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DIAMOND CORE RESOURCES LIMITED - INTERIM RESULTS FOR THE SIX MONTHS ENDED 31
DECEMBER 2003 AND 31 DECEMBER 2002, ABRIDGED ANNUAL RESULTS FOR THE YEAR ENDED
30 JUNE 2003 AND A NO CHANGE STATEMENT, THE LIFTING OF THE SUSPENSION OF THE
LISTING OF THE COMPANY AND THE EXERCISE OF AN OPTION
DIAMOND CORE RESOURCES LIMITED
(Formerly Mazal Mining and Exploration Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
Share code: DMR ISIN Number: ZAE000045688
("Diamond Core" or "the Company")
Interim results for the six months ended 31 December 2003 and 31 December 2002,
abridged annual results for the year ended 30 June 2003 and a no change
statement, the lifting of the suspension of the listing of the Company and the
exercise of an option
Interim results for the six months ended 31 December 2003, abridged annual
results for the 12 months ended 30 June 2003 and interim results for the six
months ended 31 December 2002
CONSOLIDATED INCOME
STATEMENTS
Reviewed Audited Unaudited
6 months 12 months 6 months
ended ended ended
31 December 30 June 31 December
2003 2003 2002
R R R
Revenue - - -
Cost of sales - - -
Other income 60,107 3,150,878 2,698,924
Exploration (850,199) (2,627,972) -
costs
Operating (2,074,185) (2,797,165) (2,678,676)
expenses
Impairment - (2,006,671) (2,006,671)
losses
Litigation (1,500,000) - -
settlement
Loans written 1,998,350 (245,271) -
off / (back)
Operating loss (2,365,927) (4,526,201) (1,986,423)
before interest
Investment 6,085 58,051 -
income
Finance costs (34,522) (1,357,653) (1,147,714)
Net loss for (2,394,364) (5,825,803) (3,134,137)
the period /
year
Number of 437,425,467 437,425,467 203,384,981
shares in issue
Weighted 437,425,467 270,711,696 203,384,981
average number
of shares in
issue
Headline loss (0.68) (1.92) (1.41)
per share
(cents)
Loss per share (0.55) (2.15) (1.54)
(cents)
-
Reconciliation
of headline
loss:
Attributable (2,394,364) (5,825,803) (3,134,137)
loss
Loans payable (1,998,350) 245,271 -
written (off)
/ back
Litigation 1,500,000 - -
settlement
Impairment - 2,006,671 2,006,671
losses
Profit on (60,107) (1,619,979) (1,732,177)
disposal of
mining assets
Headline loss (2,952,821) (5,193,840) (2,859,643)
CONSOLIDATED BALANCE SHEETS
Reviewed Audited Unaudited
31 December 30 June 2003 31 December
2003 2002
R R R
ASSETS
Non-current 24,544,735 24,501,831 24,156,279
assets
Mining assets 11,044,735 11,001,831 10,656,279
Intangible 13,500,000 13,500,000 13,500,000
assets
Current assets 661,605 1,926,537 2,492,815
Inventories - - 45,000
Trade and 437,757 1,359,759 353,248
other
receivables
Cash and cash 223,848 566,778 2,094,567
equivalents
Total assets 25,206,340 26,428,368 26,649,094
EQUITY AND
LIABILITIES
Capital and 17,334,808 19,729,172 18,098,127
reserves
Issued capital 55,792,468 55,792,468 35,192,468
Equity loans - - 16,277,289
Accumulated (38,457,660) (36,063,296) (33,371,630)
losses
Non-current 4,628,762 3,573,598 3,572,390
liabilities
Interest - 1,075,167 1,133,461
bearing
borrowings
Non-interest 4,128,762 1,998,431 2,098,929
bearing
borrowings
Rehabilitation 500,000 500,000 340,000
provision
Current 3,242,770 3,125,598 3,296,752
liabilities
Trade and 2,537,020 2,283,264 2,532,841
other payables
Current - - -
portion of
interest
bearing
borrowings
Non-interest - - -
bearing
borrowings
Bank overdraft 705,750 842,334 763,911
Total equity 25,206,340 26,428,368 26,649,094
and
liabilities
Net asset 3.96 4.51 0.90
value per
share (cents)
CONSOLIDATED ABRIDGED CASH FLOW STATEMENTS
6 months 12 months 6 months
ended ended ended
31 December 30 June 31 December
2003 2003 2002
R R R
Cash outflow from (1,278,711) (5,937,358) (2,470,715)
exploration and
maintenance
activities
Cash flows from 17,204 2,306,210 2,777,691
investing
activities
Cash inflows from 1,055,161 4,248,667 1,916,754
financing
activities
(Decrease)/Increase (206,346) 617,519 2,223,729
in cash and cash
equivalents
Net cash and cash (275,556) (893,075) (893,075)
equivalents
beginning of period
/ year
Net cash and cash (481,902) (275,556) 1,330,654
equivalents end of
period / year
STATEMENTS OF CHANGES IN
EQUITY
6 months 12 months 6 months
ended ended ended
31 December 30 June 31 December
2003 2003 2002
R R R
Balance at 19,729,172 4,954,975 4,954,975
beginning of
year
Net loss for (2,394,364) (5,825,803) (3,134,137)
the period /
year
Issue of share - 20,600,000 -
capital
Balance at end 17,334,808 19,729,172 1,820,838
of period /
year
Comparative figures for the 12 months ended 30 June 2002 and six months ended 31
December 2001
CONSOLIDATED INCOME STATEMENTS
Audited Unaudited
12 months 6 months
ended ended
30 June 2002 31 December
2001
R R
Revenue 4,479,759 1,939,709
Cost of sales (9,997,564) (3,891,534)
Other income 69,992 -
Exploration - -
costs
Operating (7,604,817) (3,516,151)
expenses
Impairment - -
losses
Litigation - -
settlement
Loans written 2,821,209 -
off / (back)
Operating loss (10,231,421) (5,467,976)
before
interest
Investment 13,959 -
income
Finance costs (1,884,843) (748,991)
Net loss for (12,102,305) (6,216,967)
the period /
year
Number of 203,384,981 191,805,018
shares in
issue
Weighted 191,711,411 182,181,362
average number
of shares in
issue
Headline loss (7.81) (3.41)
per share
(cents)
Loss per share (6.31) (3.41)
(cents)
- -
Reconciliation
of headline
loss:
Attributable (12,102,305) (6,216,967)
loss
Loans payable (2,821,209) -
written (off)
/ back
Litigation - -
settlement
Impairment - -
losses
Profit on (48,084) -
disposal of
mining assets
Headline loss (14,971,598) (6,216,967)
CONSOLIDATED BALANCE SHEETS
Audited Unaudited
30 June 2002 31 December
2001
R R
ASSETS
Non-current 27,208,464 25,866,931
assets
Mining assets 13,708,464 12,366,931
Intangible 13,500,000 13,500,000
assets
Current assets 945,977 748,472
Inventories 45,000 324,583
Trade and 702,836 237,675
other
receivables
Cash and cash 198,141 186,214
equivalents
Total assets 28,154,441 26,615,403
EQUITY AND
LIABILITIES
Capital and 19,624,455 7,713,993
reserves
Issued capital 35,192,468 32,066,148
Equity loans 14,669,480 -
Accumulated (30,237,493) (24,352,155)
losses
Non-current 4,056,433 15,791,567
liabilities
Interest 1,718,002 13,463,256
bearing
borrowings
Non-interest 1,998,431 2,108,311
bearing
borrowings
Rehabilitation 340,000 220,000
provision
Current 4,473,553 3,109,843
liabilities
Trade and 2,588,590 1,278,069
other payables
Current 683,868 -
portion of
interest
bearing
borrowings
Non-interest 109,879 -
bearing
borrowings
Bank overdraft 1,091,216 1,831,774
Total equity 28,154,441 26,615,403
and
liabilities
Net asset 2.44 4.02
value per
share (cents)
CONSOLIDATED ABRIDGED CASH FLOW STATEMENTS
Audited Unaudited
12 months 6 months
ended ended
30 June 2002 31 December
2001
R R
Cash outflow from (11,862,672) (5,213,322)
exploration and
maintenance
activities
Cash flows from (2,232,089) (78,303)
investing
activities
Cash inflows from 14,470,878 4,915,256
financing
activities
(Decrease)/Increase 376,117 (376,369)
in cash and cash
equivalents
Net cash and cash (1,269,192) (1,269,192)
equivalents
beginning of period
/ year
Net cash and cash (893,075) (1,645,560)
equivalents end of
period / year
STATEMENTS OF CHANGES IN EQUITY
12 months 6 months
ended ended
30 June 2002 31 December
2001
R R
Balance at 10,743,335 10,743,335
beginning
of year
Net loss (12,102,305) (6,216,967)
for the
period /
year
Issue of 6,313,945 3,187,625
share
capital
Balance at 4,954,975 7,713,993
end of
period /
year
1. LIFTING OF THE SUSPENSION OF THE LISTING OF THE COMPANY
The Company is pleased to announce that, upon posting of these results and the
annual reports referred to in paragraph 8 below, the Company will have complied
with the requirements of the JSE Securities Exchange South Africa ("JSE") for
the uplifting of the suspension of trading in the shares of the Company. The
JSE has agreed to lift the suspension with effect from the commencement of
business on Wednesday 31 March 2004.
The following report summarises activities which occurred during the periods
from 1 July 2002 to 31 December 2003. Full details appear in the 2002 and 2003
annual reports which are to be posted to shareholders today.
2. GEOLOGICAL AND OPERATIONAL REVIEW
The operations of the Company ceased during June 2002.
At a general meeting held on 28 February 2003 ("the general meeting"),
shareholders approved an agreement between the Company and Hopkinton Capital
Limited ("Hopkinton") in terms of which, inter alia, an amount of R5 million was
raised.
During March 2003, Geoventures (Pty) Ltd ("Geoventures") was retained to conduct
additional exploration at certain portions of Paardeberg East. Geoventures has
reported an inferred resource of 3 million tons of kimberlite on Portion 10 of
Paardeberg East ("P1") down to 150 metres and an inferred resource of 3.5
million tons of kimberlite on Portions 11, 12 and 13 of Paardeberg East ("P3")
down to 50 meters.
The Company has retained MSA Geoservices (Pty) Limited to continue with the
Company"s exploration activities on the Paardeberg East and Skeyfontein
projects. The total cash required for exploration purposes until June 2004 is R
3.5 million.
The tasks which the Company has already accomplished with the finance which was
at its disposal from 28 February 2003 to 31 December 2003 include:
conducting a technical analysis of the Paardeberg East kimberlites;
reaching agreement with and settling certain creditors;
refurbishing the infrastructure on site (at Paardeberg East); and
appointing an appropriately qualified Financial Manager.
3. RESTRUCTURING
A provisional liquidation order against a subsidiary of the Company was
discharged on 18 November 2003 after a settlement was entered into between the
parties. At the same time, the holders of the 144 million preference shares
issued at the general meeting, agreed to the cancellation of such shares. In
addition, a loan of R1.998 million was written off by agreement between the
parties.
4. THE HOPKINTON OPTION
At the general meeting, shareholders approved the grant of an option ("the
option") to Hopkinton to acquire 126 million shares at 7.94 cents per share,
which is an 11.8% discount to the last traded price of the Company"s shares,
being 9 cents per share. The option has been ceded to RMB Asset Management
(Pty) Limited ("RMBAM"), which is not a related party to the Company. Subject
to the relisting of the Company"s shares on the JSE, RMBAM will exercise the
option and R10 million capital will be provided to the Company. The directors
believe that the exercise of the option will provide the Company with sufficient
funds to complete the exploration activities on Paardeberg East and to initiate
exploration on Skeyfontein.
The financial effects of the exercise of the option, assuming it was exercised
on 1 July 2003, are based on the following assumptions: on 1 July 2003, R2.7
million of shareholders loans are repaid, an overdraft of R0.7 million is
released, creditors amounting to R1 million are settled and R3.5 million is paid
to contractors for exploration work to be undertaken. The balance is utilised
over the period to cover operating expenses and it was assumed that no interest
was earned on such funds.
Reviewed interim Prior to the After the % change
results for the exercise of exercise
period ended 31 the option of the
December 2003 option
Loss per share (0,55) (1,42) (158.2)
Headline loss per (0,68) (1,52) (123.5)
share
Net asset value 3,96 3,86 (2.5)
per share
Net tangible 0,88 1,46 65.9
asset value per
share
Number of shares 437 425 467 563 425
in issue 467
These financial effects are the responsibility of the directors of the Company
and have been prepared for illustrative purposes and, because of their nature,
may not fairly present the Company"s financial position.
.
5. FINANCIAL REVIEW
Audit, review and accounting policies
The results for the years ended 30 June 2002 and 30 June 2003 have been audited
and the results for the six month period ended 31 December 2003 have been
reviewed by Charles Orbach & Company. Their audit and review opinions are
available for inspection at the registered office of the Company. Without
qualifying their reports, the auditors have drawn attention to the going concern
status of the Diamond Core Group ("the Group"), which is expected to be
rectified by the exercise of the option as detailed in paragraph 4.
The accounting policies and methods of computation applied by the Company are
consistent with those applied in the previous financial years and periods.
These policies are in compliance with South African Statements of Generally
Accepted Accounting Practice. The interim reports have been prepared in
accordance with AC127, Interim Financial Reporting.
Commentary
Other income: Other income during the period ended 31 December 2003 comprises
profit on the sale of fixed assets and in the year ended 30 June 2003 (six
months ended 31 December 2002) comprises profit on the sale of fixed assets -
50% (64%), foreign exchange gains on various long-term borrowings - 30% (32%),
discounts received on settlement of certain creditors - 17% (2%) with the
balance being an insurance claim received.
Impairment losses: In the six months ended 31 December 2002, selected assets
were written down by an amount of R 2,006,671 to net realisable book value. No
further impairments are currently anticipated.
Issued capital: As set out in paragraph 2 above, in February 2003 the Company
issued 64 million ordinary shares to Hopkinton for an amount of R5 million. In
addition, non-current loans amounting to R8,4 million were converted into
equity, resulting in a further issue of 170,040,486 ordinary shares. A further
R7,2 million of non-current loans was converted into 144 million preference
shares, which the holders subsequently agreed to cancel.
6. FUTURE PROSPECTS: MANAGERIAL CONCERNS
The lack of proper mine planning by previous mine management has resulted in
damage to the P1 kimberlite and part of the resource has been sterilised. In
addition, the existing plant and equipment must be substantially re-engineered
or replaced. The board is of the view that, without the ongoing dedication of
current management, a turnaround of the Company"s fortunes will therefore be
difficult to achieve.
7. COMPLIANCE WITH THE MINING CHARTER
The Company intends to fully comply with directives issued by Government
concerning Black Economic Empowerment. To this end, management has already
negotiated an agreement with the Skeyfontein Communal Property Association,
details of which were set out in an announcement published on SENS on 15 October
2003.
8. NO CHANGE STATEMENT AND ANNUAL GENERAL MEETINGS
The annual reports for the years ended 30 June 2002 and 30 June 2003 will be
posted to shareholders today. The financial information presented in such
reports is unchanged from that presented above. The annual general meetings for
both years will be held on 30 April 2004 at 09:00 and 09:15 (or so soon
thereafter as the meeting convened for 09:00 has been concluded) respectively at
the offices of the corporate advisors of the Company, being QuestCo (Pty)
Limited, Ground Floor, Wrigley Field, The Campus, 57 Sloane Street, Bryanston,
Johannesburg.
For and on behalf of the board:
T. Botoulas D Levithan
Managing Director Non-executive director
29 March 2004
Directors: CP Dollery*, S Nachom**, D Levithan, T Botoulas *British, **American
Non-Executive
Company secretary: K Plekker
Company registered address: Ground Floor, Orbach Place, 261 Oxford Road, Illovo,
Johannesburg, 2196 (P O Box 821, Northlands, 2116)
Transfer secretaries: Computershare Limited, 70 Marshall Street, Johannesburg
2001 (PO Box 61051, Marshalltown, 2107)
Sponsor: Sasfin Corporate Finance, A division of Sasfin Bank Limited
Date: 29/03/2004 02:30:22 PM Produced by the JSE SENS Department
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