| Tue 8 Mar 2005, 11:27 | | Interim Results |
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Diamond Core - Interim Results For The Six Month Period Ended 31 December 2004
DIAMOND CORE RESOURCES 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 month period ended 31 December 2004
FINANCIAL RESULTS
Rands
CONSOLIDATED INCOME STATEMENTS
Reviewed Reviewed Audited
For the six For the six For the year
months ended months ended ended
31 December 2004 31 December 30 June 2004
2003
R R R
Revenue - - -
Cost of sales - - -
Other operating income 162,622 60,107 517,995
Exploration costs (1,561,955) (850,199) (1,145,992)
Other operating (2,798,734) (2,074,185) (4,957,520)
expenses
Impairment losses - - -
Preference share - - 7,200,000
capital cancelled
Loans written (back) / (14,000) 498,350 498,350
off
Net expenditure before (4,212,067) (2,365,927) 2,112,833
finance charges
Investment income 126,006 6,085 79,276
Finance costs (4,116) (34,522) (227,976)
Net loss for the (4,090,177) (2,394,364) 1,964,133
period
Number of shares in 647,939,287 437,425,467 563,425,467
issue
Weighted average 598,711,793 437,425,467 468,753,336
number of shares in
issue
Weighted average 620,870,202 581,425,467 469,592,969
number of shares in
issue for diluted
earnings
Headline loss per (0.70) (0.68) (1.28)
share (cents)
Loss per share (cents) (0.68) (0.55) 0.42
Diluted loss per share (0.66) (0.41) 0.42
(cents)
Reconciliation of loss
and headline loss:
Net loss for the (4,090,177) (2,394,364) 1,964,133
period
Loans written back / 14,000 (498,350) (498,350)
(off)
Impairment losses - - -
Preference share - - (7,200,000)
capital cancelled
Profit on disposal of (131,579) (60,107) (254,749)
mining assets
Headline loss (4,207,756) (2,952,821) (5,988,966)
CONSOLIDATED BALANCE SHEETS
31 December 2004 31 December 2003 30 June 2004
ASSETS
Non-current assets 24,661,166 24,544,735 24,164,973
Mining assets 11,161,166 11,044,735 10,664,973
Intangible assets 13,500,000 13,500,000 13,500,000
Current assets 6,314,640 661,605 5,123,832
Accounts receivable 273,208 437,757 687,980
Cash and cash 6,041,432 223,848 4,435,852
equivalents
Total assets 30,975,806 25,206,340 29,288,805
EQUITY AND LIABILITIES
Capital and reserves 27,586,520 17,334,808 24,493,391
Issued capital 65,775,774 55,792,468 58,592,468
Accumulated losses (38,189,254) (38,457,660) (34,099,077)
Non-current 1,575,167 4,628,762 1,575,167
liabilities
Interest bearing - - 1,075,167
borrowings
Non-interest bearing 1,075,167 4,128,762 -
borrowings
Rehabilitation 500,000 500,000 500,000
provision
Current liabilities 1,814,119 3,242,770 3,220,247
Trade and other 1,814,119 2,537,020 3,220,247
payables
Bank overdraft - 705,750 -
Total equity and 30,975,806 25,206,340 29,288,805
liabilities
Net asset value per 4.26 3.96 4.35
share (cents)
ABRIDGED CONSOLIDATED CASH FLOW STATEMENTS
For the six For the six For the year
months ended months ended ended
31 December 2004 31 December 2003 30 June 2004
Cash flow from (4,018,659) (1,278,711) (5,758,749)
exploration and
maintenance activities
Cash flow from (365,013) 17,204 470,157
investing activities
Cash flow from 5,989,252 1,055,161 10,000,000
financing activities
Increase / (decrease) 1,605,580 (206,346) 4,711,408
in cash and cash
equivalents
Net cash and cash 4,435,852 (275,556) (275,556)
equivalents beginning
of period
Net cash and cash 6,041,432 (481,902) 4,435,852
equivalents end of
period
STATEMENTS OF CHANGES IN EQUITY
For the six For the six For the year
months ended months ended ended
31 December 2004 31 December 2003 30 June 2004
Balance at beginning 24,493,391 19,729,172 19,729,172
of period
Issue of share capital 7,183,306 - 10,000,000
Reduction of - - (7,200,000)
preference share
capital
Net loss for the (4,090,177) (2,394,364) 1,964,133
period
Balance at end of 27,586,520 17,334,808 24,493,391
period
COMMENTARY
1. GENERAL
There have been a number of exciting developments in the company in recent
months.
As announced on 20 January 2005, the first prospecting right to be granted in
the Northern Cape in terms of the Mineral and Petroleum Resources Development
Act was awarded to Dikeing Mining (Pty) Limited, Diamond Core`s joint venture
with the Skeyfontein Community. The grant of this right has allowed the company
to continue with its exploration programme over the Skeyfontein property and, on
28 February 2005, the company announced that the chemical probe analysis
conducted on samples taken from the Skeyfontein property had yielded encouraging
results. The mineral chemistry indicates that the kimberlite, SKY1, has sampled
diamond bearing source rocks and has a high potential to contain diamonds.
As announced on 28 January 2005, the company has been granted an option to
acquire all of the shares in and claims against Samadi Resources SA (Pty)
Limited (`Samadi`). Samadi has an 85% interest in three alluvial projects on
the Middle Orange River, the balance being held by Sefalana Resources (Pty)
Limited, a broad-based BEE consortium. Alluvial deposits on the Middle Orange
River are typically low grade but usually contain high value diamonds with a
high average stone size.
The board is extremely pleased with these developments and believes that they
augur well for the prospects of the company.
2. OPERATIONAL REVIEW
The company currently holds rights over two properties - the Paardeberg East
project near Kimberley and the Skeyfontein project near Postmasburg.
Paardeberg East project:
The board has decided that, in light of the potential merger of Diamond Core
with Samadi (`the Samadi merger`), further work on the Paardeberg project should
be delayed until after the Samadi merger is completed. However, detailed plant
design has been completed by CDM Group (Pty) Limited and preliminary modelling
of the mine by Hatch Africa (Pty) Limited has shown that the project is likely
to be profitable at the current exchange rate. The Department of Minerals and
Energy has confirmed that the licence over the property is valid until 30 April
2009 as opposed to 27 April 2005 as originally indicated to the company. During
the latter half of October 2004, a pre-commissioning inspection revealed that a
local farmer had unlawfully removed and sold a section of the company`s
underground water pipeline which extends from the Vaal River to the Paardeberg
plant site. Efforts to achieve redress with the farmer were unsuccessful and
the company is instituting legal proceedings in order to enforce replacement of
the missing section of the pipeline. The board is confident that the pipeline
will be restored to its former state in due course.
Skeyfontein project:
Subsequent to the prospecting right being granted over the Skeyfontein property,
stream sediment samples were analysed and, based on this information, the
company will be continuing with its exploration programme on the property. In
addition, in terms of the agreement reached with the Skeyfontein Community, a
household survey has been conducted in order to properly assess the needs of the
community
3. FINANCIAL REVIEW
Review and accounting policies
The results for the half year ended 31 December 2004 have been reviewed by
Charles Orbach & Company. Their review opinion is available for inspection at
the registered office of the company. Without qualifying their report, the
auditors have drawn attention to the going concern status of Diamond Core which
is expected to be rectified either through the capital raising associated with
the Samadi merger or by the sale of assets and further issues of shares for cash
as detailed in paragraph 5 below.
The accounting policies and methods of computation applied by the company are
consistent with those applied in the previous financial years and periods. The
interim report has been compiled in accordance with South African Statements of
Generally Accepted Accounting Practice applicable to interim financial
reporting.
Commentary
Income: Diamond Core is an exploration company and therefore at present does not
generate any mining income.
Expenses: Expenses incurred by the company on exploration and securing tenure
amounted to 36% of the total expenses incurred in the six month period ended 31
December 2004 compared with 29% in the six months ended 31 December 2003. In
addition, whilst no expenses were incurred in the six month period ended 31
December 2003 relating to mine and plant design, in this reporting period
approximately R500 000 was invested in these activities.
Shares in issue: In July 2004, 5 037 800 shares were issued to the company`s
corporate advisers, QuestCo (Pty) Limited, in part payment for advisory
services. In October 2004, a further 79 476 020 shares were issued for cash in
terms of the general authority granted by shareholders at the annual general
meeting.
4. THE SAMADI OPTION
Venmyn Rand (Pty) Limited (`Venmyn`) has been appointed as the Competent Person
for purposes of the Samadi merger. Venmyn has commenced its work on evaluating
the assets of both Samadi and Diamond Core. Negotiations on the merger ratio
are expected to commence in April 2005.
5. FUTURE FUNDING OF THE COMPANY
Concurrently with the implementation of the Samadi merger, the company will
embark upon a capital raising exercise in order to fund construction of diamond
recovery plants as well as further exploration and development activities. In
the unlikely event that the Samadi merger is not implemented, the company will
be obliged to undertake further issues of shares for cash to fund its activities
on the Paardeberg and Skeyfontein projects as it has not as yet been able to
dispose of its Dense Medium Separation (`DMS`) plant.
6. SHAREHOLDER BASE
Analysis of the shareholder register indicates that over 50% of the company`s
issued shares are held by a number of South African financial institutions. The
board is of the view that this is positive for the liquidity and pricing of the
company`s shares in the market.
7. CHANGE IN COMPANY SECRETARY
As announced on 1 March 2005, and with effect from the same date, Mr Keith
Plekker has resigned as company secretary and Ms Jenny Marshall has taken over
as the new company secretary. Mr Plekker will be leaving the employ of the
company to pursue a career in general management. We wish Mr Plekker every
success in his future endeavours and thank him for the contribution he has made
to the company`s development.
For and on behalf of the board:
T Botoulas
Managing director
A C Louw
Non-executive chairman
8 March 2005
Directors: A C Louw, T Botoulas, D Levithan, S Nachom* Non-Executive *American
Company secretary: K Plekker
Registered address: 5th Floor, South Wing, Hyde Park Corner, cnr Jan Smuts and
William Nicol Ave, Hyde Park, Sandton
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown, 2107)
Sponsor: QuestCo (Pty) Limited
Website : www.diamondcore.co.za
