Namibian Minerals increases dividend in first quarter

Namibian Minerals has achieved first quarter earnings of $2.2-million (U.S.) (1999: $5.2-million (U.S.)) and a

50-per-cent increase in dividend to three U.S. cents per share (1999: two U.S. cents).

Earnings of $2.2-million (U.S.), five U.S. cents per share, on revenues of $12.2-million (U.S.), compare with first quarter 1999 earnings of $5.2-million (U.S.), 14 U.S. cents

per share, on revenues of $11.7-million (U.S.). The number of shares in issue has

increased by 22 per cent compared with first quarter 1999, reflecting equity issued to

finance the $60-million (U.S.) Ocean Diamond Mining Holdings Ltd. (ODM) acquisition,

with consequent impact on earnings per-share figures. Operating cash flow was

$4.7-million (U.S.), down from $5.5-million (U.S.) in the year earlier period. Cash at

quarter-end was $10.4-million (U.S.), with diamond stocks of 19,500 carats,

compared with $20-million (U.S.) and stocks of 32,500 carats in the fourth

quarter 1999.

Diamond production in the quarter was 52,900 carats (1999: 116,000

carats), with operations focused on Mining Licence 36 obtained from ODM last

year. The vessels equipped with airlift technology significantly exceeded

their targets and provided the major contribution to production. MV Kovambo,

equipped with the company’s proprietary NamSSol technology, was deployed in

several feature areas in Mining Licence 36 to test mining conditions and grade

estimates. The vessel mostly operated in lower-grade areas along the edges of

Halifax basin, a 2.42-square-kilometre sediment-filled depression where more than 140,000 carats were previously recovered by ODM. The results obtained, combined

with data from planned exploration, will form the basis of longer-term mine

planning to fully incorporate these new areas into the production schedule.

The average diamond size recovered during the quarter was 0.35 of a carat, up from

0.33 of a carat in the first quarter 1999.

Average diamond prices from the sale of 66,500 carats (1999: 81,000

carats) improved to $182 (U.S.) per carat this quarter, up 27 per cent from $143 (U.S.) per

carat in the first quarter 1999 and up 20 per cent on the full year 1999 average price

of $151 (U.S.) per carat. Despite lower production levels, the improved diamond

prices led to higher revenues than in the corresponding period last year.

Continued strength in the diamond market should have a significant positive

impact on the company’s earnings and cash flow.

“We are encouraged by the results from our first full quarter of

assessment and operation in the licence areas acquired from ODM,” said Namco’s

chairman and chief executive officer, Alastair Holberton. “These new mining areas will make a

significant contribution to production in the years ahead.”

Unit cash operating costs, including royalty and marketing, were $104 (U.S.)

per carat (1999: $52 (U.S.) per carat), reflecting lower production levels and

increased operating expenditure arising from the three additional vessels.

Overall operating costs for the quarter at $6.9-million (U.S.) were in line with

expectations.

During the quarter, the company launched a high-resolution geophysical

survey program in the company’s three mining licences. By quarter-end a

total of 846 line kilometres of survey data had been completed, with further

surveying to be conducted in the current quarter.

The company’s 2000 mine plan schedules higher production levels in the

second half of the year, following a $4-million (U.S.) upgrade to the airlift

operation vessels and the commissioning of Nam II, the new 170-ton ocean

diamond mining system. Modifications to MV Namibian Gem started in April and

are expected to take two months, which will affect second quarter production

levels. The company is on schedule to commission its Nam II mining system in

the third quarter of 2000.

At the company’s annual general meeting in London today, directors

declared a dividend of three U.S. cents per share, to be paid on July 27, 2000, to

shareholders of record at close of business on May 29, 2000, an increase of 50 per cent

on last year’s dividend.

“The decision to pay an increased dividend reflects the board’s

recognition of last year’s achievements and confidence in our ability to meet

the challenges ahead,” said Mr. Holberton

Namco is Africa’s second largest ocean diamond producer that develops

breakthrough technology to mine gem-quality diamonds off the Namibian coast.

CONSOLIDATED STATEMENT OF OPERATIONS

Three months ended March 31

(in U.S. dollars)

2000 1999

Income

Revenue from

diamond sales $12,166 $11,662

Interest earned 285 77

——- ——-

12,451 11,739

——- ——-

Expenses

Direct production

costs 5,850 2,783

Royalty payment 891 1,166

Marketing costs 197 245

General office costs,

including salaries 1,053 1,095

Amortization,

capital assets 1,136 1,257

Amortization,

deferred costs 63 –

Interest paid 664 8

——- ——-

(9,854) (6,554)

——- ——-

Earnings (loss) for

the period before

taxes and good will 2,597 5,185

Income tax credit 210 –

——- ——-

Earnings (loss) for

the period before

good will 2,807 5,185

Good will (562) (3)

——- ——-

Earnings (loss) for

the period after

good will $ 2,245 $ 5,182

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

Earnings per share

for the period before

good will 6 cents 14 cents

Earnings per share

for the period after

good 5 cents 14 cents

Fully diluted

earnings per share

for the period 5 cents 13 cents