| Fri 16 May 2008, 17:43 | | BCD - BRC DiamondCore - Abridged Interim Consolida |
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BCD
BCD
BCD - BRC DiamondCore - Abridged Interim Consolidated Results For The Three
Months Ended 31 March 2008
BRC DIAMONDCORE LTD.
(Incorporated in Canada)
(Corporation number 627115-4)
Share code: BCD & ISIN Number: CA05565C1095
("BRC DiamondCore" or "the Company")
Abridged unaudited interim consolidated results for the three months ended 31
March 2008
FINANCIAL RESULTS
CONSOLIDATED BALANCE SHEETS (unaudited)
As at As at
March 31 December 31
2008 2007
$`000 $`000
ASSETS
Current assets $ 4,393 $ 1,335
Cash 2,201 932
Accounts receivable and other receivables 1,282 403
Invetories 910 -
Non-current assets 111,130 16,982
Deferred transaction costs - 2,200
Mineral properties and deferred exploration
expenditure 35,249 14,188
Property, plant and equipment 15,932 594
Unallocated purchase price 59,949 -
$ 115,523 $ 18,317
LIABILITIES AND SHAREHOLDERS` EQUITY
Current liabilities $ 10,339 $ 5,622
Debt 5,082 3,023
Accounts payable and accrued
liabilities 5,137 2,599
Due to related parties 4 -
Taxation 116 -
Long term liabilities 3,726 -
Asset retirement obligations 492 -
Furture tax liabilities 3,234 -
Non-controlling interest (14) -
Shareholders` equity 101,472 12,695
Capital stock 105,291 15,827
Contributed surplus 5,508 2,757
Deficit (9,327) (5,889)
Accumulated other comprehensive income - -
Total Equity and liabilities $ 115,523 $ 18,317
CONSOLIDATED STATEMENTS OF OPERATIONS, COMPREHENSIVE LOSS AND DEFICIT
Unaudited Audited
three months year
ended ended
March 31 March 31
2008 2007
$`000 $`000
EXPENSES $ (3,432) $ (183)
Other Income 26 -
Operating loss (3,406) (183)
Interest Income 27 -
Interest expense (59) -
Net loss before income taxes (3,438) (183)
Income tax recovery - -
Net loss before non-controlling interest (3,438) (183)
Non-controlling interest - -
Net loss for the period (3,438) (183)
Other comprehensive income - -
Comprehensive loss for the period (3,438) (183)
Defict-beginning of period (5,889) (4,056)
Deficit-end of period (9,327) (4,239)
Number of shares in issue (`000) 25,741 13,568
Weighted average of shares in ssue (`000) 20,308 12,452
Loss per share (cents) (0,17) (0,01)
Diluted loss per share (cents) (0,17) (0,01)
CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Audited
three months year
ended ended
March 31 March 31
2008 2007
$`000 $`000
Cash flow from operating activities (891) (128)
Net change in non-cash working capital (432) 241
Cash flows from investment activities 592 (1,210)
Cash flow from financing activities 2,000 5,425
Increase in cash 1,269 4,328
Cash at beginning of period 932 373
Cash at end of period 2,201 4,701
COMMENTARY
GENERAL
All dollar amounts in this document are expressed in Canadian dollars unless
otherwise specified.
BRC DiamondCore (formerly BRC Diamond Corporation), is a Canadian based
diamond exploration company engaged in the acquisition, exploration and
development of diamond properties in known diamond producing areas in the
Northern Cape of South Africa and in the Democratic Republic of Congo (the
"DRC").
Transaction with Diamond Core Resources Limited
In July 2007, the Company and Diamond Core Resources Limited ("Diamond Core")
announced that they had entered into an agreement to merge the two companies
by way of a court-sanctioned scheme of arrangement ("the scheme") under South
African corporate law, pursuant to which the Company would acquire all of the
outstanding shares of Diamond Core in exchange for the issuance of BRC
DiamondCore common shares. On January 14, 2008, Diamond Core shareholder
approval was obtained, and court approval was obtained on January 22, 2008. On
February 11, 2008, the Company acquired all of the outstanding Diamond Core
shares and, as the consideration for this acquisition, issued BRC DiamondCore
shares to the Diamond Core shareholders in the agreed ratio, resulting in the
issuance by the Company of a total of 12,089,678 common shares. In connection
with this acquisition, the Company changed its name from BRC Diamond
Corporation to BRC DiamondCore Ltd. and its shares were listed on the Toronto
Stock Exchange and the JSE Limited in Johannesburg, South Africa.
Allocation of Purchase Price
Based on BRC DiamondCore`s average closing price of $7.40 per share,
calculated with reference to the share price around July 5, 2007, BRC
DiamondCore issued 12,089,678 common shares valued at $89,464,000 to Diamond
Core shareholders holding 296,218,483 Diamond Core ordinary shares outstanding
on the same date.
The acquisition has been accounted for using the purchase method of accounting
with BRC DiamondCore being identified as the acquirer and Diamond Core as the
acquiree. In accordance with the purchase method of accounting, assets and
liabilities acquired from Diamond Core are measured at their individual fair
values on the date of the acquisition and the difference between these fair
values of net assets acquired and the purchase price is recorded in the
consolidated balance sheet as unallocated purchase price.
The purchase consideration and transaction costs of $94,141,000 exceeded the
carrying value of the net assets acquired by $59,949,000 which has been
recorded as unallocated purchase price.
This document should be read in conjunction with the unaudited interim
consolidated financial statements of the Company as at and for the three
months ended March 31, 2008 (the "Financial Statements")and the related
Management`s Discussion and Analysis, both of which have been filed on SEDAR
at www.sedar.com.
Additional information relating to the Company is also available on SEDAR .
OPERATIONAL REVIEW
South Africa
Bulk sampling / trial mining operations continued at the Paardeberg East
and Silverstreams projects during the first quarter ended March 31, 2008.
The Company conducted its first diamond sales during the quarter ended March
31, 2008 and 4,050.43 carats were sold for approximately US$1.667 million. The
sale comprised 3,362.32 carats from the Paardeberg East Bulk Sampling
Kimberlite Project that realized US$672,824, or an average of US$200 per
carat, and 688.26 carats from the Silverstreams Bulk Sampling Alluvial Project
that realized US$995,150, or an average of US$1,446 per carat.
In addition, the Company recovered a 45.86 carat dark orange / brown stone
from the eastern lobe of the PK1 kimberlite at Paardeberg East. This was
withheld from the tender and will be beneficiated by the Company.
DRC
During the quarter ended March 31, 2008, 408 reconnaissance stream samples
were collected covering some 9,600 km2 of ground. Most of this (8,000km2) was
completed in the Province Equateur in the northern DRC. Almost 1,500 km2 was
covered in the Wamba basin as part of the Kwango River project and just over
200km2 was covered in the Tshikapa project area. Follow up samples were
collected over the Tshikapa project.
Limited drilling was completed over the alluvials of the Kwango River project
and a start was made with a detailed geological model for the Kwango River
basin. A drill camp was established in the Tshikapa area to prepare for the
Hydrocore Rig scheduled to start drilling the kimberlites targets in the
Tshikapa project in the second quarter of 2008.
All licence fees and provincial taxes for 2008 were paid.
Dr. Michiel C.J de Wit, the Company`s President, is the "qualified person" (as
such term is defined in Canadian National Instrument 43-101) responsible for
the technical information in this "Operational Review" section.
FINANCIAL REVIEW
The results of the Company as set out in this announcement have not been
reviewed or audited by the Company`s auditors.
Statement of compliance
The Financial Statements have been prepared in accordance with Canadian
generally accepted accounting principles ("GAAP").
Basis of preparation
The Financial Statements have been prepared by the management of the Company
in accordance with Canadian GAAP and have been prepared using the accounting
policies that are consistent with the accounting policies used in preparing
BRC DiamondCore`s audited consolidated financial statements as at and for the
year ended December 31, 2007, except for those set out below.
Effective January 1, 2008, the Company adopted the following sections of the
Handbook of the Canadian Institute of Chartered Accountants ("CICA"):
General Standards of Financial Statement Presentation (CICA Handbook Section
1400)
Inventories (CICA Handbook Section 3031)
Financial Instruments - Disclosure (CICA Handbook Section 3862)
Financial Instruments -Presentation (CICA Handbook Section 3863)
Capital Disclosures (CICA Handbook Section 1535)
Asset Retirement Obligations (CICA Handbook Section 3130)
These new standards have been adopted on a prospective basis with no
restatement to prior period financial statements.
Commentary
The Company reported a net loss of $3,438,000 or $0.17 per share for the three
months ended March 31, 2008, compared to a net loss of $183,000 or $0.01
reported for the three month period ended March 31, 2007. The increase in the
net loss for the first quarter of 2008 as compared to the first quarter of
2007 is due to the increased exploration activity of the Company and the
inclusion of Diamond Core results of operations post the Diamond Core
acquisition. The most significant item affecting the results of operations is
the unrealized foreign exchange loss recorded in the amount of $2,794,000.
Operating results for the Diamond Core group of companies have been excluded
prior to the Company acquiring control. Pending the final determination of the
fair value of all identifiable assets and liabilities acquired, the results of
the Diamond Core operations have been included with effect from February 11,
2008.
Revenue of $512,000 from the sale of diamonds recovered from the South African
bulk sampling operations has been applied to reduce the overall costs incurred
at the operations as the projects in question are still in the development
stage. The carrying value of diamond inventory at March 31, 2008, amounting to
$712,000 has similarly been applied to reduce the deferred exploration costs.
The Company incurred exploration costs of $2,635,000 in the quarter ended
March 31, 2008 compared to $6,745,000 for the year ended December 31, 2007
which have been capitalized to mineral properties. Mineral properties, which
include deferred exploration expenditures, had increased by $21,061,000 at
March 31, 2008 compared to December 31, 2007 and reflects the acquisition of
Diamond Core and the deferred exploration expenditure capitalized.
As at March 31, 2008, the Company had cash of $2,201,000 and a working capital
deficit of $5,946,000, compared to cash of $932,000 and a working capital
deficit of $4,287,000 as at December 31, 2007.
The Company does not currently generate revenues other than as a result of its
bulk sampling activities. Revenue generated from the bulk sampling activities,
amounting to US$2,417,000 as at the date of this report, is adequate to
support but not grow the South African operations. Similar to other foreign
entities operating in South Africa, the Company is subject to currency
exchange controls administered by the country`s central bank. An ability to
repatriate funds or operating profits, should any develop, may be adversely
affected by such exchange controls, and consequently the ability to adequately
finance the exploration in the DRC.
During the fourth quarter of 2007, the Company obtained a $3,000,000 credit
line (the "Loan Facility") from a Canadian financial institution, of which
$3,000,000 was utilized as at December 31, 2007. During the first quarter of
2008, the Loan Facility was increased from $3,000,000 to $6,000,000. The
Company had drawn down $5,000,000 of the Loan Facility at March 31, 2008.
The Loan Facility is guaranteed by Banro Corporation, a significant
shareholder of the Company. The Company has agreed with Banro Corporation to
pay all amounts outstanding under the Loan Facility and to terminate the Loan
Facility by July 28, 2008. Management expects the Loan Facility to fund the
Company`s exploration activities until the second quarter of 2008. The Company
will need to raise additional capital in 2008 to fund its exploration programs
for 2008 and to repay the Loan Facility.
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
The Company has relied primarily on equity financings to fund its activities.
Although the Company has been successful in completing equity financings in
the past, there is no assurance that the Company will secure the necessary
financings in the future.
All of the Company`s properties are in the exploration stage and none of these
bodies contain a known body of commercial ore. The Company currently operates
at a loss and does not generate any revenue from operations, other than the
revenue it derives from its bulk sampling operations.
For and on behalf of the Board:
T Botoulas CI Campbell
CEO CFO
16 May 2008
Directors: SFW Village (UK)*, T Botoulas, CI Campbell, MCJ de Wit, GG
Farr*(Cdn), GD Hunter*, AT Kondrat (Cdn) *, SC Thomson * (* non-executive)
Company secretary: GG Farr
Registered address: 1 First Canadian Place, 100 King Street West, Suite 7070,
Toronto, Ontario, M5X 1E3, Canada
Transfer secretaries in South Africa: Computershare Investor Services Limited,
70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107)
Canadian Transfer agent: Equity Transfer & Trust Company, Suite 400, 200
University Avenue, Toronto, Ontario, M5H 4H1, Canada
Sponsor: River Group
Website: www.brc-diamondcore.com
Date: 16/05/2008 17:43:57 Produced by the JSE SENS Department.
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