Namibian Minerals has completed its earnings for the six months ended June 30, 2000, and progress on its
two new advances in diamond technology.
Earnings for the six months before amortization of good will were $4.4-million (U.S.), nine U.S. cents per share (1999: $10.6-million (U.S.), 28 U.S. cents per share) and postamortization of good will were $3.3-million (U.S.), seven U.S. cents per share. Strength in
the diamond market has contributed to revenues of $21.9-million (U.S.) from the
sale of 118,700 carats, compared with $22-million (U.S.) from diamond sales of
151,200 carats a year ago. The average realized diamond price rose 26 per cent to
$185 (U.S.) per carat from $146 (U.S.) per carat last year. Operating cash flow for the
six months was $5.7-million (U.S.), compared with $14.9-million (U.S.) in the year-earlier period. Diamond production for the six months was 98,500 carats (1999:
192,100 carats). As previously announced, difficult mining conditions and the
mining of lower-grade material resulted in lower production than in the
comparable period last year. At six-month-end, the company had $13-million (U.S.)
in cash, with diamond stocks of 13,000 carats, compared with $6.1-million
(U.S.) and stocks of 71,400 carats at June 30, 1999.
Second quarter earnings were $1-million (U.S.), two U.S. cents per share, compared
with $5.4-million (U.S.), 14 U.S. cents per share in second quarter 1999. Diamond sales
of 52,200 carats (1999: 64,900 carats) generated revenues of $9.7-million
(U.S.) (1999: $10.3-million (U.S.)). Diamond production for the quarter was 45,600 carats
(1999: 76,000 carats).
This year’s diamond production has been affected by the need to relocate
the NamSSol mining system to easier but lower-grade mining conditions,
extended delays in port while upgrading MV Namibian Gem for its seaworthy
classification, and the removal of the oldest and least efficient vessel, MV
Oceandia, from operation. These factors, combined with an anticipated one
quarter’s delay in the startup of new mining system, Nam 2 led the company to
revise its production target to 225,000 to 250,000 carats for 2000.
In July, 2000, the company’s three production vessels were in full
operation, with diamond recoveries in line with the revised targets.
Production to date from the airlift vessels has doubled from ODM’s 1999 levels
since the new Namco management carried out technical and operational
improvements. The combination of continued strong production from the airlift
vessels, Nam 2 starting operation and continuing technical enhancements to
NamSSol should contribute to significant production growth in 2001.
In the second quarter, significant progress was made on the Nam 2 project
and on exploration. Following conversion in Poland, Namco’s newest mining
vessel, MV Ya Toivo, arrived in Cape Town in July, for installation of the 100-ton-per-hour processing plant, which is expected to take 16 weeks.
Construction of Nam 2 was completed postquarter-end and dry testing of the
machine is completed. Project commissioning is planned for the fourth quarter.
The company completed 2,500 line kilometres of geophysics in the second quarter.
In June, MV Zacharias returned to Cape Town for conversion to a sampling
vessel. The new sampling tool, built in collaboration with Wirth, supplier of
De Beers’s ocean diamond drilling systems, arrived in Cape Town last month.
Exploration is on target to start this quarter, with a focus on expanding
known resource areas. This new drilling technology, combined with the latest
survey techniques to create high-resolution seafloor maps, will provide fully
quantitative samples in sediments where this has not previously been possible.
The company is pleased to announce that recent publicity on conflict
diamonds does not affect the Namibian diamond industry or Namco’s operations.
Namibia has a stable multiparty democratic government and the diamond
industry is well-regulated by the Diamond Act, which was introduced in April,
2000. In Namco’s operations, tight security procedures have been developed so
that the entire diamond recovery process is automated, and no human hands ever
touch diamond-bearing material. After government valuation, the company’s
diamonds are transported straight from Namibia to Antwerp in Belgium for
marketing. These measures ensure that no conflict diamonds are able to enter
Namco’s production or sales processes. Namco fully supports the global diamond
industry’s proposals to isolate diamond trade from conflict areas.
“While challenging mining conditions are having a short-term effect on
diamond production, the introduction of our new Nam 2 mining system and
continued improvements to our existing fleet should contribute to significant
growth next year,” said chairman and chief executive officer, Alastair Holberton. “With the start
of exploration this quarter, we are also focused on increasing diamond
resources for future production growth.”
WARNING: The company relies on litigation protection for “forward-looking” statements.
CONSOLIDATED STATEMENT OF OPERATIONS
Six months ended June 30
(in thousands of U.S. dollars)
2000 1999
Income
Revenue from
diamond sales $21,902 $22,004
Interest earned 479 187
Gain on marketable
securities 25 300
——- ——-
22,406 22,491
——- ——-
Expenses
Direct production
costs 10,432 5,461
Royalty payment 1,693 1,899
Marketing costs 437 448
General office costs,
including salaries 2,600 1,905
Amortization,
capital assets 2,225 2,117
Amortization,
deferred costs 124 –
Interest paid 1,283 17
——- ——-
(18,794) (11,847)
——- ——-
Earnings (loss)
for the period
before taxes and
good will 3,612 10,644
Recovery of income
taxes 815 –
——- ——-
Earnings (loss)
for the period
before good will 4,427 10,644
Good will charged (1,144) (6)
——- ——-
Earnings for the
period $ 3,283 $10,638
======= =======
Basic earnings per
share for the period
before good will 0.095 0.28
Basic earnings per
share for the period
after good will 0.07 0.28
Fully diluted
earnings per share
for the period 0.07 0.26
