- Login to your account
- Free Membership to Digital Look
- Site Map
- Company A-Z
- Finance A-Z
- News Archive
- Events
- Give Us Feedback
Digital Look
- News Archive
- News Maps / Most Popular
- Expert Views
- Press Centre
- Market Reports
- Company News
- Small Caps News
- New Issues
- Economic News
- International News
- Commodities News
- Currencies News
- Bonds News
- Regulatory News
Market Cap
£162.99m
Change Today
0.25p
Share Price
140.00p
Interim Results
Namakwa Diamonds Limited
24 April 2008
24th April 2008
LSE: NAD
Results for Six Months Ended 29th February, 2008
Namakwa Diamonds Limited ("Namakwa" or the "Company"), a vertically integrated
diamond mining company, today issues its results for the six months ended 29
February 2008. The period contained nine weeks of operational performance since
the Company's Initial Public Offering ('IPO') and admission to the London Stock
Exchange in December 2007. The Directors also take this opportunity to update
shareholders on significant events since period end.
Strategic Highlights
Enhancement of the vertically integrated model
• In March 2008, the Company concluded a marketing agreement with Harry
Winston Inc. ('Harry Winston') providing Namakwa with access to Harry Winston's
retail diamond jewellery network. This provides an opportunity to share in the
retail margin on certain diamonds that Namakwa wishes to market to the Harry
Winston clientele
Beneficiation margin outperformance
• Namakwa achieved higher than expected trading margins due to successful
leveraging of its in-depth knowledge across the diamond value chain in a strong
pricing environment for rough and polished diamonds and critical mass in the
beneficiation segment
Alluvial mining consolidation progress
• Namakwa's strategy of consolidation continues to yield significant
opportunities with the first significant acquisition since IPO now complete. On
22 April 2008, Namakwa concluded an agreement to acquire the mining rights over
an historically important alluvial deposit measuring 2,121 hectares well known
for its role in the previous century's diamond rush
Key events during the period
6 months to 45 weeks to 19 weeks to
29 Feb 08 31 Aug 07 28 Feb 07
Revenue (US$ 000) 12,426 8,353 394
Loss for the period (US$ 000) (19,409) (18,991) (7,606)
Carats mined 9,517 6,662 n/a
Cash cost per tonne mined (ZAR/ton) 19.01 14.89 n/a
Cash cost per tonne mined (US$/ton) 2.71 2.08 n/a
Cash cost per carat mined (ZAR$/ct) 5,918 4,606 n/a
Cost per carat mined (US$/ct) 843 642 n/a
Recovered grade (cpht) 0.32 0.35 n/a
Carats purchased 9,533 13,637(*) n/a
Carats sold 15,342 13,098 n/a
Capex spent (US$ 000) 13,128 12,539 11,829
Carats in inventory:
Rough 10,564 7,709 n/a
Polished 834 1,582 n/a
Cash balance (US$ 000) 138,579 6,411 462
* Includes 1,700 carats acquired as part of an internal restructure
• Successful completion of IPO raising £87 million of primary capital,
before costs;
• Favourable market conditions for rough and polished diamonds. According
to international diamond consultants WWW, the industry experienced price
increases of 30% for polished diamonds larger than three carats and 58% for
polished diamonds larger than five carats over the 12 months to the end of the
period under review. Namakwa has experienced similar price increases in its
business during the period. WWW also forecast a continuing strong price
environment in both in rough and polished diamonds for the remainder of 2008;
• Mining operations in the North-West province adversely impacted by
Eskom electricity outages, unusually heavy rains as well as lower than forecast
recovered grade due to mining dilution resulting in total operating loss of
US$3.5 million and a operating cash outflow of US$1.6 million for the period;
• Substantial progress made in the expansion of Namakwa's North-West
mining operations, with the first Dense Media Separation ('DMS') plant scheduled
to recover diamonds before the end of calendar 2008, in line with the timeline
stated at the IPO;
• Significant progress in the DRC with regard to infrastructure and the
resource delineation programme, which is on track and within the budgeted
framework. During the period under review, US$1.9 million was committed to
Namakwa's DRC projects;
• Namakwa's beneficiation segment continues to exceed expectations in
terms of volume and operating margin. During the reporting period, Namakwa's
beneficiation segment achieved a trading margin before tax of 10% for rough
diamonds and 13% for polished diamonds, with outperformance driven by increased
critical mass in the business and the strong pricing environment; and
• Significant improvement in the quality and quantity of Namakwa's gem
diamond inventory as a result of access to capital and particularly through the
extension of relationships in the market. As at 29 February 2008 Namakwa owned
10,564 (31 August 2007: 7,709) carats of rough diamonds at an average cost of
$982 (31 August 2007: $537) per carat and 834 (31 August 2007: 1,582) carats of
polished diamonds at an average cost of $3,353 (31 August 2007: $2 358) per
carat.
Nico Kruger, Chief Executive Officer of Namakwa Diamonds commented, "We are
particularly pleased to have completed Namakwa's IPO and begun to apply the
capital raised to fund the future growth of the business. Our IPO enables
Namakwa to implement the expansion of our mining operations and further develop
our vertically integrated business model. Despite the difficulties faced by
Namakwa's mining operations following the Eskom electricity interruption, the
unusually heavy rainfall during the period and the lower than expected recovered
grade, the business as a whole made good progress due to the blend of the mining
and beneficiation operations. We have implemented measures to mitigate the
adverse factors which resulted in this period's disappointing mining
performance, and we look forward to the next phase of Namakwa's life as a public
company in what are exciting times in the diamond market."
DIRECTORS' REPORT
Successful Completion of the IPO
We are pleased to submit our first interim report as a publicly listed company
to Namakwa shareholders. Namakwa concluded its IPO on the Main Board of the
London Stock Exchange in December 2007 and started trading on 19 December 2007,
having successfully raised £87 million, before costs.
As outlined in the prospectus, Namakwa has begun to utilise the equity capital
raised in the IPO to:
• Expand mining operations in the South African North-West Province from
the current production levels of approximately 30,000 carats per annum to a
target in excess of 100,000 carats in FY 2009;
• Selectively expand and develop the assets in the DRC, Namibia and
Angola;
• Pursue consolidation opportunities in the North-West province of South
Africa and the DRC, through the acquisition of additional producing mines, as
well as development and potential development projects; and
• Increase beneficiation activities by purchasing a greater quantity of
rough diamonds, polishing a greater number of mined and purchased diamonds and
expanding our distribution channels so as to increase Namakwa's participation
across the diamond value chain.
Diamond Price Review
Namakwa is focussed on the mining and beneficiation of high quality gem diamonds
which demonstrated substantial price increases during the reporting period and
the six months preceding it. Namakwa is also witnessing a disproportionate
increase in the prices of larger and higher quality diamonds. The International
Diamond and Jewellery Exchange, an influential diamond industry consultant,
records polished price increases for various size diamonds from February 2007 to
February 2008 as shown below:
Carats % Increase
0.5 1.3
1.0 5.8
1.5 4.6
2.0 1.5
3.0 30.2
4.0 51.6
5.0 57.9
As price trends in polished diamonds tend to drive prices for rough diamonds,
Namakwa's assessment is that the pricing dynamics illustrated above are
representative of our own pricing experience during the reporting period.
The average price for rough diamonds received by Namakwa's mining operations
(excluding beneficiation margin) for the period under review was US$700 per
carat, which represents a significant out-performance versus Namakwa's budget.
Namakwa expects the pricing environment to remain robust over the remainder of
the financial year.
As of 29 February 2008, in excess of 80% of the US$ value of Namakwa's diamond
inventory comprised of five carat and larger diamonds, demonstrating Namakwa's
exposure to the rising prices of large stones. In anticipation of the
forthcoming beneficiation opportunities available to the Company such as the
agreement concluded with Harry Winston, Namakwa sold less of its higher value
diamonds relative to its lower value diamonds during the period under review.
Beneficiation Segment Review
During the period under review, Namakwa acquired a total of 9,533 carats of
rough diamonds from South African, Indonesian and DRC based third party
producers, at an average cost of US$785 per carat. In addition, the
beneficiation segment acquired 9,517 carats from the Namakwa mining segment at
an average cost of US$700 per carat.
During the period under review Namakwa primarily sold its lower quality
inventory, in order to enable an increase in the quality of its diamond
inventory. In line with this process of improving inventory values, Namakwa sold
13,098 carats of rough diamonds at an average selling price of US$481 per carat
to third parties, recording a net operating margin before tax of 10% for rough
diamonds and 13% for polished diamonds. The trading margins exceed the margin
recorded in the segmental disclosure contained in note 2 (which is 4.8%)
primarily because of a sale of approximately $2.5 million of consignment
diamonds at cost price and the impact of the Group's weighted average inventory
costing policy during a period when it was building its inventory of higher
value stones.
As of 29 February 2008, Namakwa owned 10,564 (31 August 2007: 7,709) carats of
rough diamonds at an average cost price of $982 (31 August 2007: $537) per carat
and 834 (31 August 2007: 1,582) carats of polished diamonds at an average cost
price of $3,353 (31 August 2007: $2,358) per carat. Namakwa supports the general
view held by leading authorities in the diamond industry that high quality gem
diamond prices will remain robust in the short to medium term and hence
Namakwa's diamond inventory reflects a concentration of value in the higher
quality categories which are benefiting most from current price increases.
Namakwa continuously monitors diamond supply and demand and with that market
trends and price trends to enable it to adapt the type and quantity of its
diamond inventory.
The trading margins achieved by the beneficiation segment over the period
exceeded expectations and was driven by the strong pricing environment as well
as an increase in critical mass which Namakwa obtained after deploying the IPO
proceeds in the beneficiation business.
For the first time, Namakwa purchased Indonesian rough diamonds and rough
diamonds from the South African State Diamond Trader. The Company is well
positioned to benefit from purchases from the South African State Diamond Trader
due to its local cutting and polishing capacity and expertise. Namakwa polished
a total of 715 carats of rough diamonds during the period under review. In line
with its stated objective, Namakwa is well positioned to expand and further
develop the cutting and polishing segment of the business.
Substantial effort continues to be invested in the expansion of the
beneficiation operations, so as to ensure that it is optimally positioned to
profit from Namakwa's increasing sources of rough diamond supply, as well as to
be able to respond to the constantly changing dynamics in the rough and polished
markets.
Agreement with Harry Winston
Namakwa has continued to reinforce and leverage the vertically integrated nature
of its business model and entered into a marketing agreement with Harry Winston
in March 2008. This agreement establishes a supply arrangement for Namakwa to
supply Harry Winston with high value polished diamonds for sale through its
stores. Under the terms of the agreement, Harry Winston and Namakwa share in
the retail margin achieved for specific stones distributed through the
structure. Harry Winston's product profile is geared to high quality and high
value diamonds which is optimally suited to Namakwa's production profile and
buying expertise.
Mining Segment Review
Overview for the period under review
Namakwa's existing mining operations in the North West produced 9,517 carats
during the period at an average gate-of-mine price of $700 per carat. Production
for the period should be seen in the context of the scheduled Christmas break,
the unexpected production delays caused by Eskom electricity interruptions and
the impact of the unusually high rainfall during October 2007, January 2008 and
February 2008, as communicated to shareholders in the Company's Operational
Update issued in February 2008. From a revenue perspective, the lower than
forecast carat production was partly off-set by the higher received prices. As a
consequence of the above the mining segment recorded a total loss of US$3.5
million, and a cash loss of US$1.6 million, during the period.
As a result of the lower than expected tonnes produced as well as the
significant increase in diesel costs in Rand terms, cash mining costs increased
to R19.01 (US$2.71) per tonne during the period. Management expects this cost to
reduce for the remaining 6 months to the end of the financial year as production
increases.
During the period under review Namakwa treated 2,962,561 tonnes compared to an
expected 3,812,652 tonnes. Recovered grade was 0.32 cpht compared to the
forecast grade of 0.41 cpht. The deviation from budgeted tonnage and a grade can
be attributed to 4 main factors, namely:
• electricity outages caused by Eskom during the period resulted in
significant working hours and hence tonnes treated lost;
• the unusually high rainfall over the entire period resulted in mining
conditions that were too wet for ore to be delivered to the plant on a
consistent basis, thereby reducing volumes;
• lower recovered grades resulting from the difficulty that Namakwa's
current rotary pan plants have in recovering diamonds from the clay which forms
in high rainfall conditions; and
• mining dilution resulting in lower then expected recovered grades.
Steps have been taken to increase tonnage throughput and to improve recovered
grade, which include:
• Installation of stand-by generators at all four mining operations in
the North-West;
• Improved oversight of mining operations, particularly following the
appointment of a senior geologist who leads a team of three ore quality grade
controllers whose exclusive function is to control the quality of ore mined and
hence to improve the recovered grade;
• Scheduled introduction of DMS plants, which, together with scrubbers
connected to the DMS plants, are designed to treat wet ore and hence will
address the sub-optimal recoveries currently experienced by rotary pan plans in
wet conditions; and
• Improved haulage roads, additional mining equipment and improved
production planning measures, which have already been introduced to improve
mining continuity.
Considering the operating challenges faced by Namakwa in this reporting period,
it is unlikely to meet the near term FY2008 production target of 45,000 carats
stated in the prospectus.
North-West Expansion Programme
Namakwa's organic expansion programme in the North-West province of South Africa
and the forecasts in the prospectus are premised on replacing its rotary pan
plants with six DMS plants, which will enable the treatment of increased volumes
of ore together with achieving higher recovery rates. These DMS plants require
significantly more electricity than the current rotary pan plants and will
therefore be affected by Eskom's ability to provide sufficient electricity.
Namakwa's stated expansion schedule requires the installation of two DMS plants
during the course of the second half of the 2008 calendar year, with a further
four DMS plants scheduled for commissioning in the 2009 calendar year.
If Namakwa could be confident that it would have sufficient access to
electricity in the future, the medium term production forecasts in the
prospectus would remain valid, namely 100,000 carats in FY2009. Eskom is however
unable to confirm whether Namakwa's applications for electricity will be
accepted based on the planned timeframe. In February 2008, Eskom announced a six
month "freeze" for all new electricity applications, with immediate effect. A
material delay in the approval of Namakwa's already submitted electricity
applications would have a significant impact on the timing of Namakwa's
expansion plans in the North-West province.
Based on Namakwa's recent interaction with Eskom, the Company believes it will
be possible to install the first three DMS plants without material deviation
from the planned time lines, but that problems in electricity supply is likely
to delay the installation of the last 3 DMS plants. If the second phase of the
DMS plant installation were to be delayed, Namakwa would continue production
from its existing pan plants until electricity were to be available.
In the event that only the first three DMS plants were to be installed
successfully, but the commissioning of the last three DMS plants were to be
delayed indefinitely, the production forecast for FY2009 would reduce from
100,000 carats to 72,000 carats. In this scenario, as soon as the requisite
Eskom electricity supply agreements were to be concluded, Namakwa's production
forecasts is expected to revert to the original forecast levels described in
Namakwa's prospectus.
Namakwa continues to assess the manner in which its expansion programme will be
executed in the absence of planned access to additional Eskom electricity.
Alternative electricity supplies in the form of diesel generators are available,
but DMS plants require substantially more electricity than rotary pan plants,
hence unit costs would increase substantially should DMS plants be dependent
only on diesel generators.
Namakwa estimates that if its DMS plants were powered exclusively by diesel
generators, its total cash cost could increase by approximately ZAR5.00 per
tonne (US$0.72 per tonne).
Namakwa remains in constant communication with Eskom and is managing its
electricity applications in conjunction with independent consultants on an
urgent basis.
Continued Alluvial Consolidation
Since the Initial Public Offering, Namakwa has performed due diligence reviews
on a number of alluvial operations in the North-West province of South Africa,
some of which are still ongoing. This is consistent with Namakwa's objective of
expanding its alluvial mining operations in the region.
On 22 April 2008, Namakwa concluded an agreement to acquire the mining rights
over an historically important alluvial deposit measuring 2121 hectares, well
known for its role in the previous century's diamond rush. The deposit is in
close proximity to Namakwa's current mining activities in the North-West
province of South Africa. Namakwa aims to commence production on this deposit
before the end of the 2008 calendar year. Further details of production plans
for the property will be released in due course.
Activities in the DRC
Namakwa is currently engaged in a resource delineation programme in the DRC,
moving into bulk sampling and small scale production in 2009. The milestones for
this project are:
• Establish infrastructure in the DRC to provide a base for development;
• Employment of a geological contractor to define ore bodies on four
concession nodes;
• Install small sample plants for indicative grade determination;
• Procure earthmoving equipment and treatment plants;
• Transport and install machinery in Tshikapa area; and
• Commence small scale production and bulk sampling - January 2009
Offices have been established and staffed in Kinshasa and in Tshikapa which
forms the centre of development. The legal and other mechanisms for importing
large quantities of machinery and supplies have been established. The main items
for infrastructure, including bridges, diesel storage tanks and a ferry for
river crossing, have been procured and are in transit to the DRC. A port
facility has been established in Djoko Punda, which will provide bulk diesel
storage and receiving facilities for mining equipment and plant. Cranage and
support vehicles have largely been procured and are in transit from Germany.
Personnel transport was procured in the DRC and is on site. Namakwa's activities
in the DRC constitute exploration activities from an IFRS accounting perspective
and hence all costs, save for equipment, are expensed as they are incurred. A
local contractor has been appointed and begun work to upgrade the road
infrastructure where required.
A geological contractor has started work on detailing the region from an
exploration perspective and initial exploration work is underway. Local labour
has been employed to dig sample pits to determine gravel boundaries and the
gravels recovered are being treated through a small sampling plant established
near Lungudi.
The geological exploration plan will focus in the short term on two primary
sites, but will expand to include two more groups of concessions. The geologists
and exploration staff will operate out of four camps, the first of which has
been established, while the other three are being procured.
Procurement of capital equipment is well under way. The four small scale
sampling plants have been manufactured in South Africa and will be transported
to the respective sites for deployment within the next month. All earthmoving
equipment has been sourced and the first consignment will leave South Africa
before the end of April. The bulk sampling plants are being constructed in Cape
Town by ADP and are scheduled for completion and shipping in August 2008.
Transport to site and installation is expected to take five months, due to the
lack of infrastructure in the DRC.
Preliminary sampling results indicate the presence of diamondiferous gravels
through small samples of diamonds that have been recovered. It is too early to
attribute grades, but results are expected before the end of the financial year.
Alternative technologies for economically mining the swamp areas next to the
rivers are being developed and are expected to allow significant savings
compared to conventional swamp mining in Africa.
Activities in Namibia
Namakwa has made significant progress with the geological delineation of the
resources at the Tidal Diamonds mining license, and the adjacent exclusive
prospecting license. The geological team has examined all the information
available from the extensive sampling data made available by DEBMARINE, De
Beers' marine sampling division.
The geological delineation required to identify focus areas in the shallow part
of the mining license area has been completed. The necessary plant designs have
been completed by Namakwa's research and development partner ADP Projects.
Namakwa's view is that Tidal will become a producer of high quality diamonds
that fit the Namakwa beneficiation profile with extensive downstream marketing
and branding potential. While generally smaller in size, the high colour and
clarity of the diamonds which Tidal is known for are in high demand.
Activities in Angola
Namakwa is currently in an advanced stage of its bulk sample programme on its
Caungula project. Namakwa aims to produce results in terms of a resource
measured by tonnes and grade before the end of calendar 2008. Depending on the
outcome of the bulk sample programme Namakwa will move to the next phase of the
projects development, which will be conducting a feasibility study which will
include gaining further confidence in the deposit as well as performing a plant
feasibility study.
Namakwa has also the process of finalising the terms of its operator agreements
regarding its other concession at Tchipoia. The aim as stated at the time of the
IPO, is for Namakwa to be in control of the mining operations as well as the
marketing of diamonds produced from the concession.
Commentary on the Financial Statements for the Period under Review
Income statement
During the six months to 29 February, 2008 the Group's loss was US$19.4 million
compared to a loss of US$7.6 million in the corresponding period in 2007.
However, to provide helpful context we note the following:
• Historical information is not comparable to the current results as it
relates to a period in which Namakwa was being restructured and did not have
control of its own beneficiation or mining assets;
• The issue of 78,713,410 million shares pursuant to the capital raising
completed at IPO raising £87 million before costs. Costs attributed to the
listing of US$4.1 million were recorded as an expense in the income statement
with the balance recorded to share premium;
• Consistent with its accounting policy, Namakwa expensed exploration
costs incurred during the period amounting to US$2.8 million;
• Expensing of exploration properties acquired by Namakwa of US$4.2
million;
• Finance charges incurred on the preference shares amounted to US$1.1
million and interest on loan note amounting to US$0.9 million. The loan note was
redeemed shortly after the IPO; and
• Interest on deferred payments on the acquisition of mining entities in
South Africa amounting to US$0.6 million, which will not occur in the future
based on the current financing structure.
Balance sheet
• Namakwa had US$138.6 million in cash at 29 February 2008 and only
limited debt as the preference shares were converted upon IPO and the loan note
and other liabilities were settled shortly after IPO;
• Namakwa continues to invest its cash with a number of banks in interest
bearing money market accounts; and
• Diamond inventory increased to US$12.4 million at 29 February 2008.
As of 29 February 2008, there were 116,422,657 ordinary shares in Namakwa
outstanding. Investors should be aware of the financial impact of the 9,053,872
"A" shares in the capital of a South African intermediary holding company which
have a dilutive effect, since they effectively carry economic rights similar to
ordinary shares, including the right to any dividend.
Namakwa's financial results have consistently been reported in accordance with
International Financial Reporting Standards ("IFRS").
Independent review report to Namakwa Diamonds Ltd
Introduction
We been engaged by the Company to review the consolidated set of financial
statements in the half-yearly financial report for the six months ended 29
February 2008, which comprises the consolidated income statement, consolidated
statement of changes in equity, consolidated balance sheet information as at 29
February 2008, consolidated cash flow statement and associated notes. We have
read the other information contained in the half-yearly financial report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the consolidated set of financial
statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the directors. The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure and Transparency Rules of the
United Kingdom's Financial Services Authority.
As disclosed in the annual financial statements of the Group are prepared in
accordance with the International Financial Reporting Standards (IFRSs.) The
consolidated set of financial statements included in this half-yearly financial
report has been prepared in accordance with International Accounting Standard
34, "Interim Financial Reporting".
Our responsibility
Our responsibility is to express to the Company a conclusion on the consolidated
set of financial statements in the half-yearly financial report based on our
review. This report, including the conclusion, has been prepared for and only
for the Company for the purpose of the Disclosure and Transparency Rules of the
Financial Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to any
other person to whom this report is shown or into whose hands it may come save
where expressly agreed by our prior consent in writing.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements 2410, 'Review of Interim Financial Information Performed by the
Independent Auditor of the Entity'. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to
obtain assurance that we would become aware of all significant matters that
might be identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the consolidated set of financial statements in the half-yearly financial
report for the six months ended 29 February 2008 is not prepared, in all
material respects, in accordance with International Accounting Standard 34 and
the Disclosure and Transparency Rules of the United Kingdom's Financial Services
Authority.
PricewaterhouseCoopers LLP
Chartered Accountants
24 April 2008
One Embankment Place
London, WC2N 6RH
Consolidated Income Statement
Note 6 months to 19 weeks to 45 weeks to
29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of US dollars
Revenue 12,426 394 8,353
Cost of sales (14,275) (265) (10,780)
Gross (loss)/profit (1,849) 129 (2,427)
Other income 48 - 16
Exploration expenses (2,759) (607) (4,823)
Acquired exploration asset expense (4,204) (6,887) (6,887)
Listing costs expensed* (4,128) - -
Other operating expenses 4 (5,772) (235) (4,236)
Operating loss before finance costs and taxation (18,664) (7,600) (18,357)
Finance income 1,348 1 189
Finance expenses 5 (2,563) (7) (1,403)
Net financing costs (1,215) (6) (1,214)
Loss before taxation (19,879) (7,606) (19,571)
Taxation 470 - 580
Loss for the period (19,409) (7,606) (18,991)
- attributable to outside equity shareholders (3,412) - (2,542)
- attributable to equity shareholders of Namakwa Diamonds (15,997) (7,606) (16,449)
Limited
Basic loss per share (dollars) (0.23) (16.46) (10.13)
Diluted loss per share (dollars) (0.23) (16.46) (10.13)
Paid and proposed dividends - - -
* In line with IAS 32, costs directly related to the issue of shares are
allocated as a reduction of the equity raised. Costs attributed to the listing
on the London Stock Exchange are expensed.
Consolidated Balance Sheet
Note 29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of US dollars
Assets
Property, plant and equipment 6 43,790 10,101 35,512
Goodwill 4,782 - 4,152
Total non-current assets 48,572 10,101 39,664
Inventories 7 13,880 - 8,017
Trade and other receivables 8,747 1,725 7,486
Cash and cash equivalents 138,579 462 6,411
Total current assets 161,206 2,187 21,914
Total assets 209,778 12,288 61,578
Equity
Capital and reserves attributable to the equity holders of the
Company
Issued capital 8 74 14 24
Share premium 8 227,338 8,317 11,203
Reserves (862) 122 855
Accumulated loss (46,234) (7,606) (11,977)
Total 180,316 847 105
Minority interest in equity 14,169 - 28
Total equity 194,485 847 133
Liabilities
Loans and borrowings 10 1,787 104 186
Provisions 2,201 - 1,222
Deferred tax liabilities 4,304 - 4,362
Total non-current liabilities 8,292 104 5,770
Trade and other payables 6,255 5,396 6,706
Preference shares 10 - - 43,452
Unsecured loan 10 - - 5,324
Loans and borrowings 10 607 5,941 83
Tax liabilities 139 - 110
Total current liabilities 7,001 11,337 55,675
Total liabilities 15,293 11,441 61,445
Total equity and liabilities 209,778 12,288 61,578
Consolidated statement of changes in equity
Note Share Share Translation Share Accumulated Minority Total
capital premium reserve based Loss interests equity
payment
reserve
In thousands of US
dollars
Period ended 29
February 2008
(Unaudited):
Balance at 1 24 11,203 33 822 (11,977) 28 133
September 2007
Shares issued 31 172,133 - - - - 172,164
Value of services - - - 1,835 - - 1,835
provided
Exercise of awards 1 1,152 - (1,153) - - -
Conversion of 18 42,850 - - - - 42,868
preference shares
Minorities arising - - - - - 226 226
from business
combinations
Repurchase of 'A' - - - - - (865) (865)
shares
Change on - - (2,467) - - - (2,468)
translation of
foreign operations
Loss for the period - - - - (15,997) (3,412) (19,409)
8 74 227,338 (2,434) 1,504 (27,974) (4,023) 194,485
Gain/ (loss) arising - - 175 (107) (18,260) 18,192 -
from impact on
minority interest of
the above equity
transactions
Balance at 29 74 227,338 (2,259) 1,397 (46,234) 14,169 194,485
February 2008
Period ended 28
February 2007
(Unaudited):
Balance at 20 - - - - - - -
October 2006
Shares issued 14 8,317 - - - - 8,331
Change on - - 122 - - - 122
translation of
foreign operations
Loss for the period - - - - (7,606) - (7,606)
Balance at 28 14 8,317 122 - (7,606) - 847
February 2007
Period ended 31
August 2007
(Audited):
Balance at 20 - - - - - - -
October 2006
Shares issued 24 11,203 - - - - 11,227
Minorities - - - - - 6,712 6,712
Gain on issuing of - - - - 4,472 (4,472) -
shares to minorities
Equity-settled - - - 822 - 330 1,152
transactions
Change on - - 33 - - - 33
translation of
foreign operations
Loss for the period - - - - (16,449) (2,542) (18,991)
Balance at 31 August 24 11,203 33 822 (11,977) 28 133
2007
Consolidated Statement of Cash Flows
Note 6 months to 19 weeks to 45 weeks to
29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of US dollars
Cash flows from operating activities
Loss for the period before tax (19,879) (7,606) (19,571)
Adjustments for:
Depreciation 6 2,091 94 2,328
Impairment of acquired exploration assets 4,204 6,887 6,887
Net finance expense 1,215 6 1,214
Profit on disposal of property, plant and equipment (48) - (13)
Equity settled share-based payment transactions 2,635 - 1,152
Movement in provision for rehabilitation 538 - 106
(9,244) (619) (7,897)
Change in inventories (4,653) - (2,492)
Change in trade and other receivables (1,081) (1,725) (7,282)
Change in trade and other payables (908) 5,396 2,074
Net cash outflows from operations (15,886) 3,052 (15,597)
Interest paid (1,464) (7) (133)
Income taxes paid (150) - -
Net cash (used in)/ from operating activities (17,500) 3,045 (15,730)
Cash flows from investing activities
Interest received 1,348 1 189
Acquisition of subsidiaries, net of cash acquired 3 (2,674) - (13,135)
Acquisition of property, plant and equipment* (13,218) (11,829) (12,539)
Proceeds from disposal of property, plant and equipment 87 - 29
Net cash used in investing activities (14,457) (11,828) (25,456)
Cash flows from financing activities
Proceeds from the issue of share capital 171,365 3,200 6,001
Proceeds from the issue of 'A' shares - - 3,250
Repurchase of "A" shares (865) - -
Proceeds from the issue of convertible redeemable preference shares - - 42,182
Preference dividends paid (1,683) - -
(Repayment of)/ proceeds from borrowings (4,692) 6,045 (3,868)
Net cash from financing activities 164,125 9,245 47,565
Net increase in cash and cash equivalents 132,168 462 6,379
Cash and cash equivalents at the beginning of the period 6,411 - -
Effect of exchange rate fluctuations on cash held - - 32
Cash and cash equivalents at the end of the period 138,579 462 6,411
* During the period ending 29 February 2008, acquisitions of exploration assets
of US$4,204,000 were made. These exploration assets were subsequently expensed.
During the period ended 31 August 2007 acquisitions of exploration assets of
US$6,036,000 were made through the issuance of ordinary shares in Namakwa
Diamonds Limited to the value of US$5,226,000 and "A" ordinary shares in Namakwa
Diamond Holdings (Pty) Ltd to the value of US$810,000 and these exploration
assets were subsequently expensed. In addition, property, plant and equipment
was purchased for US$2,652,000 through the issuance of "A" ordinary shares in
Namakwa Diamonds Holdings (Pty) Ltd.
Notes to the consolidated financial information
1. Accounting policies
The interim results, which are reviewed, have been prepared in accordance
with International Financial Reporting Standards (IFRS) adopted by the
International Accounting Standards Board (IASB). The interim financial
statements have been prepared in accordance with the requirements of
International Accounting Standard 34. This interim report does not include all
the notes of the type normally included in an annual financial report.
Accordingly, this report is to be read in conjunction with the Consolidated
financial information for the period ended 31 August 2007 and any public
announcements made by the Company during the interim reporting period.
The reviewed interim financial statements for the six months ended 29
February 2008 do not constitute statutory accounts and have been drawn up using
accounting policies and presentation consistent with those applied in the
financial information presented in the listing prospectus for the period ended
31 August 2007. The financial information for the period ended 31 August 2007
has been extracted from the listing prospectus. The reporting accountant's
report for the period ended 31 August 2007 was unqualified.
(a) New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not
yet effective for the period ended 29 February 2008, and have not been applied
in preparing the consolidated financial information:
• IFRS 7 Financial Instruments: Disclosures and the Amendment to IAS 1
Presentation of Financial information: Capital Disclosures require extensive
disclosures about the significance of financial instruments for an entity's
financial position and performance, and qualitative and quantitative disclosures
on the nature and extent of risks. IFRS 7 and amended IAS 1, which will become
mandatory for the Group's 2008 financial statements, will require extensive
additional disclosures with respect to Group's financial instruments and share
capital. The effective date for incorporating this statement is for annual
periods beginning on or after 1 January 2007.
• IAS 1 (Amendment), Presentation of Financial Statements - Capital
Disclosures (1 January 2007)
• IFRIC 10 Interim Financial Reporting and Impairment (30 June 2008)
• IFRIC 11 Group and Treasury Share Transactions (30 June 2008)
• IFRIC 12 Service concession arrangements (30 June 2009)
• IFRIC 13 Customer Loyalty Programmes (1 July 2008)
• IFRIC 14 IAS19 - The limit on a Defined Benefit Asset minimum funding
requirements and their interaction (1 January 2008)
(b) New standards and interpretations applied but not yet effective
IFRS 8: Operating Segments statement together with its amendments were applied
for the period ending 29 February 2008 and have been applied in the preparation
of the consolidated financial information. IFRS 8 requires disclosure regarding
the nature and financial effect of the business activities in which the Group
engages and the economic environment in which the Group operates. The effective
date for incorporating this statement is for annual periods beginning on or
after 1 January 2009.
(c) Standards, interpretations and amendments to published standards effective
for the period
During the financial year, the following new and revised accounting standards,
amendments to standards and new interpretations were adopted by the Group:
• IAS 21 (Amendment) Net Investment in a Foreign Operation
• IAS 19 (Amendment) Employee Benefits
• IAS 39 (Amendment) Cash Flow Hedge Accounting of Forecast Intragroup
Transaction
• IAS 39 (Amendment) The Fair Value Option
• IAS 39 and IFRS 4 (Amendment) Financial Guarantee Contracts
• IFRS 1 (Amendment), First-time Adoption of International Financial
Reporting Standards
• IFRS 6 (Amendment), Exploration for and Evaluation of Mineral
Resources
• IFRIC 5 Rights to Interests arising from Decommissioning,
Restoration and Environmental Rehabilitation Funds
• IFRIC 6 Liabilities arising from Participating in a Specific Market -
Waste Electrical and Electronic Equipment
• IFRIC 7 Applying the restatement approach under IAS 29 Financial
Reporting in Hyperinflationary Economies
• IFRIC 8 Scope of IFRS 2
• IFRIC 9 Reassessment of Embedded Derivatives
• AC 503 Accounting for Black Economic Empowerment (BEE) Transactions.
These standards, interpretations and amendments did not have a material effect
on the Group.
2. Segment reporting
Operating segments
The Group comprises the following operating segments:
Exploration: Exploration includes all exploration and
development projects up to the stage where a project commences production at
which point it will form part of the Mining segment.
Mining: Mining includes all diamond mining operations.
All mined diamonds are sold to the beneficiation segment.
Beneficiation: Beneficiation includes the purchase of
diamonds from the mining segment and external sources, polishing of diamonds and
all the revenue from the sale of these beneficiated and mined diamonds.
In presenting information on the basis of operating segments, segment revenue is
based on the results from each operation. Segment assets are based on the
operation in which they are used.
6 months ended 29 February 2008 (Unaudited):
Mining Exploration Beneficiation Other Total
In thousands of US dollars
Total revenue from external customers - - 12,426 - 12,426
Inter-segment revenue 6,579 - - - 6,579
Total revenue 6,579 12,426 19,005
Finance income 2 - 21 1,325 1,348
Finance expense (13) (4) (4) (2,542) (2,563)
Depreciation and amortisation (1,886) (4,392) (18) - (6,296)
Segment (loss)/profit (3,525) (7,074) 596 (9,876) (19,879)
Taxation 470 - - - 470
Reportable segment assets 51,081 1,267 16,368 141,062 209,778
Capital expenditure 10,425 1,433 140 64 12,062
Reportable segment liabilities (10,046) - (406) (4,841) (15,293)
The following results are reportable in terms of geographical segments:
South Africa Other Africa Other Total
In thousands of US dollars
Total revenue from external customers 9,926 - 2,500 12,426
Reportable net assets 56,408 1,267 136,810 194,485
In the current period management has changed the basis of pricing between
the mining segment and the beneficiation segment in that a discount on market
related prices agreed between mining and beneficiation has been adjusted from
15% in the prior period to a discount of 5% in the current period. Prior period
comparative numbers have not been restated as it is impracticable to provide
this information on an equivalent basis. Had the change been applied throughout
the current period, the revenues in the mining segment would have increased by
US$258,000 to US$6.8 million and the loss would have decreased by US$258,000 to
US$3.3 million. The profit in the beneficiation segment would have reduced by
the same amount for the current period.
6 Months ended 28 February 2007 (Unaudited):
Mining Exploration Beneficiation Other Total
In thousands of US dollars
Total revenue from external customers - - 394 - 394
Inter-segment revenue - - - - -
Finance income - - - 1 1
Finance expense - - - (7) (7)
Depreciation and amortisation - (6,887) - (9) (6,896)
Reportable segment (loss)/profit before income - (7,522) 129 (213) (7,606)
tax
Taxation - - - - -
Reportable segment assets - 10,031 - 2,257 12,288
Capital expenditure - 10,136 - 59 10,195
Reportable segment liabilities - (90) - (11,351) (11,441)
The following results are reportable in terms of geographical segments:
South Africa Other Africa Other Total
In thousands of US dollars
Total revenue from external customers - - 394 394
Reportable net assets 847 - - 847
45 weeks ended 31 August 2007 (Audited):
Mining Exploration Beneficiation Other Total
In thousands of US dollars
Total revenue from external customers - - 8,353 - 8,353
Inter-segment revenue 3,283 - - - 3,283
Finance income 6 - - 183 189
Finance expense (98) - (6) (1,299) (1,403)
Depreciation and amortisation (1,970) (346) (12) - (2,328)
Reportable segment (loss)/profit before income (9,429) (11,349) 2,322 (1,115) (19,571)
tax
Taxation 580 - - - 580
Reportable segment assets 48,940 1,433 11,205 - 61,578
Capital expenditure 35,927 1,747 182 - 37,856
Reportable segment liabilities (9,008) - (844) (51,593) (61,445)
The following results are reportable in terms of geographical segments:
South Africa Other Africa Other Total
In thousands of US dollars
Total revenue from external customers 7,628 - 725 8,353
Reportable net assets 50,292 1,433 (51,592) 133
3. Business combinations
(i) Jacobus Smit
On 1 September 2007, the Group acquired the South African alluvial diamond
mining assets of Jacobus Smit for consideration of US$2 522 153 in cash. In the
six months to 29 February 2008 the business contributed a loss of US$170 239 to
the consolidated loss for the period. The acquisition had the following effect
on the Group's assets and liabilities on acquisition date and should be
considered provisional and subject to review due to the timing of the
transaction:
Acquiree's net assets at the acquisition date
Pre-acquisition Fair value Recognised
carrying amounts adjustments values on
acquisition
In thousands of US dollars
Property, plant and equipment 1,068 332 1,400
Mineral properties - 1,563 1,563
Deferred tax liabilities - (531) (531)
Provision for rehabilitation (441) - (441)
Net identifiable assets and liabilities 1,991
Goodwill on acquisition 531
Total consideration 2,522
Comprised of:
Consideration paid, satisfied in cash (2,522)
Cash (acquired) -
Net cash outflow (2,522)
The goodwill is attributable to the tax amortisation benefit arising from the
fair value adjustments to assets and liabilities. The goodwill has been
allocated to the mining segment.
(ii) Elite Diamond Cutting Works (Pty) Limited
On 1 September 2007 the Group entered into a agreement to acquire 100 per cent
shareholding in a diamond polishing business, Elite Diamond Cutting Works (Pty)
Limited, incorporated in South Africa. The acquisition of 66.67 per cent was
concluded on the same day for consideration of US$765 299; the remaining 33.33
per cent was concluded after the period end. In the six months to 29 February
2008, the subsidiary contributed US$235 592 to the consolidated loss for the
period. Elite Diamond Cutting Works (Pty) Limited is a company incorporated in
South Africa. The acquisition had the following effect on the Group's assets and
liabilities on acquisition date and should be considered provisional and subject
to review due to the timing of the transaction:
Acquiree's net assets at the acquisition date
Pre-acquisition Fair value Recognised
carrying amounts adjustments values on
acquisition
In thousands of US dollars
Property, plant and equipment 21 65 86
Diamond inventory 1,059 151 1,210
Trade receivables 180 - 180
Cash and cash equivalents 276 - 276
Loans and borrowings (894) - (894)
Deferred tax liabilities - (60) (60)
Trade payables (120) - (120)
Net identifiable assets and liabilities 678
Minority interest (226)
Goodwill on acquisition 313
Total consideration 765
Comprised of:
Deferred consideration (337)
Consideration paid, satisfied in cash (428)
Cash (acquired) 276
Net cash outflow (152)
The goodwill is attributable to the tax amortisation benefit arising from the
fair value adjustments to assets and liabilities. The goodwill has been
allocated to the beneficiation segment.
Business combinations in aggregate contributed a loss of US$405,831 to the
consolidated loss for the period.
4. Other operating expenses
29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of US dollars
Auditor's remuneration
- Audit fee 3 - 165
- Fees for other services* - - -
Consulting fees 385 6 338
Depreciation 142 94 343
Office expenses 273 - 128
Personnel expenses
-Payroll 1,471 - 938
-Equity settled share based payments 1,835 - 1,152
Loss on foreign exchange 9 - 265
Rehabilitation costs 661 - 106
Travel 433 119 461
Other 560 16 340
5,772 235 4,236
* Included in listing expenses and as a reduction in equity from share issue is
an amount of US$1,134,372 for services performed for the listing and initial
public offer by PWC.
5. Finance expense
29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of US dollars
Preference share dividends 1,098 - 1,270
Interest on unsecured loan 907 - -
Finance expense on late payment 537 - -
Other 21 7 133
2,563 7 1403
The interest expense relating to the preference share dividends, unsecured loan
and finance expense on late payment relates to pre-IPO finance arrangements and
will therefore not re-occur in future, based on the current funding structure.
6. Property, plant and equipment
Land Plant and Mineral Capital Total
equipment properties work in
progress
In thousands of US dollars
Cost
Period ending 29 February 2008
(Unaudited):
Balance at 01 September 2007 439 16,649 20,712 40 37,840
Acquisitions through business combinations - 1,557 1,492 - 3,049
Other additions 122 8,814 - 77 9,013
Disposals - (55) - - (55)
Effect of translation of foreign currencies (19) (728) (905) (2) (1,654)
Balance at 29 February 2008 542 26,237 21,299 115 48,193
Period ending 28 February 2007 (Unaudited):
Balance at 20 October 2006 - - - - -
Additions 140 179 9,876 - 10,195
Balance at 28 February 2007 140 179 9,876 - 10,195
Period ending 31 August 2007 (Audited):
Balance at 20 October 2006 - - - - -
Acquisitions through business combinations - 12,406 10,259 - 22,665
Other additions 439 4,259 10,453 40 15,191
Disposals - (16) - - (16)
Balance at 31 August 2007 439 16,649 20,712 40 37,840
Depreciation and impairment losses
Period ending 29 February 2008
(Unaudited):
Balance at 01 September 2007 - 2,115 213 - 2,328
Depreciation charge for the period - 1,766 325 - 2,091
Disposals - (16) - - (16)
Balance at 29 February 2008 - 3,865 538 - 4,403
Period ending 28 February 2007 (Unaudited):
Balance at 20 October 2006 - - - - -
Depreciation charge for the period - 94 - - 94
Balance at 28 February 2007 - 94 - - 94
Period ending 31 August 2007 (Audited):
Depreciation charge for the period - 2,115 213 - 2,234
Balance at 31 August 2007 - 2,115 213 - 2,328
Net book value
At 29 February 2008 (Unaudited) 542 22,372 20,761 115 43,790
At 28 February 2007 (Unaudited) 140 85 9,876 - 10,101
At 31 August 2007 (Audited) 439 14,534 20,499 40 35,512
7. Inventories
29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of US dollars
Rough diamonds 10,317 - 4,140
Polished diamonds 2,092 - 3,730
Jewellery 649 - 54
Consumables 822 - 93
13,880 - 8,017
8. Capital and reserves
Share capital and share premium
Movements in the Group's share capital is reflected below:
Ordinary Shares
29 February 2008 28 February 2007 31 August 2007
Unaudited Unaudited Audited
In thousands of shares
On issue at beginning of the period 2,357 - -
Issued for cash 46 - 435
Issued for property, plant and equipment - - 132
Issued for the conversion of the convertible loan - 312
Issued to founding shareholders - 1,446 1,478
Share based payments 100 - -
Repurchase of "A" shares 69 - -
2,572 1,446 2,357
Share split 16:1 38,582 - -
Reduction in pre-listing shares* (1,688) - -
Conversion of preference shares on listing** 25,825 - -
Issued as script dividend to preference shareholders 673 - -
Shares issued to non-executive directors 341 - -
Issued on IPO 50,118 - -
On issue at the end of the period - fully paid 116,423 1,446 2,357
At 29 February 2008 the authorised share capital comprised 251 000 000 (31
August 2007: 5,000,000) ordinary shares. All classes of shares have a par value
of US$ 0.000625 (31 August 2007: $ 0.01) per share. All issued shares are fully
paid.
* The ordinary shareholder's number of shares were diluted at listing to effect
the redemption of the convertible loan notes valued at $6,238m.
**The redeemable preference shares were completely redeemed and converted into
ordinary shares.
9. Minority interests
A subsidiary of the Company has also issued 'A' ordinary shares. The holders of
'A' ordinary shares are entitled to receive dividends as declared from time to
time and are treated as minority shareholders in the group.
A Shares
29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of US dollars
Nominal value 4 - 6
Share premium 6,172 - 7,036
6,176 - 7,042
A Shares
29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of shares
On issue at the beginning of the period 635 - -
Issued for cash - - 253
Share based payments - - 20
Issued for the conversion of the convertible loan - - 118
Issued for property, plant and equipment - - 244
Share buy back (69) - -
Share split 16:1 8,488 - -
On issue at the end of the period - fully paid 9,054 - 635
A Shares
29 February 28 February 31 August
2008 2007 2007
Unaudited Unaudited Audited
In thousands of US dollars
On issue at the beginning of the period 7,042 - -
Issued for cash - - 3,250
Share based payments - - 330
Issued for the conversion of the convertible loan - - 810
Issued for property, plant and equipment - - 2,652
Share buy back (865) - -
On issue at the end of the period- fully paid 6,177 - 7,042
A second class of shares, 'A' shares, were issued in Namakwa Diamond Holdings
(Pty) Ltd, a 100% subsidiary of the Company. These 'A' shares were issued to
certain South African residents investing in the Group and to fund acquisitions
during the period. These 'A' shares rank pari passu with the rights attaching to
the Namakwa Diamonds Limited ordinary shares and give the holder an effective
economic interest in the profits of the Company as set out below. As set out in
the accounting policies, the 'A' shares have been treated as a minority
investment in the Group accounts.
Rights attaching to 'A' shares
Each 'A' share will be issued on the basis that:
- the rights attaching to the shares shall rank pari passu with the rights
attaching to the Namakwa Diamonds Limited Ordinary Shares, and any alteration of
the ordinary share capital of Namakwa Diamonds Limited shall apply mutatis
mutandis to the 'A' Ordinary Shares;
- if the Namakwa Diamonds Limited Ordinary Shares are consolidated or
sub-divided, the same will apply, mutatis mutandis, to the 'A' Ordinary Shares;
- if any rights issue is implemented by Namakwa Diamonds Limited, Namakwa
Diamond Holdings (Pty) Ltd will automatically have a rights issue in respect of
the 'A' Ordinary Shares on identical terms to the rights issue implemented by
Namakwa Diamonds Limited, which will include, but not be limited to the price
per Namakwa Diamonds Limited rights issue share and the ratio of Namakwa
Diamonds Limited right issue shares to existing Namakwa Diamonds Limited
Ordinary Shares; and
- if the shareholders of Namakwa Diamonds Limited receive Namakwa Diamonds
Limited Ordinary Shares in substitution for all their Namakwa Diamonds Limited
Ordinary Shares then the number of 'A' Ordinary Shares will be automatically
adjusted such that each 'A' Shareholder will own the number of 'A' Ordinary
Shares as equals their existing number of 'A' Ordinary Shares, multiplied by the
common number of substitution Namakwa Diamonds Limited Ordinary Shares issued
for each Namakwa Diamonds Limited Ordinary Share.
Dividends
The 'A' Shareholders shall only be entitled to an 'A' Ordinary Dividend (which
for the avoidance of doubt shall mean that as and when Namakwa Diamonds Limited
declares a dividend in respect of the Namakwa Diamonds Limited Ordinary Shares,
then the 'A' Ordinary Shares will be entitled to an 'A' Ordinary Dividend out of
the Profits of the Company available for Distribution per 'A' Ordinary Share
equal to "D" calculated in accordance with the following formula:
D = A x F
Where:
A = the dividend declared and payable by Namakwa Diamonds Limited in respect of
each Namakwa Diamonds Limited Ordinary Share; and
F = the spot foreign exchange rate quoted by Nedbank Limited on the date on
which the relevant Namakwa ordinary dividend is payable to the Namakwa
shareholders to determine the South African Rand value in respect of the 'A'
Ordinary Dividends.
The Company in general meeting or the directors of the Company shall be entitled
to declare an 'A' Ordinary Dividend in respect of the 'A' Ordinary Shares on the
basis that the 'A' Ordinary Dividend shall be payable on the date upon which the
relevant dividend is payable to the shareholders of Namakwa Diamonds Limited in
respect of Namakwa Diamonds Limited Ordinary Shares, to the 'A' Shareholders
registered as such on the declaration date of the relevant dividend pertaining
to the Namakwa Diamonds Limited Ordinary Shares.
Payment in respect of 'A' Ordinary Dividends and any other payments will be made
in South African Rands at the risk of the relevant 'A' Shareholder.
Repurchase
Each 'A' Shareholder shall, subject to the provisions of Section 85 of the
Companies Act (South Africa) and the specific authority granted to the Company
in terms of special resolution no. 4, be entitled to require the Company to
repurchase some or all of the 'A' Ordinary Shares at any time by delivery of a
Repurchase Notice to the Company specifying the number of 'A' Ordinary Shares
being the subject of such repurchase.
The Company shall be obliged to repurchase the 'A' Ordinary Shares that are
required to be repurchased in terms of the Repurchase Notice within 90 days of
receipt of such Repurchase Notice, subject to:
- the Company possessing sufficient funds for such purpose; and
- the absolute and sole discretion of the board of directors of the Company who
shall at all times be obliged to consider the financial position of the Company,
but who in exercising their discretion, shall not withhold the consent to such
repurchase unreasonably.
10. Loans and borrowings
This note provides information about the contractual terms of the Group's
interest-bearing loans and borrowings.
29 February 2008 28 February 2007 31 August 2007
Unaudited Unaudited Audited
In thousands of US dollars
Non-current liabilities
Unsecured loans 279 -
Secured bank loans 90 80 100
Finance lease liabilities 1,418 24 86
1,787 104 186
Current liabilities
Convertible redeemable preference shares - - 43,452
Unsecured loan - - 5,324
Current portion of finance lease liabilities 597 21 73
Secured bank loan 10 10 10
Shareholders loan - 5,910 -
607 5,941 48,859
Disclosed in the balance sheet as:
Non - Current
Loans and borrowings 1,787 104 186
Current
Convertible redeemable preference shares - - 43,452
Unsecured loan - - 5,324
Loans and borrowings 607 5,941 83
2,394 6,045 49,045
Terms and debt repayment schedule
Nominal Year of Face Carrying
In thousands of US dollars Currency interest rate maturity value amount
Floating rate borrowings:
Unsecured loan USD 0% N/A 279 279
Secured loan USD Prime 2008-2016 100 100
Finance lease liabilities USD 9-13.7% 2008-2014 2,015 2,015
Total loans and borrowing 2,394 2,394
Convertible redeemable preference shares
The convertible redeemable preference shares were issued on 24 April 2007 and
were redeemed at the initial public offering price of US$ 1.75 on the initial
public offering. Dividends were set at 9 per cent of the issue price.
February February August
2008 2007 2007
In thousands of US dollars
Proceeds on the issue of convertible redeemable preference shares - - 45,000
Accrued interest - - 1,270
Transaction cost - - (2,818)
- - 43,452
Finance lease liabilities
Finance lease liabilities are payable as follows:
For the period ended 29 February 2008 (Unaudited):
Minimum lease Capital Interest
payments 2008 2008
2008
In thousands of US dollars
Less than one year 770 597 173
Between one and five years 1,946 1,418 528
2,716 2,015 701
For the period ended 28 February 2007 (Unaudited):
In thousands of US dollars Minimum lease Capital Interest
payments 2007 2007
2007
Less than one year 27 21 6
Between one and five years 31 24 7
58 45 13
For the period ended 31 August 2007 (Audited):
Minimum lease Capital Interest
payments 2007 2007
2007
In thousands of US dollars
Less than one year 93 73 20
Between one and five years 105 86 19
198 159 39
11. Taxation
During the period the company tax rate in South Africa changed from 29% to 28%.
The amount of US$470,000 for the period ended 29 February 2008 represents the
reversal of deferred tax liabilities raised in the previous period.
12. Capital commitments
During the period the board approved expenditure of US$45 million of which US$23
million was contracted at the end of the period.
13. Related parties
Identity of related parties
The Group has a related party relationship with its subsidiaries, joint
ventures, directors and executive officers.
Transactions with key management personnel
Directors of the Company and their immediate relatives control 18.42 per cent of
the voting shares of the Company.
During the period remuneration was paid to key management personnel for
executive services rendered to the amount of US$ 425,145 (28 February 2007: nil)
(31 August 2007: US$ 315,410).
No loans were made to directors during the current financial year.
Group entities
Significant subsidiaries
As at the period end the following were subsidiaries:
Country of Ownership
incorporation interest
2007
Amira SA Panama 100
Debon Logistics British Virgin Islands 100
Namakwa Diamonds Management Services (Pty) Limited South Africa (RSA) 100
Namdima Enterprises SA Panama 100
Adima SPRL Democratic Republic of Congo (DRC) 100*
Dorod SPRL DRC 100*
Namakwa Diamond Holdings (Pty) Ltd RSA 100
Tidal Diamonds (Pty) Limited Namibia 100
Namakwa Diamonds Trading (Pty) Limited RSA 100
Namakwa Diamonds Mining North West (Pty) Limited RSA 100
Namakwa Diamonds Mining South Africa (Pty) Limited RSA 100
Albetros Inland Exploration (Pty) Limited RSA 100
Lomlex Mining (Pty) Limited RSA 100
Pypklip Diamante (Pty) Limited RSA 100
Joey Fourie Trust (Pty) Limited RSA 100
Amber Cascades (Pty) Limited RSA 100
Dumela Diamonds (Pty) Limited RSA 100
Big Sky Trading (Pty) Limited RSA 100
DJL Landgoed (Pty) Limited RSA 100
Morning Dew Properties (Pty) Limited RSA 100
Elite Diamond Cutting works (Pty) Limited RSA 66.67
Batavia Trading 46 (Pty) Limited RSA 100
River Queen Trading 194 (Pty) Limited RSA 100
Meondo Trading 72 (Pty) Limited RSA 100
Central High Trading 58 (Pty) Limited RSA 100
Counter Point Trading RSA 100
Spring Green Trading 115 (Pty) Limited RSA 100
Mirimar Trading 57 (Pty) Limited RSA 100
Namakwa Diamonds Mining Company DRC SPRL DRC 100*
* In three of the subsidiaries, incorporated in the DRC, one per cent of the
shareholding is held by an employee on behalf of the Group to comply to the
regulatory environment of the country. These one per cent shareholdings are
effectively held by the Group and included in the consolidation of the Group.
The Group is involved in the following material joint exploration projects in
Angola and the DRC which if successful will be developed in joint arrangements:
Joint venture with Aubrey Mining SPRL (DRC)
Joint venture with Kasai Sud Diamant SPRL (DRC)
Projecto Caungula (Angola)
14. Subsequent events
On 4 March 2008, the Group acquired the remaining 33.33 per cent shareholding in
Elite Diamond Cutting Works (Pty) Ltd for cash consideration of US$345,925.
On 22 April 2008, Namakwa concluded an agreement to, subject to the fulfilment
of certain conditions precedent, acquire 100% of the issued share capital of
Monroe Mining (Pty) Limited for a cash consideration of US$1.35 million. Monroe
holds certain mining rights over 2 121 hectares in close proximity to Namakwa's
North West operations.
For further information please contact:
Namakwa Diamonds - Nico Kruger
Tel: +27 11 334 8886
Taylor Rafferty - Rob Newman
Tel: +44 207 614 2900
About Namakwa:
Following its successful Initial Public Offer on December 19, 2007 on the London
Stock Exchange, Namakwa Diamonds is the only quoted vertically integrated
diamond mining company. Its strategy of backward integration from its 30 years
of beneficiation experience into mining has created a unique public investment
proposition. Namakwa Diamonds has a diversified portfolio of diamond projects,
which includes five distinct diamond resource target areas. These are located in
four African countries, namely; South Africa, the Democratic Republic of Congo,
Namibia and Angola. Namakwa's projects are located within historically
prospective geological environments. Alluvial diamond deposits constitute the
primary focus of the company, whilst kimberlite opportunities will be considered
if they are at an advanced stage of development, consistent with Namakwa's
philosophy of a short resource delivery time as provided by its alluvial diamond
mines.
This information is provided by RNS
The company news service from the London Stock Exchange