TIDMNAD
RNS Number : 7530G
Namakwa Diamonds Limited
03 July 2012
3 July 2012
Namakwa Diamonds Limited (LSE: NAD)
Q3'FY2012 Interim Management Statement
Namakwa Diamonds Limited ("Namakwa", the "Company" or the
"Group") today issues its interim management statement for the
period 1 March 2012 to 31 May 2012, together with a trading update
to 25 June 2012.
HIGHLIGHTS:
-- June 2012 Antwerp Tender: Aggregate sales revenue of
US$11.29m, through tender partner Fusion Alternatives, with the
sale of an 11.36ct vivid pink diamond from the North West Province
achieving a Namakwa Diamonds' house-record price of US$4.55m
(US$400,900/ct) and the sale of 22,743 carats of run-of mine
production from the Kao Mine raising US$6.73m at an average price
of US$296/ct.
-- Lesotho: Q3'FY2012 production 42,348 carats, from 397,560
tonnes processed, an average cost of US$400/ct. Sales during the
period amounted to 22,865 carats at an average price of US$350/ct.
The ramp-up of processing capacity continues in line with
expectations. The second new crusher was installed into the
tertiary crushing circuit in June 2012 and the repaired scrubber
will now be reinstalled into the processing sequence in mid-July
2012. This will correspond with the commissioning of the water
pipeline for supplemental make-up process water. The costs of
remaining capital projects will be met from Group resources and
operations are currently cash-flow positive. As at 25 June 2012,
YTD production was 85.7Kcts and management has reconfirmed its
FY2012 target of 150Kcts.
-- South Africa: Q3'FY2012 production 5,296 carats, from 798,577
tonnes processed, an average cost of US$1,034/ct. Sales during the
period amounted to 3,032 carats at an average price of US$1,326/ct.
Operations are cash-flow positive and 13 special diamonds (above
10.8cts each) were discovered during the period, with the largest
being 43.7ct and the most valuable being the 11.36ct vivid pink
diamond mentioned. Sales during the period also included a 44.47ct
diamond produced in H1'FY2012 which achieved US$1.5m in revenue. As
at 25 June 2012, YTD production was 18.5Kcts and management
anticipated exceeding their FY2012 production target of 20Kcts.
-- Group Funding: Group fully funded with the completion of
c.US$55m pre-emptive equity open offer and repayment of c.US$45.5m
in Group debt in June 2012.
-- Corporate Costs:Continue to be significantly reduced as Group
restructuring nears completion. Q3'FY2012 costs were US$2.2m,
providing for an aggregate total YTD of US$6.3m against an FY2012
target of US$9m (FY2011: US$15.9m actual).
-- Move to AIM: Following the closure of the equity fundraising,
the Company's free-float is less than 25%. As a result, the Company
has today commenced a process to de-list from the Main Market and
is expected to move to AIM at 8am on 1 August 2012.
Commenting, Richard Collocott, CEO of Namakwa said: "Following
my appointment as Chief Executive Officer in September 2011, I am
pleased to report that we have now successfully executed our stated
strategy and restructured the Company, providing a platform of
positive cash-flow in the North West Province of South Africa and
the Kao Mine in Lesotho and a significant reduction in Group costs.
The Company is now positioned for its next stage of development -
turning the Kao Mine into a major kimberlite production asset on
the World stage."
For further information please visit www.namakwadiamonds.com or
contact:
Namakwa Diamonds Tavistock Communications
+44 20 7920
Richard Collocott +27 11 334 8886 Simon Hudson 5150
---------------- -------------- ------------
+44 7974 453 +44 20 7920
Ryan Barrow 954 Simon Compton 5150
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Notes to Editors:
About Namakwa Diamonds Limited
Namakwa is a diamond resource group, which seeks to extract
maximum value from the marketing, distribution and sale of Group
mined and contracted production.
The Group's Mining Division is focused on the Kao mine in
Lesotho, the 4th largest individual kimberlite pipe in South Africa
and Lesotho (and the only one mining at or near surface),
anticipated to come into commercial production in the first quarter
of the calendar year in 2012. Operated by Storm Mountain Diamonds
and its leading hard-rock mining team, with a proven track record
in the construction and development of Lesotho's leading kimberlite
pipes, the Kao mine presents a 186Mt kimberlite resource of c.13m
carats (c.4m indicated and c.9m inferred), in which Namakwa holds a
62.5% interest.
The Group also maintains alluvial mining operations in the North
West Province of South Africa.
Forward Looking Statements
This announcement includes forward-looking statements that
reflect the current views of Namakwa Diamonds' management with
respect to future events. These forward-looking statements include
matters that are neither historical facts nor are statements
regarding the Company's intentions, beliefs or current expectations
concerning, inter alia, the Company's results of operations,
financial condition, liquidity, prospects, growth, strategies, and
the industry in which Namakwa Diamonds operates. Forward-looking
statements are based on current plans, estimates and projections,
and therefore too much reliance should not be placed upon them.
Such statements are subject to risks and uncertainties, most of
which are difficult to predict and are generally beyond the
Company's control. Namakwa Diamonds cautions you that
forward-looking statements are not guarantees of future performance
and that if risks and uncertainties materialise, or if the
assumptions underlying any of these statements prove incorrect, the
Company's actual results of operations, financial condition and
liquidity and the development of the industry in which Namakwa
Diamonds operates may materially differ from those made in, or
suggested by, the forward-looking statements contained in this
announcement. In addition, even if the Company's results of
operations, financial condition and liquidity and the development
of the industry in which Namakwa Diamonds operates are consistent
with the forward-looking statements contained in this announcement,
those results or developments may not be indicative of results or
developments in future periods. Except as required by the United
Kingdom Listing Authority's Listing Rules and applicable law, the
Company does not undertake to update any forward-looking statements
to reflect events that occur or circumstances that may arise.
Operating & Financial Review
Lesotho
During the period 1 March 2012 to 31 May 2012, the mining area
produced 42,348 carats from 397,560 tonnes processed at an average
cost of US$400/ct and 22,865 carats were sold at an average price
of US$350/ct. From an operational perspective, the mine turned
cash-flow positive in June 2012 and up to 25 June 2012 YTD
production was 85,721 carats from 525,471 tonnes processed.
Operations continue to be ramped up, with the second new crusher
commissioned into the tertiary crushing circuit in June 2012 and
the repaired scrubber now planned to be installed in mid-July 2012.
Make-up process water remains sufficient for current operations and
water levels in the freshwater dam are currently higher than
forecasted. The construction of the water pipeline that will
provide an additional source of process water for operations
remains on schedule for commissioning in mid-July 2012. As such,
the local management team is confident that a production target of
150Kcts for FY2012 (as revised in late May 2012) remains
achievable.
Namakwa Diamonds will continue to fund remaining capital items
for the Phase 1 ramp-up from internal resources, during FY2012.
Thereafter, it is expected that the mine will operate on a
stand-alone basis, with corporate and operational support from
Namakwa Diamonds.
Storm Mountain Diamonds Q3'FY2012 H1'FY2012 FY2011(1) FY2010(1)
- Kao Mine - Phase 1 Production
Data
---------------------------------- ---------- ---------- ---------- ----------
Tonnage 1,794,349 1,308,336 136,376 43,168
Tonnes Treated - K6 310,671 54,817 - -
Tonnes Treated - KOther 86,889 255,071 - -
Waste Tonnes 1,396,789 998,448 - -
Total Carats Recovered 42,348 26,558 12,405 4,345
- K6 35,948 9,730 - -
- KOther 6,400 16,828 - -
Average Grade (cpht) 10.65 8.57 - -
- K6 11.57 17.75 - -
- KOther 7.37 6.60 - -
Carats Sold 22,865 26,906 17,178 -
Average Price US$/ct 350 214 356 -
Note: (1)Production data for metallurgical test work and
pre-production mining prior to the Kao Mine moving into operational
production in late November 2011 is not indicative of future
results of operations.
Results from the tender of Kao Diamonds are detailed below:
2012 Tenders Location No. Carats Average Price Average Diamond
(US$/ct) Size (ct)
------------------ -------------- ----------- -------------- ----------------
No. 7 - June Antwerp 22,743 296 0.35
No. 6 - May Antwerp 16,388 395 0.36
No. 5 - April Johannesburg 6,478 234 0.29
No. 4 - March Johannesburg 8,419 224 0.22
No. 3 - February Johannesburg 7,242 168 0.21
No. 2 - February Johannesburg 7,326 233 0.29
No. 1 - January Johannesburg 3,918 246 0.21
South Africa - North West Province
During the period 1 March 2012 to 31 May 2012, the mining area
produced 5,296 carats, from 798,577 tonnes processed at an average
cost of US$1,034/ct and 3,032 carats were sold at an average price
of US$1,326/ct. Production included 13 special diamonds (above 10.8
carats each). Following the period end, an additional 2,178 carats
were produced from 334,666 tonnes processed up to 25 June 2012. The
North West Province remains on track to meet its production target
of 20Kcts for FY2012.
During Q3'FY2012, the average price per carat and the average
cost per carat increased significantly when compared to H1'FY2012.
This increase results from a significant rise in the profit-share
received by contract miners from sales of high-value, special
diamonds discovered by contractors during the period.
The average cost per carat of own production increased from
US$600/ct in H1'FY2012 to US$778/ct in Q3'2012. Average production
cost per tonne was consistent with H1'FY2012 but recovered grade
(cpht) on Namakwa's own production was down from 0.65cpht during
H1'FY2012 to 0.51cpht during Q3'FY2012 resulting in an increase in
the average costs per carat.
SA: NW Province Q3'12 H1'12 FY2011 Q4'11 Q3'11 H1'11 FY2010
----------------- ------ ------- ------- ------ ------ ------- -------
Tonnage (Mt) 0.79 1.52 5.39 1.64 1.31 2.43 4.08
Carats Produced 5,296 11,069 38,092 9,347 8,154 20,591 38,476
Grade (cpht) 0.66 0.73 0.71 0.57 0.62 0.85 0.94
Carats Sold 3,032 11,178 37,235 9,106 8,013 20,116 37,722
Avg. Price
US$/ct 1,326 632 638 735 625 629 418
Avg. Cost
US$/ct 1,034 589 961 1,293 937 797 602
The decision taken to restructure operations in September 2011
is now showing significant positive results, with the mining area
operating on a cash-flow positive basis. Recent discoveries of a
number of high-value, special diamonds by both Namakwa and
contractors demonstrate support for the restructured business model
operating on a break-even basis, with the scope for significant
upside from the recovery of such "specials".
The table below highlights the sale value of the top 5
"specials" recovered on the North West Province mining area.
Additional discoveries, which have not yet been sold, include a
43.7ct diamond and a 15.25ct diamond:
Top 5 Specials Recovered from North West Province since
December 2007 IPO - By Value
Carat Average Revenue Total Revenue Date
(US$/ct) (US$/ct)
--- ---------------- ---------------- -------------- -------------
11.36ct - Vivid
1. Pink 400,900 4.55m June 2012
2. 44.47ct 34,000 1.51m May 2012
7.53 - Vivid
3. Orange 176,714 1.33m October 2010
26.74 - Type
4. IIA 44,004 1.18m October 2010
5. 39.17 15,337 0.60m October 2010
Group Funding
On 28 June 2012, the Company closed its pre-emptive equity open
offer of US$55m, with the admission of 794,629,171 new ordinary
shares to trading on the Main Market of the London Stock Exchange
(the "Open Offer"). From the US$55m gross proceeds of the Open
Offer, the Company immediately repaid its corporate debt facilities
of US$45.44m, in full, with the payment of US$10.24m to Sputnick
Limited and US$35.2m to Jarvirne Limited. Transaction costs of
c.US$1.5m were also settled.
Group Litigation
On 30 November 2011, the High Court of Lesotho dismissed the
claim of Batla Minerals SA and, its subsidiary, Toro Diamonds
Lesotho (Pty) Ltd (together, "Batla Minerals") to a 50% interest in
Namakwa's 62.5% shareholding in Storm Mountain Diamonds, with costs
awarded to Namakwa. Batla Minerals subsequently informed Namakwa on
15 December 2011 of its intention to exercise its rights to appeal
the decision of the High Court. On 27 April 2012, the Lesotho Court
of Appeal granted leave to Batla Minerals to file its record of
appeal late and by a long-stop date of 30 June 2012. Namakwa did
not challenge Batla Minerals' application, as in accordance with
the decision of the Lesotho High Court, Namakwa considers Batla
Minerals' claim to be without merit.
On 2 July 2012, the Company was informed that Batla Minerals had
filed its record of appeal with the Lesotho Court of Appeal on 29
June 2012. Namakwa is unable to comment on the merits of Batla
Minerals' appeal and has until 31 July 2012 to respond. Thereafter,
Namakwa understands that the next session of the Lesotho Court of
Appeal is scheduled for September/ October 2012, at which time
Namakwa expects that the substantive appeal of Batla Minerals' to
be heard. Namakwa will continue to defend its rights
vigorously.
Outlook
Following the repayment of Group debt from the proceeds of the
recent Open Offer and sufficient working capital available to meet
the Group's stated development plans, Namakwa is well positioned to
continue to develop its operating platforms in Lesotho and South
Africa. In the coming months, the Group's focus will be on
optimising value from current operations and further cost reduction
at both the corporate and mine level.
Namakwa remains confident that the Kao Mine will achieve its
nameplate production capacity during Q4'FY2012, and that it will
continue to operate on a cash generative basis. In the North West
Province of South Africa the business is expected to continue to
operate on a breakeven basis, with upside provide from the sale of
special stones, such as the 11.36ct vivid pink sold in June 2012
for c.US$4.55m.
The Company expects to take forward the feasibility study for
the second phase of development at the Kao Mine during FY2013 to
determine the optimal plan for the mine's long term
development.
- Ends -
This information is provided by RNS
The company news service from the London Stock Exchange
END
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