Source - RNS
RNS Number : 6257J
Diamondcorp Plc
13 September 2016
 

DiamondCorp plc

 

JSE share code: DMC

AIM share code: DCP

 

ISIN: GB00B183ZC46

 

(Incorporated in England and Wales)

 (Registration number 05400982)

 (SA company registration number 2007/031444/10)

 ('DiamondCorp' or 'the Company' or 'the Group')

 

Interim Results (unaudited) for the six month period

ended 30 June 2016 and lace mine operational update

 

DiamondCorp plc, the Southern Africa focussed diamond mine development and exploration company, releases its unaudited interim results for the six month period ended 30 June 2016 and an operational update on the Lace mine.

 

FINANCIAL HIGHLIGHTS

·      After adjustments for a stronger Rand exchange rate, the pre-tax loss for the period was reduced to £0.247 million compared with a loss of £3.159 million in the same period in 2015.

·      Administrative expenditure for the period increased to £0.893 million (£0.672 million in 2015). The increase is primarily due to a timing change on audit remuneration, as well as additional administrative expenses as the company is moving from development into production.

·      Total assets at 30 June were £39.227 million (£32.719 million in 2015) and liabilities were £28.456 million (£25.219 million in 2015).

·      Cash at 30 June was £0.108 million. After the period end, a further £2.0 million was raised through a share issue.

·      Fair value adjustment through profit and loss is calculated using the current share price of 6.63 pence (11.00 pence in 2015) and a foreign exchange rate of ZAR 19.7817 (ZAR 19.2023 in 2015).

OPERATIONAL UPDATE

·     The Company's diamond sales schedule has been reorganised to maximise attendance by clients who have been absent from Antwerp during various religious holidays as well as the De Beers August sale. The first tender will now be concluded on 17 September 2016 with results announced on 20 September 2016. Subsequent monthly sales will be concluded around the middle of each month.

·     Production from the first mining block on the 310m level was impacted during August by a number of operational issues, discussed below, all of which have now been overcome.

·     In particular, development drilling for the return air pass from the production level intersected a geological contact with significant water inflow which flooded the production level until pumps were able to clear the level and specialist contractors were mobilised to seal the face.

·     As a consequence, a total of 9 days of production were lost in the first half of August. One of the knock on effects of this lost production is that the September diamond sale will now be c.5700 carats, not 7,000 as previously planned.

·     An additional 8 days of production were lost in the second half of the month from further water issues as the return air pass tunnel was advanced into the contact area then resealed. The return air pass face now remains sealed from any serious water inflow.

·     In addition, mining in August included significant tonnage of lower grade kimberlites which ingressed from old workings above into the 310m production draw point through old shafts adjacent to the slot. This lower grade kimberlite had to be mined before the clean K4 trough kimberlite could be accessed. This meant that not only was total tonnage for the month of August approximately a third of what was planned, recovered grade for the month was diluted from the budgeted 31 carats per hundred tonnes (cpht) to 18 cpht.

·     Management considers these operational issues are not unusual in the ramp up of underground mining operations. Further, the financial impact of the operational issues is expected to be met by existing cash and a new third party convertible debt facility. Several offers of new working capital facilities are currently being assessed and management is confident that such facility will be in place in the coming weeks.

·     Mining is now progressing in predominately high-grade K4 kimberlite and, importantly, will be shortly clear of these old development workings. The Company's independent geological consultants MPH Consulting Limited are closely monitoring the in-situ kimberlite facies being mined. Importantly, MPH has concluded that reconciliation of in-situ kimberlite facies mined during August demonstrated that recovered grades were in line with the geological model and are confident we are not expected to encounter any significant rafts of low grade kimberlite in the planned mining blocks not already incorporated in the geological model.

·     The diamonds yielded during August remain of a high quality, and four stones larger than 10 carats were recovered, including a 12.7 carat gem diamond. These diamonds will be sold in the October sale.

·     In light of the ramp-up problems encountered to date, which management considers essentially resolved, the production forecast for the remainder of 2016 has been re-budgeted for 20,000 tonnes in September, 25,000 tonnes in October and 30,000 tonnes in each of November and December.

·     The Company's current diamond inventory is 7,003 carats. It takes between 30 and 45 days for diamonds recovered to move from the mine to Antwerp and be sold. As a consequence, the October sale will be relatively small but monthly sales are expected to build up to the 9,000 carat base case in the budget by December.

 

 

 

 

13 September 2016

 

 

 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENT



 




 


Six months ended

30 June 2016 (Unaudited)

Six months ended 30 June 2015 (Unaudited)

 


£

£

 




 

 Other income

                      5 658

                      1 700

 

 Operating expenses

(897 039)

(672 480)

 

 Operating loss

(891 381)

(670 780)

 

 Investment revenues

                      7 074

                      8 914

 

 Fair value adjustments

                 642 388

(2 497 523)

 

 Loss before tax

(241 919)

(3 159 389)

 

 Tax

(5 302)

                            -  

 

 Loss for the financial year

(247 221)

(3 159 389)

 

 Attributable to:



 

 Equity holders of the parent

(150 114)

(3 098 379)

 

 Non-controlling interest

(97 107)

(61 010)

 


(247 221)

(3 159 389)

 




 

 Basic and diluted loss per share (pence)

(0.04)

(0.98)

 




 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME & EXPENSES





 


 Six months ended 30 June 2016 (Unaudited)

 Six months ended 30 June 2015 (Unaudited)

 


 £

 £

 




 

Net loss

(247 221)

(3 159 389)

 

Other comprehensive loss:



 

Items that may be reclassified to profit and loss:



 

Exchange differences on translating foreign operations

              1 910 260

(369 402)

 




 

Other comprehensive loss for the year net of taxation

              1 663 039

(3 528 791)

 

Total comprehensive loss



 




 

Total comprehensive loss attributable to:



 

Equity holders of the parent

              1 438 269

(3 348 102)

 

Non-controlling interest

                 224 770

(208 026)

 


              1 663 039

(3 556 128)

 




 

 

CONSOLIDATED BALANCE SHEET



 


 Six months ended 30 June 2016 (Unaudited)

 Year ended  31 December 2015 (Audited)

 


 £

 £

 

Assets



 

Non-Current Assets



 

Property, plant and equipment

               35 830 182

               27 472 410

Goodwill

                 2 792 879

                 2 403 483

Rehabilitation trust fund

                    148 869

                    128 113

Restricted cash

                       54 997

                       60 913


               38 826 927

               30 064 919

Current assets



Inventories

                    385 306

                    627 535

Current tax receivable

                                -  

                         5 003

Trade and other receivables

                    295 814

                    371 120

Cash and cash equivalents

                    108 758

                 1 722 486


                    789 878

                 2 726 144

Total Assets

               39 616 805

               32 791 063




Equity and Liabilities



Equity



Equity Attributable to owners of the parent



Share capital

               46 541 131

               44 626 346

Reserves

(4 327 766)

(5 927 267)

Accumulated loss

(28 453 633)

(28 303 519)


               13 759 732

               10 395 560

Non-controlling interest

(2 599 355)

(2 824 126)

Total Equity

               11 160 377

                 7 571 434




Liabilities



Non-Current Liabilities



Other financial liabilities

               20 610 444

               16 974 515

Provisions

                    602 274

                    518 301


               21 212 719

               17 492 816




Current Liabilities



Compound instruments - debt component

                 2 965 725

                 2 684 835

Compound instruments - derivative component

                 3 247 660

                 3 596 870

Trade and other payables

                 1 030 325

                 1 445 108


                 7 243 710

                 7 726 813

Total Liabilities

               28 456 429

               25 219 629

Total Equity and Liabilities

               39 616 805

               32 791 063

 


STATEMENT OF CHANGES IN EQUITY (UNAUDITED)


Total share capital

Total Reserves

Retained losses

Total attributable to owner of the parent

Non- controlling interest

Total equity



£

£

£

£

£

£

GROUP







Restated balance as at 1 January    2015 (audited)

37 161 667

(3 503 973)

(26 048 922)

7 608 772

(2 147 363)

5 461 409

Loss for financial year

                              -  

                              -  

(3 098 379)

(3 098 379)

(61 010)

(3 159 389)

Other comprehensive income

                              -  

(249 723)

                              -  

(249 723)

(147 015)

(396 738)

Total comprehensive income

                              -  

(249 723)

(3 098 379)

(3 348 102)

(208 025)

(3 556 127)

Warrants issued

79 192

(79 192)

                              -  

                              -  

                              -  

                              -  

Issue of share capital

3 415 755

                              -  

                              -  

3 415 755

                              -  

3 415 755

Total contributions by and distributions to owners of the company recognised directly in equity

3 494 947

(79 192)

                              -  

3 415 755

                              -  

3 415 755

Balance at 30 June 2015 (unaudited)

40 656 614

(3 832 886)

(29 147 301)

7 676 427

(2 355 388)

5 321 037

Loss for financial year

                              -  


843 782

843 782

(94 420)

749 362

Other comprehensive income

                              -  

(2 124 167)

                              -  

(2 124 167)

(374 318)

(2 498 485)

Total comprehensive income

                              -  

(2 124 167)

843 782

(1 280 385)

(468 738)

(1 749 123)

Issue of share capital

                  3 969 732

                              -  

                              -  

3 969 732

                              -  

                  3 969 732

Value attributed for equity settled share based payments

                              -  

29 788

                              -  

29 788

                              -  

                       29 788

Total contributions by and distributions to owners of the company recognised directly in equity

                  3 969 732

29 788

                              -  

3 999 520

                              -  

3 999 520

Balance at 31 December 2015 (audited)

44 626 346

(5 927 267)

(28 303 519)

10 395 560

(2 824 126)

7 571 434








Loss for financial year

                              -  

                              -  

(150 114)

(150 114)

(97 107)

(247 221)

Other comprehensive income

                              -  

1 588 383

                              -  

1 198 986

321 877

1 520 863

Total comprehensive income

                              -  

1 588 383

(150 114)

1 048 872

224 770

1 273 642

Issue of share capital

                  1 914 785

                              -  

                              -  

1 914 785

                              -  

1 914 785

Value attributed for equity settled share based payments

                              -  

                       11 118

                              -  

                       11 118

                              -  

                       11 118

Balance at 30 June 2016 (unaudited)

           46 541 131

(4 327 765)

(28 453 633)

           13 370 337

(2 599 356)

           10 770 979








 

CONSOLIDATED CASH FLOW STATEMENT




 Six months ended

30 June 2016

 Six months ended 30 June 2015


 £

 £


(Unaudited)

(Unaudited)

Cash flows from operating activities



Cash utilised in operations

(1 182 486)

                     11 599

(Taxation paid) / refund received

                              -  

                           662

Finance cost

                              -  

                              -  

Net cash used in operating activities

(1 182 486)

                     12 261




Cash flows from investing activities



Purchase of property, plant and equipment

(539 682)

(3 934 963)

Interest income

                       7 074

                       8 914

Net cash used in investing activities

(532 608)

(3 926 049)




Proceeds on share issue

               1 914 785

               3 415 755

Net cash from financing activities

               1 914 785

               3 415 755




Total cash movement for the year

                   199 691

(498 033)

Cash at the beginning of the year

               1 722 486

               2 531 420

Effect of exchange rate movement on cash balances

(1 813 419)

(89 525)

Total cash at end of the year

                   108 758

               1 943 862




 



 

NOTES TO THE FINANCIAL STATEMENTS

 

Six months ended 30 June 2016

 

 

1.         ACCOUNTING POLICIES

 

These interim financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards (IFRSs). The same accounting policies, presentation and methods of computation are followed in the condensed interim financial information as applied in the Group's latest annual audited financial statements. The financial figures included in this half-yearly report have been computed in accordance with IFRSs applicable to interim periods.

 

These interim financial statements were approved by the Board on 12 September 2016 and do not constitute statutory financial statements within the meaning of Section 435 of the Companies Act 2006. The results for the year ended 31 December 2015 have been extracted from the statutory financial statements of DiamondCorp plc.

 

A copy of the statutory accounts for the year ended 31 December 2015 has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under Section 498 (2) or (3) of the Companies Act 2006.

 

These interim financial statements have been prepared using the accounting policies set out in the Group's 2015 statutory accounts.

 

Results for the six-month periods ended 30 June 2016 and 30 June 2015 have not been audited.

 

The comparative information presented in the income statement has been prepared for the period 1 January 2015 - 30 June 2015. This has been performed in order to comply with the AIM rules and is presented solely for this purpose.

 

 

2.         LOSS PER SHARE

 

IAS 33 "Earnings per share" requires presentation of diluted earnings per share when a company could be called upon to issue shares that would decrease net profit or increase net loss per share. For a loss-making company with outstanding share options, net loss per share would only be decreased by the exercise of out-of-money options. Since it seems inappropriate to assume that option holders would exercise out-of-money options, no adjustment has been made to basic loss per share for out-of-money share options.

 

The calculation of basic and diluted loss per ordinary share is based on the loss attributable to equity holders of the parent of £150,114 for the six months ended 30 June 2016 (30 June 2015: £3,098,379) and on 573,873,516 ordinary shares (30 June 2015: 321,462,540) being the weighted-average number of ordinary shares in issue.

 

The Group presents an alternative measure of loss per share after excluding all capital gains and losses from the loss attributable to ordinary shareholders ("Headline earnings / (loss)"). Due to there being no adjustments headline loss per share and basic loss per share is the same.

 


30 June 2016

30 June 2015


(Unaudited)

(Unaudited)

Basic and diluted loss per share (pence)

(0.03)

(0.98)

Basic and diluted loss per share (Rand)

(R0.006)

(R0.1882)

 

 

3.         SHARE CAPITAL

 

DiamondCorp plc does not have an authorised share capital, in line with the provisions of the UK Companies Act 2006.  The Directors' authority to issue and allot shares in the Company is set each year by the Company's shareholders at the Annual General Meeting.  The level of disapplication in respect of pre-emption authority is based on UK corporate governance guidelines for AIM companies.

 

In May 2015, 5,000,000 ordinary shares of 0.1 pence were issued to a warrant holder following the exercise of warrants over 5,000,000 ordinary shares at an exercise price of 9 pence.

 

In June 2015, 31,837,000 ordinary shares of 0.1 pence were issued at a price of 10 pence per share to current and new shareholders of the Company.

 

In July 2015, 20,894,263 ordinary shares of 0.1 pence were issued at a price of 10 pence per share to current and new shareholders of the Company.  These shares were issued in response to the Company's open offer where eligible shareholders were able to purchase 1 open offer share for every 17 existing ordinary shares.

 

In December 2015, 32,337,000 ordinary shares of 0.1 pence were issued at a price of 6 pence per share.  This was the first tranche of a two stage placing.

 

In December 2015 a UK bondholder exercised his right to convert his bonds.  The company issue 2,642,689 ordinary shares of 0.1 pence at a price of 5.6 pence per share to the holder.

 

In January 2016, 34,329,667 ordinary shares of 0.1 pence at a price of 6 pence per share were issued as the second tranche of the two stage placing.

 

See note 5 for issued of shares after 30 June 2016.

 

Authorised

30 June 2016

30 June 2015


(Unaudited)

(Unaudited)

Ordinary shares

   355 202 478

      355 202 478

Issue of ordinary shares

     90 203 769

                        -


   445 406 247

      355 202 478




Reconciliation of number of shares issued after



reorganisation:



Ordinary shares of 0.1 pence each

   345 406 247

      355 202 478

Ordinary shares of 2.9 pence each

   276 839 478

      276 839 478


   722 245 725

      632 041 956




Issued



Ordinary shares of 0.1 pence each

          445 407

            355 203

Deferred ordinary shares  of 2.9 pence each

       8 028 344

         8 028 344

Share premium

     38 067 380

       32 273 067


     46 506 801

       40 656 614

 

4.  FAIR VALUE INFORMATION

 

Fair value hierarchy






 

The table below analyses assets and liabilities carried at fair value. The different levels are defined as follows:


 

Level 1: Quoted unadjusted prices in active markets for identical assets or liabilities that the group can access at


 

measurement date.






 

Level 2: Inputs other than quoted prices included in level 1 that are observable for the asset or liability either directly or

 

indirectly.







 

Level 3: Unobservable inputs for the asset or liability.

 





 

Levels of fair value measurements

 






 

Level 3






 




Group


 




2016

2015



 




£

£



 




(Unaudited)

(Audited)



 

Liabilities







 

Financial liabilities at fair value through profit or loss






 








 

Derivative financial instruments


3 247 660

3 596 870



 

Financial guarantees


-

-



 

Total



3 247 660

3 596 870



 

 

Carrying amount of loans and receivables, including cash and cash equivalents approximate their fair values.

 

Transfers of assets and liabilities within levels of the fair value hierarchy




 

 

No transfers were made between levels in the fair value hierarchy in the 2015 or 2016 financial years.


 

 

Valuation techniques used to derive level 3 fair values





 

 

Valuation techniques and assumptions applied for the purposes of measuring fair value

 



 

The fair values of derivative instruments are calculated using quoted prices.  Where such prices are not available, a

 

discounted cash flow analysis is performed using the applicable yield curve for the duration of the instruments for non-

 

optional derivatives, and option pricing models for optional derivatives. The fair value of the embedded derivative


 

component of the convertible bonds was determined using the Black Scholes (using the Barone-Adesi and Whaley

 

approximation technique) option pricing model.  The table below outlines the fair value inputs used in the embedded

 

derivative valuation.

 






 

No changes have been made to the valuation technique.





 

 

Black Scholes Assumptions




30 June

31 December

 

 2016

2015

 

Term range




5 years

5 years

 

Expected dividend yield




Nil

Nil

 

Risk free interest rate




0.98%

1.96%

 

Share price volatility




91.65%

90.70%

 

Share price at time of grant




6.6 pence

6.8 pence

 

 

Description of valuation method and inputs of another class of level 2 fair values.

 

5.  EVENTS AFTER THE REPORTING DATE

 

In July 2016, 33,333,333 ordinary shares of 0.1 pence at a price of 6 pence per share were issued to current and new shareholders.

 

6.  CONTINGENT LIABILITIES

 

A claim was submitted by Acrux Resources (Pty) Ltd against Lace Diamond Mines (Pty) Ltd for an amount of $207,229 plus interest during the 2015 financial year.  The claim submitted is for the structuring fee of a terminated contract between Acrux Resources (Pty) Ltd and Lace Diamond Mines (Pty) Ltd.  The claim is disputed by Lace Diamond Mines (Pty) Ltd and management is of the opinion that the claim will be unsuccessful.  Management anticipates that the outcome of the claim will only be resolved in 2017.

 

 





 

 

 

 

Contact details: 

DiamondCorp plc
Paul Loudon, CEO
Tel: +27 56 216 1300
Euan Worthington, Chairman       
Tel: +44 7753 862097

UK Broker & Nomad
Panmure Gordon (UK) Limited
Adam James/Atholl Tweedie
Tel: +44 20 7886 2500

JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068 

SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker/Andrew Brady
Tel: +27 11 883 6358

  

The information communicated in this announcement is inside information for the purposes of  Article 7 of Market Abuse Regulation 596/2014 ("MAR")

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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