African Diamonds PLC
20 March 2008
20th March 2008
Interim Results for the Six Months ended 31st December 2007
Highlights
• Good progress with the AK6 Mining Licence application in Botswana
• AK6 mine development fully funded with no shareholder dilution
• Deployment of state of the art technology in the pursuit of new kimberlite
discoveries in the Makgadikgadi Pans, north of Orapa Mine, Botswana
• Mini-bulk sampling completed on five known kimberlites in the Orapa area
• Drilling the AK9 kimberlite gives localised grades of up to 10cpht
• Botswana shareholders now own more than 20% of the Company
• Good results from associated companies
John Teeling, Chairman of African Diamonds commented;
'The AK6 diamond mine in Botswana is the jewel in our crown. The final step
prior to construction, the mining licence, is at an advanced stage of
negotiation. We remain on target for an end 2009 start-up. The capital cost is
fully funded at no dilution to shareholders.
We are delighted to have the active support of the Botswana investment community
who now own about 20 percent of the equity.
The wider portfolio of exploration projects is performing well with specific
targets under evaluation in Botswana.'
Further information:
African Diamonds Plc
John Teeling Tel: +353 1 8332833
Alex van Zyl Tel: +27 83 261 2956
James AH Campbell Tel: +27 83 457 3724
Panmure Gordon
Dominic Morley Tel: +44 (0) 207 459 3600
College Hill
Paddy Blewer Tel: +44 (0) 20 7457 2020
Nick Elwes
www.afdiamonds.com
Chairman's Statement - Interim Results for the Six Months ended 31st December
2007
The AK6 Mine, Orapa, Botswana
A Mining Licence for the world-class AK6 kimberlite diamond discovery in the
Orapa area of Botswana was submitted at the end of the third quarter of 2007.
The mine is scheduled to be in production towards the end of 2009, treating 2.7M
tonnes per annum (tpa) of kimberlite in its first full year of production.
Rising to 4.2M tpa in 2012. By this time, AK6 is expected to be one of only
twelve hard-rock diamond mines in the world and in the top five as measured by
profit to revenue.
Significant progress has been made with the Mining Licence application. Approval
has been received from the regulatory authorities concerning water, power, land
and social matters. Discussions with the government on an appropriate fiscal
regime are far advanced.
Whilst these discussions have been taking place, detailed engineering design
work has continued on the mine so as to both optimise operations from a
technical and economic perspective. This will also enable a rapid ramp-up of
engineering activity once the Mining Licence has been approved.
Full financing is in place for the mine development, without any dilution to
existing shareholders.
Botswana Diamond Exploration
Botswana, particularly the Orapa area, remains one of the most prospective
diamond provinces in the world. Good progress has been made on both African
Diamonds' own diamond exploration efforts and those in joint venture with De
Beers.
The joint venture with De Beers covers 3,743km2 of Prospecting Licences in the
Orapa region of Botswana. Thirty-four out of the seventy plus known kimberlites
in the area can be found on this ground. From a discovery perspective, De Beers
are deploying innovative technology in exploring the Makgadikgadi Pans, where
the only known kimberlites form part of Debswana's Damtshaa Mine. The logic here
is that there are potentially large kimberlites under the salt pans. Several
exploration targets have been reported which are currently being followed-up.
Mini-bulk sampling has been completed on five kimberlites, with results from
AK9, 3 hectares in size showing localised grades of up to 10 carats per hundred
tonnes (cpht). The remainder of the samples are currently in De Beers
Macrodiamond Laboratory and will be reported on during Q2 2008.
On AK8 (5-Ha), field work has been completed and De Beers are currently valuing
the diamonds and undertaking a comprehensive geological and resource assessment.
The results of this study will be reported in Q2 2008. AK8 has 20M tonnes of
kimberlite to a depth of 300m and has potential to be a stand-alone small-mining
operation. If it is economic, it will be operated by African Diamonds.
A further twenty kimberlites are also being re-assessed by African Diamonds
personnel following a detailed historical review of the Orapa region by De
Beers. This re-assessment will include further field work, such as core drilling
and micro-diamond work.
African Diamonds holds an interest in Wati Ventures Pty Ltd, a private Botswana
company. This company owns 1.35% of AK6 and has substantial exploration ground.
Known kimberlites exist on this ground and these are currently being assessed
for their economic potential.
Work on African Diamonds' 100% owned Kedia block of five licences, West of
Orapa, covering 3,481km2 is continuing. A full review of historical data is
almost complete and a preliminary geological model has been postulated.
Preliminary field work is due to commence in Q2 2008.
Diamond activities outside of Botswana
African Diamonds holds 35.42% of Bugeco SA, a private Belgian company with
licences in the DRC which are in joint venture with De Beers. Ten diamondiferous
kimberlites have been discovered, which are currently in the process of being
mini-bulk sampled. Recent detailed ground geophysical surveys have increased the
total area of these kimberlites to 35-Ha, with eight of these kimberlites being
in close proximity to each other.
African Diamonds holds 12.5% of West African Diamonds plc (WAD) a listed diamond
and gold producer in Sierra Leone and Guinea. Limited diamond and gold
production has already commenced on the Plant 11 Mine and plans are in place to
implement an alluvial diamond mining operation on the Bomboko Project in Guinea.
A recent detailed ground geophysical survey over the Droujba kimberlite pipe in
Guinea has suggested that the pipe is twice as large as previously thought. The
survey also discovered four new geophysical 'pipe-like' targets in the vicinity
of the Droujba pipe. West African Diamonds also has significantly upgraded the
value of Pipe 3 in Sierra Leone.
Management
Ribson Gabonowe joined African Diamonds as the CEO of African Diamonds' two
wholly owned subsidiaries in Botswana. Ribson brings many years of experience as
Director of Mines in Botswana, overseeing the administration of mineral licences
as well as involvement in negotiations of major mineral agreements for diamonds,
copper/nickel, soda ash and coal. He represented the Government of Botswana in
various mine executive committees and currently serves as a director in coal,
copper/nickel and diamond businesses. Ribson retired from his recent position of
Deputy Permanent Secretary in the Ministry of Local Government before joining
African Diamonds. Ribson graduated with a BSc in Mining Engineering, MSc in
Mineral Economics and MBA from Canada, USA and Botswana Universities
respectively.
Finance
The full cost of the AK6 mine development is funded. It is expected that 75
percent of the capital cost will be provided by project finance with the
remainder as equity. The African Diamonds portion of the equity will be loaned
by De Beers on acceptable terms and repaid out of dividends. In the current
turbulent times, having up to $300m funding in place at no dilution to current
shareholders is comforting.
The shift in shareholding from the UK to Botswana has continued, with over 20%
of the company now owned by Botswana institutions and individuals. We are
delighted with this development and hope that it continues.
African Diamonds has sufficient cash, £3m, to meet exploration commitments for
the foreseeable future. These commitments include meeting our 30% share of our
De Beers Joint Venture as well as African Diamonds' growing programme in
Botswana. If our current work produces a commercial discovery, it will need to
be financed.
Outlook
African Diamonds is one of those rarest of creatures, a diamond explorer which
has discovered a high quality hard rock kimberlite diamond mine. Not alone were
we fortunate in the discovery, we were equally fortunate to arrange mine finance
before the current global credit crisis.
Our focus remains firmly on Botswana. Our wholly owned exploration programme is
growing on what we believe is prospective ground mainly in the Orapa area. Our
joint venture exploration programme with De Beers is concentrating on the
intriguing Makgadikgadi Pans licences. The finalisation of the AK6 mining
licence will allow the development of this world class ore body with first
production expected at the end of 2009.
John Teeling
Chairman
20th March 2008
Financial Information (unaudited)
Six Months ended
31 Dec 07 31 Dec 06
£'000 £'000
Condensed Consolidated Income Statement
Revenue 0 0
Operating Costs (236) (225)
---------------- ----------------
Operating Loss (236) (225)
Interest Receivable 34 49
---------------- ----------------
Loss on ordinary activities before
taxation (202) (176)
Tax on Loss on ordinary activities 0 0
---------------- ----------------
Loss for the period (202) (176)
========= =========
Loss per share (0.27p) (0.24p)
========= =========
Loss per share - Diluted (0.27p) (0.24p)
========= =========
31 Dec 07 31 Dec 06
£'000 £'000
Condensed Consolidated Balance Sheet
Assets
Non-current assets
Intangible Assets 2,245 1,608
Investments 1,000 1,000
Investment in associates 836
--------- ---------
Total of non current assets 4,081 2,608
--------- ---------
Current assets
Other receivables and prepayments 73 869
Cash and cash equivalents 3,309 2,027
--------- ---------
Total current assets 3,382 2,896
--------- ---------
--------- ---------
Total assets 7,463 5,504
--------- ---------
Liabilities
Current liabilities
Trade and other payables (114) (57)
---------------- ----------------
Total liabilities (114) (57)
---------------- ----------------
Net assets 7,349 5,447
========= =========
Equity
Share Capital and Reserves 7,349 5,447
--------- =========
--------- ---------
Total equity 7,349 5,447
========= =========
Condensed Consolidated Statement of Changes in Shareholders Equity
for six months ended Dec 31 2007
Share Share Other Retained Total
Capital Premium Reserves Losses Equity
£000 £000 £000 £000 £000
As at 1 July 2006 742 7,960 (1,176) 7,526
Loss for the period (176) (176)
Transfer to reserves (7,960) 7,960 0
Repayment of capital in
specie (2,177) (2,177)
Share option costs recognised
in reserves 274 274
------- -------- -------- -------- -------
As at 31 December 2006 742 274 4,431 5,447
------- -------- -------- -------- -------
Loss for the period (189) (189)
Share option costs recognised
in reserves 118 118
Shares issued 19 19
Share premium on shares
issued 2,133 2,133
------- -------- -------- -------- -------
As at 30 June 2007 761 2,133 392 4,242 7,528
------- -------- -------- -------- -------
Loss for the period (202) (202)
Share option costs recognised
in reserves 23 23
------- -------- -------- -------- -------
As at 31 December 2007 761 2,133 415 4,040 7,349
------- -------- -------- -------- -------
Six Months ended
31 Dec 07 31 Dec 06
£'000 £'000
Condensed Consolidated Cash Flow
Cash flows from operating activity
Operating Loss (236) (225)
Movements in Working Capital 125 (735)
------------------- -------------------
Net cash outflow from operating
activities (111) (960)
Cash flow from investing activities
Returns on Investments and
Servicing of Finance 34 49
Capital Expenditure (295) (70)
Investments 0 (1,000)
------------------- -------------------
Net cash used in investing
activities (261) (1,021)
---------- ----------
Net decrease in cash and cash
equivalents (372) (1,981)
Cash and cash equivalents at
the beginning of the period 3,681 4,008
---------- ----------
Cash and cash equivalents at
end of period 3,309 2,027
========== ==========
Notes:
1. The financial information for the six months ended December 31, 2007 and
December 31, 2006 is unaudited. The financial information above does not
constitute fully statutory accounts within the meaning of section 240 of the
Companies Act 1985.
2. The interim financial statements have been prepared on the basis of the
recognition and measurement requirements of International Financial Reporting
Standards (IFRS) as adopted by the European Union (EU) and implemented in the
UK. Previously, African Diamonds PLC prepared financial statements in accordance
with UK generally accepted Accounting Principles (UK GAAP). As the 2007 interim
financial statement includes comparatives for 2006, the Groups date of
transition to IFRS was 1 July 2006 and the 2006 comparatives are restated
according to IFRS.
3. The IFRS interim financial statements do not include all the information
required for full IFRS annual financial statements. The group's first IFRS
annual financial statement will be prepared for the year ending 30 June 2008.
The transition to IFRS has not affected the reported position, results and
cashflow of the Group.
4. Copies of this announcement will be sent to shareholders and will be
available for inspection at the Companies Registered Office at 20-22 Bedford
Row, London WC1R 4JS.
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