standard also varies the recognition of impairment from that in IAS 36 but
measures the impairment in accordance with that standard once the impairment
is identified.
This statement was early adopted in the previous financial year.
Commentary
The loss for the year under review amounted to R17 050 296, or 5.78 cents per
share compared with R60 333 217, or 47.61 cents per share. Headline loss per
share decreased to 5.61 cents per share from 6.53 cents per share. Net asset
value decreased to 91.72 cents per share from 96.99 cents per share
previously.
The main contributing factors that gave rise to the change in performance are:
- capitalisation of expenditure in terms of IFRS 6;
- construction of the bulk sampling plant at Paardeberg East;
- construction of the trial mining facility at Silverstreams;
- increased activity within the Group.
Diamond Core is an exploration company and does not generate mining revenue at
present. Total exploration costs increased to R19 831 003 from R1 648 168.
R19 590 008 (2006: R320 047) of these costs have been capitalised in
accordance
with the IFRS statement on Exploration for and Evaluation of Mineral
Resources.
Operating expenses of R27 107 185 increased from R9 680 755, mainly as a
result of the increased activity in the Group.
In applying the requirements of IFRS 2,
Share-based payment, the Company has expensed the full value of the options
granted to staff despite the release of the reserved shares over a period of
three years. To the extent that the reserved shares are not released for
delivery, either through the attrition of staff or forfeiture, in future
periods, a transfer will be made between the share-based payments reserve and
retained income.
Investment income increased to R11 225 999 from R2 714 084. Cash resources
available to the Company at the end of the period amount to R77 390 094 (2006:
R219 703 429).
Post balance sheet event
The Company issued 19 334 827 options in respect of the capital raise and
5 000 000 options in respect of the Samadi acquisition in the previous
financial year. The options were exercisable at any time from issue date to 30
September 2007 on the basis of one Diamond Core Resources Limited ordinary
share for one option at a price of 200 cents per share. No option holders
indicated they would like to exercise their options and the options expired on
the commencement of business on 1 October 2007. The listing of the options was
terminated on 1 October 2007.
LITIGATION
There are currently no legal or arbitration proceedings against the Company or
its subsidiaries (including any proceedings which are pending or threatened)
of which the Company is aware which may have, or have had in the 12 months
preceding the date of this report, a material effect on the consolidate
position of the Company.
OUTLOOK
Exploration for, and mining of diamonds, particularly alluvial diamonds, is a
high risk business activity which needs to be planned and implemented
optimally. The exploration risk is offset by the portfolio of alluvial
properties under the control of the Company and the potentially high returns
associated with the market for gem quality diamonds which are associated with
these alluvial properties. General consensus amongst market analysts forecasts
this niche in the diamond market to be particularly robust in the future. The
portfolio of alluvial projects in the merged Company provide a rapid, capital
efficient entry into the production of gem quality diamonds. This, coupled
with exploration acreage for kimberlite deposits in highly prospective areas,
positions the Company to deliver on its existing projects as well as source
new projects both in the Democratic Republic of Congo and South Africa.
For and on behalf of the Board:
AR Davids T Botoulas
Non-executive Chairman Chief Executive Officer
15 October 2007
Directors: AR Davids*, T Botoulas, CI Campbell, S Nachom*(USA), MJ Prinsloo*,
GD Hunter*, JK Barker*(UK) (* non-executive)
Company secretary: Statucor (Pty) Ltd
Registered address: Block C St Andrews Office Park, Meadowbrook Lane,
Epsom Downs, Bryanston
Transfer secretaries: Computershare Investor Services 2004 (Proprietary)
Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051,
Marshalltown,2107)
Sponsor: River Group
Website: www.diamondcore.co.za
Date: 15/10/2007 13:00:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
