The company recorded a positive operating margin for a second consecutive quarter since the Diamond Fields-Trans Hex Group joint venture began diamond mining operations. The company’s operating profit margin for the second quarter ended Dec. 31, 2001, improved significantly over the first quarter primarily due to production cost recoveries.
Joint venture operations commenced on May 24, 2001, with a program of trenching and mining in the Marshall Fork area of the company’s Luderitz concessions in order to assess how airlift technology applies itself in the various geological and grade environments of the joint venture area. On Nov. 6, 2001, full-scale mining commenced when Trans Hex deployed a fully dedicated vessel to Marshall Fork. Results from the operations to Dec. 31, 2001, were as follows:
Joint venture
Dec. 31, 2001
Quarter Six months
Carats
produced 8,210* 16,470
Carats sold 4,866 10,124
Gross profit
from
operations $363,487 $392,993
*Includes seven weeks of full-scale
mining commencing Nov. 6, 2001
DFI’s share
Dec. 31, 2001
Quarter Six months
Carats
produced 4,926 9,882
Carats sold 2,920 6,074
Gross profit
from operations $363,487 $392,993
At Dec. 31, 2001, the company’s share of the joint venture’s diamond inventory was over 3,800 carats recorded at a cost of $451,000. These were sold in January for proceeds of approximately $840,000, reflecting a surge in rough diamond prices over the sales in the December quarter.
Mr. Lee stated: “We are encouraged by the results of our operations to date. We previously reported that our mined grades in January were 170 per cent over the estimated grades reported by MRDI in our October, 2000, feasibility study. With increased recoverability of diamonds, and continued low costs of production, we expect to continue to achieve positive operating results. Furthermore, rough diamond prices have surged since its lows following the Sept. 11 events, adding to prospects of improving operating profitability.”
Mr. Lee added: “We would like to assure our shareholders that we adopt conservative accounting practices and adhere strictly to generally accepted accounting principles. All of our financial statements are reviewed by our auditors on a quarterly basis and audited on an annual basis. Our company policy is to conduct business with the utmost integrity and transparency.”
WARNING: The company relies upon litigation protection for “forward-looking” statements.
