Excerpts of our annual report as posted by canada-stockwatch
Nora Exploration Inc -
Nora Exploration annual report
Nora Exploration Inc NXI
Shares issued 23,453,594 1999-02-10 close $0.26
Monday Feb 15 1999
Mr. Pierre Leveille reviews the company
As a great majority of investors will agree, 1998 was not particularly kind to most companies involved in the junior mining sector, including Nora. The sharp decline in share prices put somewhat of a damper on the optimism usually attributed to this segment of the market.
The acquisitions made by the company during the past year, now place it as the second largest marine diamond exploration area owner in Namibia, second only to De Beers.
While the acquisitions have placed the company in a enviable position, management had to contend with its share of disappointments. First and foremost was a confidentiality clause contained in the contractual agreement between the company's satellite company Diaz Point Exploration (Pty) Ltd. and Namdeb preventing the company from divulging information pertaining to production and exploration on the concession.
While the clause did not hinder the operations, it did curtail the efforts for full disclosure to the company's shareholders and prompted management to postpone additional financing, previously ear-marked to upgrade the equipment in order to increase production. Discussions between the parties are moving forward to resolve these matters and the company feels confident on the outcome.
Second, was the inconsistency in production on the Otjua concession. The unforeseen departure of key employees combined with endless delays due to equipment failure and lack of spare parts prevented the company from maintaining a continuous and stable rate of production.
Namibia - Otjua
On the eastern shores of the Atlantic Ocean, the contractual concession stretches along the Namibian coastline and includes the beaches from North Rock in the south to Grosse Bucht (near Luderitz) in the north. In a previous report on the contractual concession area, the results of the Benoto sampling program along the present beach were used to calculate an inferred resource of about three million carats to 3.5 million carats. This calculations remains a best estimate and none of the work carried out by Nora's affiliated company, Diaz Point Exploration (Pty) Ltd. or its contractors in either prospecting or mining has produced results that either raised doubts as to the validity of the estimate or have diminished it by extraction.
Nora's affiliation with Diaz Point Exploration (Pty) Ltd. stems from its minority interest in Otjua Minerals (Pty) Ltd., who in turn holds a minority interest in Diaz Point Exploration (Pty) Ltd., who in turn is under contract with Namdeb to develop the Otjua concession. Namdeb is jointly and equally owned by the Namibian government and De Beers Centenary AG, the world's largest diamond mining company. Namdeb holds the mineral rights to what is known as diamond area No. 1 extending from the Orange River (the geographical boundary between South Africa and Namibia) north past Hottentot Bay, including the Otjua concession.
The central coastline north of the Orange River has been called the world's largest and richest gem diamond deposit. Production figures on the Otjua concession during fiscal 1998, fell short of management's expectations. Monitoring of these short falls, led management to conduct a thorough technical and managerial audit of all aspects of the operations. The results of the audit revealed serious deficiencies in the day-to-day management of the operations, the overall management of the concession and the physical state of the equipment.
Evaluation of new mining methods and exploration techniques has already begun and a complete review of the equipment is under way. Management is confident that the actions taken will help in turning the tide to get production on track and awaits the outcome of negotiations pertaining to the option agreement, enabling Nora to acquire the remaining 53 per cent of Otjua Minerals (Pty) Ltd. from Elizabeth Bay (Pty) Ltd. Undivided ownership of the concession will pave the way for further investments targeted directly at increasing production and permit the implementation of Nora's long-term development program.
A key factor in reaching management's annual production goal of 35,000 carats to 50,000 carats will be its ability to attain the proper equilibrium between production capacity and the delimiting of additional zones with proven reserves.
Namibia - Namibian Gemstones
In late 1998, Nora ratified its joint venture agreement with Namibian Gemstones Mining Corporation (Pty) Limited and increased its interest in Namibian Gemstones concession to 40 per cent and now is in the process of issuing 1.1 million shares to Namibian Gemstones to increase its interest to 50 per cent. Nora can acquire an additional 30 per cent interest by making a cash payment of $2,160,000 (U.S.) on March 25, 1999.
The Namibian Gemstones concession, the second largest offshore diamond marine concession in southern Africa consists of 23 deep-water concessions, each with an area of 1,000 square kilometres. Considered as a single block, starting on the Namibia-South Africa border and extending northward along the outer edge of the continental shelf and on the continental slope. The southern part of the concession is adjacent to the western border of Namdeb's main set of concessions from which the great majority of De Beers' offshore production is derived. Carried out by the Council for Geoscience (geological survey) of South Africa, the survey identified large areas of marine eroded bedrock with abundant features of similar types to those in which diamonds are concentrated elsewhere in the Namibian offshore zone. The survey covered approximately 41 per cent of the 23,000 square kilometre (9,000 square kilometre) block of 23 concessions and was limited to water depths of less than 500 metres. The report contains a large quantity of geophysical data collected on the eastern portion of the concession, its thorough approach gives a sound factual basis for initial interpretation and orientation for followup work. Management, in conjunction with the technical advisory board are now preparing the next stages in the exploration program which will include a geophysical survey of targeted areas followed by low-cost dredging. Startup of bulk sampling will be dependent on the results of the first two stages.
Namibia - Blocks J and N
Known as Block J (100,000 hectares/1,000 square kilometres) and Block N (90,500 hectares/905 square kilometres) the concessions are off the western shores of Namibia between the 100 metres and 200 metres isobath, both concessions are bordered to the south by the Namibian Minerals Corporation's concession and to the north by Ocean Diamond Mining's concession. Exclusive prospecting licences (EPLs) for diamonds in the Mercury-Conception Bay area were granted by the government of Namibia to Woduna Mining Holding (Pty) Ltd. (Block J) and Karas Mineral Holdings (Pty) Ltd. (Block N). Negotiations are going on in order to finalize the joint venture agreements. Once completed, management will be in a
position to allocate the finances required to implement the first stage of the exploration program. Management is confident that the geophysical survey to be conducted during the first stage of the exploration program will reveal that the sedimentary base is similar to the surrounding concessions held by Namibian Minerals Corporation and Ocean Diamond Mining Holdings Limited.
Ghana
Nora currently holds majority interests in the 49 square kilometre Kade and the 28 square kilometre Pramkese concessions, lying in the world-renowned Birim River diamond fields. Reports indicate deposits of higher quality than the great majority of Ghanaian diamonds with an estimated resource of 540,000 carats identified so far. However, minimal work is now being conducted and Nora is actively searching for joint venture partners to assist in the further development of the resource.
Chile
During fiscal 1997, Nora entered into an agreement with Dania Gold S.A. to purchase 100 per cent of a gold concession in the Maricunga district of Chile. The 1,700 hectare concession is in the heart of Chile's Maricunga Belt, directly adjacent to Bema Gold's and Amax Gold's world renowned Refugio mine. Subsequently, Nora entered into an option agreement with Orex Exploration Inc., whereby Orex Exploration Inc. could acquire a 75 per cent participation in the total concession area. However, considering the recent situation prevailing in the gold market, Orex Exploration has chosen not to exercise its option. Management will reassess its position as to the future of the concession as it has become more apparent to Nora that allocating the necessary resources toward its diamond mining interests is definitely more profitable.
Financial
During fiscal 1998, the company closed six private placements during the year resulting in the issuance of 2,228,137 shares in exchange for $1,610,000 in cash (average price per share - 72 cents);
received $421,129 from the exercise of 634,878 options
(average exercise price - 66 cents);
received $504,900 from the exercise of 846,000 warrants
(average exercise price - 60 cents).
Out of $2,763,446 generated from financing activities during fiscal 1998, a total of $2,214,557 (80 per cent) was invested to further the development of the company's Namibian assets; a total of $84,179 was used to maintain the remaining assets of the company; and the remaining balance was employed to cover the operating activities of the company.
As of Aug. 31, 1998 the company had $6,082 in cash. During the month of January 1999, the company completed a private placement for a total amount of $600,600. Until this private placement, the company's activities were financed through additional loans and advances from management.
(c) Copyright 1999 Canjex Publishing Ltd.
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