| Thu 30 Mar 2006, 17:00 | | Diamond Core - Interim results for the six month p |
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DMR DMRO
DMR
Diamond Core - Interim results for the six month period ended 31 December 2005
DIAMOND CORE RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
Share code: DMR & ISIN Number: ZAE000076956
Option code: DMRO & ISIN Number: ZAE000078945
("Diamond Core" or "the company")
Interim results for the six month period ended 31 December 2005
FINANCIAL RESULTS
Rands
CONSOLIDATED INCOME
STATEMENT
Reviewed Restated Restated
6 months 6 months Year ended
ended ended
31 December 31 December
2005 2004 30 June 2005
R R R
Revenue - - -
Cost of sales - - -
Other operating income 18,790 162,622 443,284
Exploration costs (733,899) (1,561,955) (4,570,796)
Other operating expenses (3,199,714) (3,030,644) (4,744,084)
Impairment losses - - (1,232,833)
Rehabilitation Provision - - (2,400,000)
Loans written off - (14,000)
Net expenditure before (3,914,823) (4,443,977) (12,504,429)
finance charges
Investment income 157,195 126,006 272,158
Finance costs (5,048) (4,116) (6,153)
Net loss for the period (3,762,676) (4,322,087) (12,238,424)
Number of shares in issue 663,399,461 647,939,287 647,939,287
Weighted average number of 652,750,221 598,711,793 623,123,235
shares in issue
Weighted average number of 715,572,162 620,870,202 663,057,870
shares in issue for
diluted earnings
Headline loss per share (0.58) (0.74) (1.44)
(cents)
Loss per share (cents) (0.58) (0.72) (1.96)
Diluted loss per share (0.53) (0.70) (1.85)
(cents)
Reconciliation of loss and
headline loss:
Net loss for the period (3,762,676) (4,322,087) (12,238,424)
Loans written off 14,000 -
Impairment losses - - 1,232,833
Rehabilitation Provision - - 2,400,000
Profit on disposal of - (131,579) (391,007)
mining assets
Headline loss (3,762,676) (4,439,666) (8,996,598)
CONSOLIDATED BALANCE SHEET
ASSETS
Non-current assets 17,396,091 24,169,871 17,365,751
Mining assets 3,896,091 10,669,871 3,865,751
Intangible assets 13,500,000 13,500,000 13,500,000
Current assets 4,729,113 6,314,640 7,884,678
Accounts receivable 1,960,980 273,208 590,283
Cash and cash equivalents 2,768,133 6,041,432 7,294,395
Total assets 22,125,204 30,484,511 25,250,429
EQUITY AND LIABILITIES
Total equity 17,235,056 27,095,225 19,628,732
Issued capital 67,144,774 65,775,774 65,775,774
Share based payments 490,773 40,928 490,773
reserve
Retained losses (50,400,491) (38,721,477 (46,637,815)
)
Non-current liabilities 3,975,167 1,575,167 3,975,167
Non-interest bearing 1,075,167 1,075,167 1,075,167
borrowings
Rehabilitation provision 2,900,000 500,000 2,900,000
Current liabilities 914,981 1,814,119 1,646,530
Trade and other payables 914,981 1,814,119 1,646,530
Total equity and 22,125,204 30,484,511 25,250,429
liabilities
Net asset value per share 2.60
(cents) 4.18 3.03
CONSOLIDATED CASH FLOW
STATEMENT
Cash flow from exploration (5,201,481) (4,018,659) (9,475,344)
and maintenance activities
Cash flows from investing (293,481) (365,013) 5,150,581
activities
Cash flows from financing 968,700 5,989,252 7,183,306
activities
Increase in cash and cash (4,526,262) 1,605,580 2,858,543
equivalents
Net cash and cash 7,294,395 4,435,852 4,435,852
equivalents beginning of
period
Net cash and cash 2,768,133 6,041,432 7,294,395
equivalents end of period
STATEMENT OF CHANGES IN
EQUITY
Balance at beginning of 19,628,732 24,493,391 24,493,391
period
Opening RI adjustment - (300,314) (300,314)
IFRS -
Issue of share capital 1,369,000 7,183,306 7,183,306
Share based payment 40,929 490,773
reserve -
Net loss for the period (3,762,676) (4,322,087) (12,238,424)
Balance at end of period 17,235,056 27,095,225 19,628,732
COMMENTARY
1. GENERAL
There have been a number of exciting developments in recent months. In November
2005, new order mining and prospecting rights were granted over the projects
held by Samadi Resources SA (Pty) Limited ("Samadi"). The merger of the company
with Samadi and the issue of shares and options for cash to raise capital,
details of which were contained in the circular to shareholders dated 3 February
2006, were approved by shareholders in the general meeting held on 27 February
2006. The capital raising process has now been finalised and the company made
an announcement confirming the successful raising of R232 million in this
process on 29 March 2006. The purchase of the plant and equipment required for
the prospecting, exploration and mining activities on the Paardeberg East and
Skeyfontein projects, as well as on the Middle Orange River alluvial projects,
will now commence in earnest.
2. OPERATIONAL REVIEW
The Diamond Core group ("the group") currently holds rights over five
properties:
- an old order mining right over the Paardeberg East project near Kimberley
which must be converted before April 2009;
- a new order prospecting right over the Skeyfontein project near
Postmasburg; and
- new order rights over three Middle Orange River alluvial prospects namely:
- a new order mining right and new order prospecting right over the
Silverstreams project;
- a new order prospecting right over the Uitdraai project; and
- a new order prospecting right over the De Kalk project.
Very little operational activity has taken place over the last six months whilst
the company awaited the grant of the prospecting and mining rights over the
Middle Orange River projects and the completion of the merger process. Now that
the merger and the capital raising process have been finalised, operational
activities can commence. The company intends to undertake bulk sampling of the
PK1 and PK3 kimberlites on Paardeberg with a DMS plant as well as continuing
with exploration work on the remainder of the farm and its surrounding areas.
Future detailed exploration is planned on the Skeyfontein project to determine
the extent of the kimberlite identified as SKY1. In addition, the company
intends to construct bulk sampling plants to continue with exploration
activities on the Silversteams and Uitdraai projects. Drilling of the De Kalk
project will also be undertaken.
3. FINANCIAL REVIEW
3.1 Review
The results for the half year ended 31 December 2005 have been reviewed by
Charles Orbach & Company. Their review opinion is available for inspection at
the registered office of the company.
3.2 Basis of preparation
The group has adopted International Financial Reporting Standards (IFRS) for the
year ending 30 June 2006. IFRS 1 - First time adoption of International
Financial Reporting Standards - has been applied in preparing the group"s
reviewed interim results, which have been prepared in accordance with IAS 34 -
Interim Financial Reporting.
In applying IFRS, the group has elected not to retrospectively apply the
requirements of IFRS 3 for business combinations that occurred prior to 1 July
2004, and not to apply IFRS 2 Share-based payments to equity instruments that
were granted on or before 7 November 2002.
This report has been prepared based on current IFRS statements issued up to 31
December 2005. The group"s first IFRS compliant annual financial statements
will be prepared for the year ending 30 June 2006, based on standards and
interpretations prevailing at that date.
Significant changes to the group"s accounting policies as a result of the
adoption of IFRS
1. Share based payment transactions - IFRS 2
The fair value of share options granted to employees is now recognised as an
expense in the income statement, with a corresponding credit to equity, over the
vesting periods.
2. Property, plant and equipment - IAS 16
The depreciation basis has been changed to a usage basis for categories where
appropriate e.g. earthmoving and mining equipment, while the straight line basis
will continue to be used for the remaining categories of assets. Residual values
and components subject to depreciation were also re-assessed.
The above changes have had a negative impact on the group"s previously reported
earnings and net asset values, as shown in the profit and equity reconciliations
below. There was no material effect on cash flows.
Equity reconciliation of previous SA
GAAP to IFRS
Reviewed
Six months ended Year ended Transition
date
31 December 2004 30 June 2005 30 June 2004
Total equity
As previously 27,586,520 20,311,008 24,493,391
reported
Property, plant and (491,295) (682,276) (300,314)
equipment
As reported under 27,095,225 19,628,732 24,193,077
IFRS
Income statement reconciliation of previous SA GAAP
to IFRS
Net (loss)/profit
for the period
As previously (4,090,178) (11,365,689)
reported
Property, plant and (190,981) (381,962)
equipment
Share-based (40,928) (490 773)
payments
As reported under (4,322,087) (12,238,424)
IFRS
3.3 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 19% of the total expenses incurred in the six month period ended 31
December 2005 compared with 34% in the six months ended 31 December 2004. This
decline is due to the lack of operational activity, as mentioned in the
operational review above.
Shares in issue: During the period, 4 070 174 (unconsolidated) shares were
issued to the company"s corporate advisers, QuestCo (Pty) Limited, in part
payment for advisory services and 11 400 000 (unconsolidated) shares were issued
for cash in terms of the general authority granted by shareholders at the annual
general meeting.
4. LITIGATION
The company is pleased to advise that litigation instituted by Yosef Weltsman,
in both his personal capacity and in his capacity as a member of the Gentle
Touch cc, in an amount of R3 368 511 has been withdrawn.
5. OUTLOOK
The company is looking forward to a very exciting roll-out period which should
see the culmination of all the work invested in re-listing Diamond Core and in
concluding the merger and the capital raise. The company now has five projects
at varying stages of exploration and development together with a number of
"grassroots" projects focused in the Northern Cape. The board believes that
this critical mass could lead to further consolidation of assets and is likely
to provide further exciting growth opportunities for the group.
For and on behalf of the board:
T Botoulas A C Louw
Managing director Non-executive chairman
30 March 2006
Directors: A C Louw, T Botoulas, D Levithan, S Nachom* Non-Executive *American
Company secretary: J Marshall
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 Limited, 70 Marshall
Street, Johannesburg 2001 (PO Box 61051, Marshalltown, 2107)
Sponsor: QuestCo (Pty) Limited
Website : www.diamondcore.co.za
www.diamondcore.co.za
Date: 30/03/2006 05:00:10 PM Produced by the JSE SENS Department
