Namibian Minerals Corporation (NAMCO) Announces Nine Month Earnings And Improved Third Quarter Production
LONDON, Nov. 2 /PRNewswire/ -- Namibian Minerals Corporation (Nasdaq: NMCOF - news) today announced improved diamond production for third quarter 2000 attributed to all three of its mining vessels being in operation and the effect of technical enhancements carried out during the year.
Third quarter highlights
* Diamond production rose 42% from the second quarter to 65 000 carats;
the Company is on track for higher second half production levels.
* A loss of US$665 000 was due to exceptional costs of operating
improvements and a non-cash write-off of relinquished concessions.
* Operating cash flow increased 70% from the second quarter to US$1.7
million.
* Nine month production from two airlift vessels outperformed historic
annual production levels, realizing the value of last year's ODM
acquisition.
* Construction of Nam 2 was completed and the project is on schedule to
start operation in Namibia by year end.
* Exploration started off the coast of Namibia including concessions
acquired in the ODM acquisition; to date less than 3% of the
concessions have been explored in detail.
Third quarter diamond production rose 42% to 65 000 carats (1999: 15,700 carats) from the previous quarter (45 600 carats). A loss of US$665,000, or US$0.01 per share for the third quarter (1999: profit of US$5.4 million, US$0.14 per share) was primarily due to exceptional costs of engineering and operating improvements to the fleet. Earnings were also affected by a one-time non cash write-off of US$428,000 for relinquished concession areas in South Africa. Third quarter diamond sales of 58,100 carats (1999: 78,100 carats) generated revenues of US$9.3 million (1999: $12.4 million). After an exceptionally strong first half year in the diamond market, the average realized diamond price for the quarter was US$160 per carat (1999: $159 per carat). Namco produces high-quality gem diamonds and sales prices have increased post quarter-end.
For the nine months ended 30 September 2000, total diamond production was 163,500 carats, compared to 207,800 carats a year ago. Earnings for the nine months before amortisation of goodwill were US$4.3 million, US$0.09 per share (1999: US$16 million, US$0.42 per share) and post amortisation of goodwill were US$2.6 million, US$0.06 per share (1999: US$16 million, US$0.42 per share), on revenues of US$31.2 million (1999: US$34.4 million). The average realized diamond price rose 19% to US$176 per carat from US$150 per carat last year. Operating cash flow for the nine months was significantly down at US$7.4 million compared to US$20.6 million in 1999. Direct production costs of US$14.8 million (1999: US$9.7 million) reflect the increase in Namco's fleet from one to three production vessels while general office costs of US$4.3 million were in line with expectations. At period end, the Company had US$9.1 million in cash, with diamonds stocks of 19 500 carats, compared with US$3 million in cash and stocks of 7 500 carats a year ago.
``Diamond production is back on track with all three vessels in operation during the quarter,'' said Chairman and CEO Alastair Holberton. ``After a year of consolidation and investment we have the foundation for future growth.''
During the quarter Namco made excellent progress on the development of the new mining system Nam 2 and vessel MV Ya Toivo. Construction and dry testing of Nam 2 is complete, with the first subsea testing scheduled to take place this month. Installation of Nam 2's launch and recovery unit and processing plant is on schedule and MV Ya Toivo is on target to sail to Namibia before year end. Expenditure on the major capital items totalled US$6.5 million on the mining system, US$13 million on the processing plant and US$8 million on upgrading the vessel, including the launch and recovery unit.
Nam 2 is expected to contribute substantially to the Company's production growth and profitability in 2001 with greater mining rates and throughput capacity (1.5 million cu.m. per annum compared to 0.7 million cu.m. per annum from the present NamSSol seabed crawler). A number of productivity enhancements will allow for operation in a much greater variety of geological and mining conditions.
Construction of Namco's new exploration tool was also completed during third quarter. An exploration vessel MV Zacharias, chartered for five years, is equipped with a range of exploration equipment including the new drilling system, an airlift sampling tool, a grab sampler and a vibrocorer. As previously advised, capital expenditure was US$8.2 million. 65 of 163 prospective geological features have been prioritized, concentrating on the inner continental shelf in water depths to 100 metres. Sampling with the airlift tool started post quarter end and the new drilling system is expected to commence operation in November. The programme's objective is to upgrade diamond resources for future mine planning.
During the quarter Namco reduced its total concession holdings to approximately 18 000 sq.km. At the present time, the Company believes its major strategic focus is the development of its inner shelf concessions (water depths to 100 metres), while the ``D'' concessions returned to the South African Government were in deeper waters (250 to 500 metres). Namco is the only company to have specifically designed and successfully operated large-scale technology for the inner shelf geological conditions. The Company's strategy is to lower the unit cost of production to develop further this prospective region.
The Company is focused on optimizing diamond production, reducing operating and support costs and in particular, improving liquidity, as the integration of the ODM takeover and the substantial capital expenditure programmes of 2000 are completed.
FOR AND ON BEHALF OF THE BOARD OF DIRECTORS OF NAMIBIAN MINERALS CORPORATION
J.A.Holberton
Chairman & Chief Executive Officer
None of the Nasdaq Stock Market, The Toronto Stock Exchange, nor the Namibian Stock Exchange have reviewed the information herein and do not accept responsibility for the adequacy or the accuracy of the above.
This Media Release contains forward-looking statements that involve a number of risks and uncertainties. Among the important factors that could cause actual results to differ materially from those indicated by such forward looking statements are operational factors, general economic conditions and the risk factors detailed from time to time in the Company's periodic reports and registration statements filed with the Securities and Exchange Commission.
Namibian Minerals Corporation
Key Statistics
(In United States dollars) (Unaudited)
Third quarter ended
30 September,
2000 1999
Operating Results
Diamond production (carats) 65,000 15,700
Diamond sales (carats) 58,100 78,100
Sales value (carat) $ 160 159
Cash costs (carat) (1) 95 71
Financial Results (millions)
Revenues $ 9.3 $ 12.4
Net income (loss) (0.7) 5.4
Operating cash flow 1.7 5.7
Per share information
Net income $ (0.01) $ 0.14
Operating cash flow 0.04 $0.15
Common shares (weighted average) 46.7 38.4
Nine months ended
30 September,
2000 1999
Operating Results
Diamond production (carats) 163,500 207,800
Diamond sales (carats) 176,800 228,500
Sales value (carat) $ 176 150
Cash costs (carat) (1) 102 58
Financial Results (millions)
Revenues $ 31.2 $ 34.4
Net income 2.6 16.0
Operating cash flow 7.4 20.6
Per share information
Net income $ 0.06 $ 0.42
Operating cash flow 0.16 $0.54
Common shares (weighted average) 46.7 38.4
As at 30 As at 31
September December
2000 1999
Financial Position (millions)
Cash $9.1 $ 20.0
Long-term debt 55.1 31.1
Shareholders' equity 87.9 91.7
(1) Includes royalty and marketing
Namibian Minerals Corporation
Consolidated Balance Sheets
United States Dollars
ASSETS As at 30 As at 31
September December
2000 1999
$000 $000
Current Cash 9,051 20,033
Accounts receivable 2,275 1,196
Prepayments 155 530
Inventories 6,812 5,279
Marketable securities 97 97
18,390 27,135
Exploration and development costs 14,547 14,098
Capital assets, net of amortization 101,859 71,926
Deferred costs 553 718
Goodwill 33,583 33,449
Other assets 269 308
169,201 147,634
LIABILITIES
Current Accounts payable
and accrued liabilities 11,305 8,624
Current portion of long term debt 14,619 16,833
25,924 25,457
Deferred income taxes 14,440 14,900
Long term debt 40,532 14,228
80,896 54,585
Non controlling interest 400 1,300
SHAREHOLDERS' EQUITY
Share capital 88,951 83,802
Warrants 56 500
Exchangeable debentures 2,600 4,615
Contributed surplus 459 459
Cumulative foreign exchange adjustment (10,870) (3,124)
Retained earnings (deficit) 6,709 5,497
87,905 91,749
169,201 147,634
Namibian Minerals Corporation
Consolidated Statements of Operations and Retained Earnings (Deficit)
United States Dollars
For the 9 For the 9
months ended months ended
30 September 30 September
2000 1999
$000 $000
Income Revenue from
diamond sales 31,175 34,390
Interest earned 634 250
Gain on marketable securities 31 324
From affiliate -- 100
31,840 35,064
Expenses Direct production costs 14,838 9,683
Royalty payment 2,490 2,976
Marketing costs 705 701
General office costs,
including salaries 4,300 2,948
Amortization - capital assets 3,504 2,633
- exploration and
development costs 428 --
- deferred costs 187 --
Interest paid 2,073 83
(28,525) (19,024)
Earnings for the period before taxes and goodwill 3,315 16,040
Recovery of income taxes 1,019 --
Earnings for the period before goodwill 4,334 16,040
Goodwill charged (1,716) (9)
Earnings for the period 2,618 16,031
Retained earnings (deficit)
- beginning of period 5,497 (10,607)
Accretion on equity component of
exchangeable debenture -- (189)
Dividend for period
($0.03 per share, 1999: $0.02 per share) (1,406) (758)
Retained earnings - end of period 6,709 4,477
$ $
Basic earnings per share
for the period before goodwill 0.09 0.42
Basic earnings per share
for the period after goodwill 0.06 0.42
Fully diluted earnings
per share for the period 0.06 0.38
Weighted average number
of shares outstanding
in thousands 46,752 38,424
Namibian Minerals Corporation
Consolidated Statements of Cash Flows
United States Dollars
For the 9 For the 9
months ended months ended
30 September 30 September
2000 1999
Cash resources provided by (used in) $000 $000
Operating
activities Earnings for the period 2,618 16,031
Items not affecting cash
Amortization - capital assets 3,504 2,633
- goodwill 1,716 9
- exploration
and development
costs 428 --
- deferred costs 187 --
(Gain) loss on
marketable securities (31) (324)
From affiliate -- (100)
Changes in income taxes (1,019) --
Changes in non-cash
working capital 26 2,368
7,429 20,617
Investing activities Exploration and
development costs (877) (1,275)
Capital assets (38,102) (7,305)
Acquisition of ODM (2,653) (14,030)
Marketable securities -- 84
Other assets 39 --
(41,593) (22,526)
Financing activities Share capital 1,778 1
Bank overdraft -- 1,008
Mortgage -- 722
Long term debt 24,090 --
Effect of foreign
exchange movement
on long term debt (630)
Dividend payment (1,406) (758)
23,832 973
Net increase (decrease) in cash (10,332) (936)
Effect of foreign
exchange movement
on cash balances (650) --
Cash position
- beginning of period 20,033 3,897
Cash position - end of period 9,051 2,961
SOURCE: Namibian Minerals Corporation
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