Namibian Minerals Corporation second-quarter results

Namibian Minerals Corporation has achieved record six-month earnings reflecting continued strong production,

good cost control and improved diamond prices.

Six-month highlights:

earnings of $10.6-million (U.S.), 28 U.S. cents per share;

revenues of $22-million (U.S.);

cash operating costs of $51 (U.S.) per carat;

average realized diamond price of $146 (U.S.) per carat;

diamond production of 192,100 carats; and

1999 production target raised to 260,000 carats.

Earnings for the six months June 30, 1999, rose to $10.6-million (U.S.),

28 U.S. cents per share, compared with a loss of $5-million (U.S.), 13 U.S. cents per share,

for the six months ended May 31, 1998. In June, 1999, the company paid its first

dividend of two U.S. cents per share.

Diamond production for the second quarter from Feature 019, Luderitz Bay

Grant, exceeded target at 76,000 carats, bringing production for the six

months to 192,100 carats. The second quarter’s mining period was reduced by

three weeks of exploration in the Hottentot Bay Grant and a further week to

decommission and sail to Cape Town for the scheduled July port call.

Sales for the six months of 151,200 carats generated revenues of $22-million (U.S.) (1998: nil), for an average price of $146 (U.S.) per carat. In the second

quarter, sales of 69,400 carats generated revenues of $10.3-million (U.S.) (1998:

nil) and Namco’s average realized sales price increased by 4 per cent on last quarter

to $148 (U.S.) per carat. The sale of diamond stocks (71,400) at quarter-end is

expected to generate additional gross revenues in excess of $10-million (U.S.).

Direct production costs of $5.4-million (U.S.) (1998: nil), and corporate

administration costs of $1.9-million (U.S.) (1998: $2.3-million (U.S.)) were in line

with expectations. Cash operating costs (1) were $51 (U.S.) per carat for the six-month period (1998: nil).

After investing activities of $12.6-million (U.S.), cash at quarter-end

increased to $6.2-million (U.S.) from $3.9-million (U.S.) a year earlier, reflecting the

company’s strong cash flow generation. Major investments were NamSSol

equipment and other capital assets for $3.7-million (U.S.) and a shareholding in

Ocean Diamond Mining Holdings Ltd. for $7.7-million (U.S.) (see below).

Grades have consistently exceeded the company’s 1999 mine plan for

Feature 019. The company has therefore increased its 1999 production target

and expects to mine at least 260,000 carats this year. The revised figure

takes account of a one-month port call in July and one month in October and

slower mining rates as NamSSol moves into areas of thicker sediment cover.

Revised resource estimates (2) reported on May 10, 1999, for Features 019

and 020 of the Luderitz Bay mining licence increased Namco’s total estimated

resources to 2.8 million carats. This comprises 836,000 carats of measured

resources, 319,000 carats of indicated resources and 1.6 million carats of

inferred resources (3).

The company is on target for the commissioning of a second mining system,

NamSSol II, early next year. Construction of the tool has commenced. Processing

plant design and vessel selection are expected to be finalizd this quarter.

Mining is expected to commence in mid-2000. Namco intends to finance the NamSSol

II project through a mix of cash reserves and debt.

Namco has purchased a 34.6-per-cent shareholding in Namibian marine diamond

producer Ocean Diamond Mining Holdings Ltd. (ODM), for a cost of

approximately $18-million (U.S.). The investment was financed from the company’s cash

resources and through the issue of 1.65 million shares at $3.25 (U.S.) per share.

ODM’s major assets are 20,078 square kilometres of marine diamond concessions off the

coast of Namibia and South Africa,

stated reserves and three production vessels. ODM’s marine diamond production in 1998 was 63,074 carats.

“Namco’s recovery of just over 200,000 carats from one vessel in six months sets new standards for the marine diamond industry. We have proved our technical and operating capabilities and the profitable nature of our business,” said chairman of Namco, Alastair Holberton

(1) Includes royalty and marketing costs.

(2) Namco’s resource estimates were compiled by Marine & Coastal

Geo-Consultants based on mining and sampling data provided by the company and

using the resource definitions provided in the Australasian Code for Reporting

of Identified Mineral Resources and Ore Reserves (JORC code). Marine & Coastal

actively participated in the sampling operations and have confirmed that the

recoding of sampling was undertaken in a rigorous and competent manner. The

revised model and estimates have been based on reasonable assumptions and

rigorous technical evaluation of available information. A full description of

the assumptions and evaluation together with the geological environment and

relevant regulatory systems of the Luderitz Bay mining licence are contained

in the company’s annual information form dated April 30, 1999.

(3) The 1999 inferred resource category includes 9,000 carats and 464,000

carats in Features 011 and 018 respectively in Luderitz Bay mining licence and

406,000 carats and 82,000 carats in Feature 022 and 012 respectively in

Hottentot Bay Grant, Namibia. These estimates have not been reassessed.

WARNING: The company relies on litigation protection for “forward-looking” statements.