Diamond Fields International has recorded a net loss for the three months ended Dec. 31, 2003, of $384,641 (U.S.) or one U.S. cent per share, compared with a net loss of $593,957 (U.S.) or one U.S. cent per share for the same period in 2002. Year to date, the net loss is $701,018 (U.S.), compared with a loss of $836,065 (U.S.) for the same period of 2002.
The current period revenues increased as a result of diamond production recommencing in late September, 2003, at the company’s Namibia marine diamond concessions. The contract mining vessel mv Anya operated for three months during the period.
All of the company’s revenue for the six-month period ended Dec. 31, 2003, resulted from the sale of diamonds recovered during operations or held in inventory. During the six-month period, 8,354 carats of diamonds were produced from the Luderitz sea diamond concession. A total of 5,728 carats were sold at an average price of $143.02 (U.S.) per carat, generating net revenue of $789,930 (U.S.), up from 2,189 carats and net revenue of $312,231 (U.S.) for the same period in 2002. Production, royalty and selling expenses associated with the sale of inventory totalled $500,539 (U.S.), compared with $170,465 (U.S.) for the same period in fiscal 2003. The company’s operating margin for the six months ended Dec. 31, 2003, was $289,391 (U.S.), compared with $141,866 (U.S.) for the same period in 2002.
Operations, including exploration and development, as well as general and administrative costs, were financed from cash on hand at the beginning of the period and from revenue generated by the sale of diamonds during the period, as well as from a non-brokered financing.
During the six-month period ended Dec. 31, 2003, Diamond Fields expanded diamond exploration activities, broadened the company’s exploration scope to include nickel exploration, completed non-brokered private placements totalling $8.1-million (Canadian) and resumed diamond production on its Luderitz sea diamond concession. Proceeds from the financing and cash flow from Luderitz will allow the company to expand its diamond and nickel exploration activities.
Property acquisitions
On July 31, 2003, the company contracted to acquire exploration properties in Madagascar (nickel and diamonds), Greenland (nickel) and Sierra Leone (diamonds).
In November, 2003, Diamond Fields negotiated the exclusive right to acquire a 100-per-cent interest in the Valozoro lateritic nickel deposit located in Madagascar, a deposit with a historically calculated resource of 3.7 million tonnes grading 1.75 per cent nickel for 65,000 tonnes contained nickel. The estimates were reported by UGINE which, during 1956 and 1957, conducted extensive prospecting. These are historical resource estimates which do not comply with National Instrument 43-101 standards of disclosure. Diamond Fields’ exploration plans include a continuation of the sampling to build a more accurate and complete picture of nickel grade and tonnage distribution in the deposit, as well as prospecting in the vicinity for additional mineralization. Diamond Fields plans for this deposit include assessment of the costs to mine and ship concentrate from the site to in-country mills or offshore processors.
Financings
On Nov. 28, 2003, the company closed non-brokered private placements totalling $8.1-million (Canadian) with the issuance of 6.6 million units at a price of 60 Canadian cents per unit for total proceeds of $3.96-million (Canadian) and the issuance of 6.9 million subscription receipts convertible into units on a 1:1 basis at a price of 60 Canadian cents per subscription receipt for total proceeds of a further $4.14-million (Canadian). Each unit consists of one common share of Diamond Fields and one non-transferable share purchase warrant, each warrant entitling the holder to purchase one additional common share until Nov. 28, 2006, at a price of $1.00 (Canadian) per share. However, the warrants must be exercised after notice by Diamond Fields should the weighted average closing price of Diamond Fields’ common shares equal or exceed $1.30 (Canadian) per share for a period of 20 consecutive days at any time between six months and 35 months after closing of the private placements. Otherwise, the warrants will expire.
Proceeds from these private placements will be used to finance continued development of Diamond Fields’ Namibian marine diamond concession, as well as exploration activities in Greenland, Sierra Leone and Madagascar, and for repayment of debt and general working capital purposes.
Outlook
On Feb. 19, 2004, Diamond Fields had entered into a joint venture agreement with Samicor Mining Services (Pty.) Ltd. to carry out diamond mining operations on a 50/50 basis on Diamond Fields’ marine mining licence ML111 located near Luderitz, Namibia. Although diamond production will be split equally between the parties, operational costs to Diamond Fields will be capped to the fixed United States dollar amount of $400,000 (U.S.) per month. Diamond Fields’ commitment to finance its full share of operating costs is subject to certain assurances of Samicor as to equipment availability. Diamond mining operations will use Samicor’s chartered vessel mv Kovambo, which is equipped with the third-generation Seabed crawler based on the Namssol crawler (the Seabed crawler) mining system and a diamond processing plant. The Seabed crawler, built at a cost of $30-million (U.S.), operated on Namco’s cross-border extensions to the Marshall Fork deposits during parts of 1998 through 2000, producing 200,000 carats of diamonds in 1999. The joint venture provides Diamond Fields with the highest level of production capacity in the company’s history. The arrangement is contingent on the mutual approval of a mine plan.
WARNING: The company relies upon litigation protection for “forward-looking” statements.
