Namibian’s seven-month earnings

Namibian Minerals had earnings of $3.1-million (U.S.) from its marine diamond mining

operation in Luderitz Bay, Namibia, for the seven months ended Dec. 31,

1998.

In 1998 the reporting period was changed from May 31 to Dec. 31 and

the following results present information for the seven months to Dec. 31,

1998. For comparative purposes, financial information for the 12 months

ended May 31, 1998 is shown.

Total production in the seven months was 100,100 carats (1998: 25,900

carats). As previously reported, the first quarter’s production was 30,300

carats; the second quarter’s production was 42,600 carats; and in the last

month of the period production was 27,200 carats. This marked increase in

production rates was due to the cumulative effect of enhancements to the

NamSSol mining system and increasing NamSSol operator skills.

Diamond sales of 92,100 carats (1998: 5,093 carats) generated revenues of

$13-million (U.S.) (1998: $900,000 (U.S.)) and diamond stocks at year end were 30,500

carats (1998: 22,500 carats). The average realized diamond price for the seven

months was $141 (U.S.) per carat, which represents a decline of 20 per cent on the previous

period, primarily due to pressures in the diamond market resulting from

turbulence in the Asian economies. The excellent characteristics of the

company’s goods ensured demand for all production. Market conditions in the

opening months of 1999 suggest confidence is returning to the diamond market.

Operating costs for the period were $5.6-million (U.S.). This includes vessel

charter, salaries for offshore personnel and royalties paid to the Namibian

government. Corporate administration and support costs were $2-million (U.S.).

Exploration and development costs of $250,000 (U.S.) were capitalized in the

period. Total costs for the period were $10.1-million (U.S.) compared with $8.1-million (U.S.) in 1998.

Earnings of $3.1-million (U.S.) (1998: loss of $7.1-million (U.S.)) is equivalent

to earnings per share of eight U.S. cents (1998: loss of 19 U.S. cents). Cash at the period end was $3.9-million (U.S.) (1998: $3.9-million (U.S.)). In the period there was an

improvement in non-cash working capital of $4.9-million (U.S.).

In January 1999 the company announced that it had achieved its annual

production target of 150,000 carats in the 10 months since the start of

operation. The company continues to produce at rates higher than that of the

first two quarters of last year.

Namco is now the world’s second largest marine diamond producer.

Namco is focused on achieving further production success in 1999 from its

Luderitz Bay mining operation with a second mining system, NamSSol II,

targeted to commence production in 2000. With both systems in production, the

company’s total annual output is expected to exceed 300,000 carats.

STATEMENT OF OPERATIONS AND DEFICIT

Seven 12

months months

ended ended

Dec. 31 May 31

1998 1998

Income

Revenue from

diamond sales $12,984 –

Interest received 111 688

Gain on sale of

marketable securities 128 372

——– ——–

13,223 1,060

Expenses

Direct production

costs 5,615 –

Marketing costs 324 –

General office costs,

including salaries 1,980 3,892

General exploration

and development costs – 3,254

Writedown of

marketable securities 350 –

Amortization

Capital assets 1,807 959

Good will 7 12

Interest payable 32 22

——– ——–

(10,115) (8,139)

——– ——–

Earnings (loss) $3,108 $(7,079)

======== ========

Earnings (loss)

per share 8 cents (19 cents)