DCP.L Regulatory News (DCP)

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

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

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.

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.

Contact details: 

DiamondCorp plcPaul Loudon, CEOTel: +27 56 216 1300Euan Worthington, Chairman Tel: +44 7753 862097

UK Broker & NomadPanmure Gordon (UK) LimitedAdam James/Atholl TweedieTel: +44 20 7886 2500

JSE Designated AdvisorSasfin Capital (a division of Sasfin Bank Limited)Megan YoungTel: +27 11 445 8068 

SA Corporate AdvisorQinisele Resources Proprietary LimitedDennis Tucker/Andrew BradyTel: +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")