RLD.L Regulatory News (RLD)

6 Mar 2008 08:00

Tanzanite One Limited06 March 2008 6 March 2008 Tanzanite One 2007 Financial Year Results Highlights Financial * Net profit up 267% to $6.6 million (US8.96 cents per share)* Cash profit up 30% to $8.6 million* Net cash generated from operating activities up $9.2 million to $14.5 million* Full year dividend up 25% to US 10 cents per share* Cash and near cash balances up $5.9 million to $12.9 million at year end Operational * Tonnes processed up 60% to 25,367 tonnes* Tanzanite recovered up 38% to 1.7 million carats* 10% quality-for-quality price increase achieved* Increase in unit and US Dollar value sales in all major markets Corporate * Strategy to expand into other Premium Coloured Gemstones commenced with the acquisition of a Tsavorite project * Increased infrastructure and resource requirements in place and absorbed within current operating costs * Directors shareholdings in Company increased through share purchases and conversion of options * Board and management restructure to reflect successful repositioning and rebuilding of operational and financial performance, Zane Swanepoel appointed Managing Director. Key statistics+-----------------------------+-----------+-----------+-----------+| | FY 2007 | FY 2006 | Movement |+-----------------------------+-----------+-----------+-----------+|Revenue | $42.6m | $36.0m | +18% |+-----------------------------+-----------+-----------+-----------+|Gross margin | 50% | 44% | +14% |+-----------------------------+-----------+-----------+-----------+|Profit attributable to equity| $6.6m | $1.8m | +267% ||holders of parent | | | |+-----------------------------+-----------+-----------+-----------+|Tonnes processed | 25,367 | 15,896 | +60% |+-----------------------------+-----------+-----------+-----------+|Carats recovered | 1.7 m cts | 1.2 m cts | +38% |+-----------------------------+-----------+-----------+-----------+|Carats per tonne | 67 | 77 | (13%) |+-----------------------------+-----------+-----------+-----------+|On mine cash cost per carat | $3.39 | $4.47 | (24%) |+-----------------------------+-----------+-----------+-----------+ Financial Performance TanzaniteOne announces consolidated earnings for the year ended 31 December 2007of $6.6 million, an increase of 267% compared to 2006 financial year. This isequal to US 8.96 cents per share (2006: US 2.5 cents per share). The increased profit reflects an 18% increase in revenue, up $6.6 million to$42.6 million, primarily as a result of increased production. The Directors have declared a final dividend of 7 cents (2006: 6 cents) pershare payable on 25 April 2008 to shareholders registered on 28 March 2008. Thisbrings the total dividend payable for the year ended 31 December 2007 to 10cents, an increase of 25% over the previous year. Net profit and production comparisons by year+----------------------+---------+---------+---------+---------+---------+| | 1H | 2H | FY 2007 |FY 2006* | Change || | FY 2008 | FY 2007 | | | |+----------------------+---------+---------+---------+---------+---------+|Net profit after tax &| $3.0m | $3.6m | $6.6m | $1.8m* | +267% ||OEI | | | | | |+----------------------+---------+---------+---------+---------+---------+|Tanzanite recovered | 762,073 | 938,061 |1,700,134|1,230,505| +38% ||(carats) | | | | | |+----------------------+---------+---------+---------+---------+---------+ * FY2006 comparative net profit is after non-cash write offs of $3.2 million following the decision to divest of the wholesale jewellery business. Revenues from ordinary activities for the period increased 18% to $42.6 millionfrom $36.0 million in FY 2006. This increase was largely due to an increase incarats recovered during the year in line with the 60% increased in tonnesprocessed. The quantity of "A"-quality tanzanite recovered (0.90% ofproduction), however, remained below historical averages of 1.5%. Production for the year totalled 1,700,134 carats of tanzanite, from 25,367tonnes at an average of 67.0 carats per tonne. During the first half of the yearthe mine recovered 762,073 carats of tanzanite from 9,818 tonnes processed.Production increased sharply by 23% during the second half, recovering 938,061carats from 15,549 tonnes. The increase in production volumes was as a result ofa change in mining practice to allow multiple producing faces to be minedconcurrently. The concept of not locking up potential production faces (forlater mining) and mining all faces concurrently continues to work wellsubsequent to December 2007. This new practice is possible due to improvedsecurity measures introduced at the mine. As a result of this new practice, atotal of four production areas in Bravo, CT, Main and Delta Shafts were mined atvarious times. Indications are that Delta, Main, CT and Bravo will give a moreeven distribution in 2008, based on the current level of development and themineralised areas identified. FY 2007 Production profile+---------------------+--------+--------+--------+---------+-------+| Shafts | Main | Bravo | Delta |Askari/CT| TOTAL |+---------------------+--------+--------+--------+---------+-------+| Production split | 49% | 36% | 8% | 7% | 100% |+---------------------+--------+--------+--------+---------+-------+ The Merelani mine plant is currently operating at 90% capacity on a single shiftbasis. There is sufficient capacity to increase production through theintroduction of a second shift at the plant. On-mine cash costs per carat for the full year at $3.39 per carat were 24% lowercompared to FY2006 due to increased production volumes mined during the year.The 60% increase in tonnes processed has had a significant effect on reducingunit costs despite inflationary challenges. On-mine cash costs include mineoperating costs, mine administration costs and royalty charges incurred atMerelani mine. The Group achieved a gross margin for the year of 50% compared to 44% forFY2006. Whilst this reflects a 14% improvement compared to 2006, after adjustingfor the non-cash write down of stock in 2006, the current year's gross marginshows a deterioration of 2% compared to 2006's adjusted margin. The reduction ingross margin is due to a number of factors including increased costs incurred atthe mine level in support of increased capacity for growth, increased costs atthe trading operation, local inflationary pressures, legislative changesrequiring some wage adjustments and the lower overall quality mix of tanzaniterecovered during the year. Corporate and other operating costs include group mining overhead plus othercosts associated with growth and the evaluation of projects. These costs wereincurred in conjunction with the development of systems and structures in linewith the Group's expansion into other gemstones, an objective which is part ofthe Group's aim of becoming a diversified global gemstone company. The first ofthese, the tsavorite project is in its preliminary stages and is working towardscommencing bulk sampling. Anticipated savings from the closure of the SouthAfrican offices have not occurred due to the delay in relocating services toTanzania. This move is now scheduled to occur in the first half of 2008. Inventory levels are down to $3.7 million, largely on account of the sale ofhistoric cut and polished stock, in-line with the Group's decision to divestfrom the wholesale jewellery business in FY2006. Capital expenditure for the year of $2.6 million included upgrades to security(including the purchase of X-Scan security machines and equipment for $0.8m),mine development ($1.2m) and sundry plant and equipment. Cash balances at 31 December 2007 were $12.9 million representing a $5.9 millionincrease over the previous twelve months. This was due to strong net cashgenerated from operating activities of $14.4 million, up from $5.3 million inthe 2006 financial year. Tanzanite Market FY2007 saw continued growth and confidence in tanzanite with more retailersstocking and marketing the gemstone. Despite a weakened U.S. economy, globaldemand for tanzanite increased during the year and is expected to reflect agradual increase in "A" quality rough tanzanite prices for 2008. During the year under review, TanzaniteOne sold 1.7 million carats of tanzanite($42.6 million), an increase of 19% compared with the previous year. This wasdue to the 42% increase in the number of carats recovered during the year. Five sights were held during the year. Demand for rough tanzanite throughout theyear remained strong with all stock of tanzanite offered at the five sight salessuccessfully sold. A new market was established for the lighter coloured roughtanzanite (termed B Light) being mined in the second quarter. Quality for quality, TanzaniteOne achieved a 10% increase in rough tanzaniteprices for the year. This was in spite of "A" quality tanzanite salescontributing only 11% of sales by value, a 45% reduction in "A" qualitytanzanite from 2006 where "A" quality sales represented 20% of sales by value. Financial Statements Tanzanite One Limited Condensed Consolidated Income Statement Year ended 31 December 2007 ($'000) Notes FY 2007 FY 2006 Revenue 42,635 35,958Cost of sales (21,319) (20,102) __________________Gross profit (i) 21,316 15,856 Corporate Administration and (ii) (3,868) (4,484)other operating costsMine Administration (iii) (2,312) (1,827)Selling and distribution costs (iv) (3,257) (4,251)Royalties (1,352) (1,238)Depreciation and amortisation (1,858) (1,692)Interest income received 399 163Financing costs paid (81) (5) __________________Profit before tax 8,987 2,522 Income tax expense (v) (2,503) (737) __________________Profit after tax 6,484 1,785 __________________Minority interest (vi) 91 (2) __________________Profit attributable to equity (vii) 6,575 1,783holders of parent EPS (basic - cents) 8.96 2.47EPS (diluted - cents) 8.58 2.35 Notes Income Statement (i). Gross margin at 50% is marginally down from 52% compared to the previous year after adjusting for non-cash write-downs of $2.8 million in FY2006. (ii). Corporate administration costs reflect costs incurred in administering stock exchange listing costs, corporate compliance, investor relations, Financial and legal consulting and M&A activity. (iii). Mine administration includes costs incurred in exploration and development of new projects, community works, local regulatory compliance, and general administration at mine level. (iv). Selling and distribution costs include costs associated with the Tanzanite Foundation advertising and general expenses incurred in the sale of tanzanite during the year. (v). The effective tax rate for the year ended 31 December 2007 is 28%. (vi). Minority interest (which represents the 25% minority in Tanzanite One Trading) reflects the 25% interest in the Tanzanite Trading Limited loss for the 12 months ended 31 December 2007. (vii). Net profit attributable to Tanzanite One shareholders. Tanzanite One Limited Condensed Consolidated Balance Sheet As at 31 December 2007 $'000 Notes 2007 2006Non-current assetsProperty, plant and equipment (i) 21,558 20,824Inventory (ii) 621 613Deferred tax assets (iii) 2,376 2,515 ___________________Total non-current assets 24,555 23,952 ___________________Current assetsInventory (iv) 3,655 9,872Income tax receivable (v) 2,757 2,125Trade and other receivables (vi) 10,227 11,497Cash and cash equivalents 12,935 7,005 ___________________Total current assets 29,574 30,499 ___________________Total assets 54,129 54,451 ___________________EquityIssued share capital 22 22Share premium 38,709 37,671Share options outstanding 706 739Foreign currency translation reserve (227) (27)Retained earnings 6,247 7,858 ___________________Total equity attributable to parent 45,457 46,263equity holdersMinority interest 96 151 ___________________Total equity 45,553 46,414 ___________________Non-current liabilitiesInterest-bearing borrowings (vii) 679 1,166Provisions (viii) 94 82Deferred tax (ix) 3,992 3,809 ___________________Total non-current liabilities 4,765 5,057 ___________________Current liabilitiesInterest-bearing borrowings (x) 231 10Income tax payable (xi) 2,309 1,980Trade and other payables (xi) 1,271 990 ___________________Total current liabilities 3,811 2,980 ___________________Total liabilities 8,576 8,037 ___________________Total equity and liabilities 54,129 54,451 ___________________Number of shares in issue (million) 74.3 72.7Net asset value per share (US cents) 61.30 63.87 Notes to Balance Sheet (i) Represents fixed assets within the group. The movement from prior year is due to depreciation ($1.9 million) and current year capital expenditure ($2.6 million). Current year expenditure reflects purchase of security equipment which mainly include X-Scan machines ($0.58m) and CCTV cameras ($0.27m), development expenditure ($1.2m) and earthmoving equipment ($0.1m) which mainly include LHD and forklift. (ii) Reflects display jewellery in Tanzanite Foundation Ltd ($0.19 million) and Tanzanite One (SA) Ltd ($0.42 million). (iii) Reflects deferred tax on assessed losses in Tanzanite One (SA) Ltd. (iv) Inventories: reflects rough and polished tanzanite gemstones and consumable stores (v) Income tax receivable: includes tax prepaid mainly in Tanzanite One Mauritius Limited and Tanzanite One Mining Limited. (vi) Reflects mainly trade debtors of $6.5million and value added tax of $1.4million. (vii) Reflects non-current portion of finance lease loans. (viii) Reflects provision for rehabilitation. (ix) Deferred tax comprises largely deferred tax liability in fixed assets in Tanzanite One Mining Ltd in Tanzania. (x) Reflects current portion of finance lease loans. (xi) Reflects mainly income tax payable in TanzaniteOne Mining Ltd in Tanzania ($2.2 million). (xii) Includes trade creditors $0.3 million, director's fees payable $0.1m million, and other creditors $0.9 million. Tanzanite One Limited Condensed Consolidated Cash Flow Statement For the Year Ended 31 December 2007 $'000 Notes FY 2007 FY 2006Cash flows from operating activitiesCash generated from operations (i) 18,159 7,548Interest income received (ii) 386 766Financing cost paid (iii) (69) (608)Taxation paid (iv) (4,015) (2,395) __________________Net cash from operating activities 14,462 5,266Cash flows from investing activitiesAcquisitions of property, plant and (v) (2,599) (2,669)equipmentProceeds on disposal of property, plant - 129and equipment __________________Net cash from investing activities (2,599) (2,540)Cash flows from financing activitiesNet proceeds from issue of share capital (vi) 1,038 788(Repayment)/increase in interest-bearing (vii) (266) 397borrowings - currentDividends paid (viii) (6,705) (5,205) __________________Net cash from financing activities 5,933 1,185Net increase/(decrease) in cash and cash 5,930 (1,293)equivalentsCash and cash equivalents at beginning 7,005 8,298of the year __________________Cash and cash equivalents at end of the 12,935 7,005year __________________ Notes to Cash Flow Statement (i) Reflects net cash from the sale of tanzanite, payments to suppliers and movement in working capital. (ii) Reflects interest received on surplus cash balances and call accounts. (iii) Interest paid on the NBC bank finance lease obligation applied on acquisition of certain plant and equipment. (iv) Includes $2.0 million income tax paid in TanzaniteOne Mining Ltd and $1.5m income tax paid in TanzaniteOne Mauritius Limited and 12.5% Secondary Tax on Companies (STC) of $0.3m paid on dividend declared to 'A' Class shareholders in South Africa. (v) Includes purchase of security equipment which mainly include X-Scan machines (0.58m) and CCTV cameras ($0.27m), development expenditure ($1.2m) and earthmoving equipment ($0.1m) which mainly include LHD and forklift. (vi) Reflects net proceeds from the exercise of options into shares. (vii) Reflects a movement in the NBC Bank finance lease obligation as mentioned above. (viii) Comprised of 2006 final dividend of 6 cents per common share declared on 16 March 2007 and the interim dividend of 3 cents paid on 16th November 2006. Tanzanite Mining The tanzanite resource is divided into five blocks. TanzaniteOne in Block Cundertakes larger scale mining and medium scale mining is undertaken by each ofKilimanjaro Mining in Block A and Tanzanite Africa in Block D-extension. TheCompany's neighboring Blocks B and D are mined largely by artisanal miners. Thisposes some challenges for TanzaniteOne, notably in terms of undermining,whereby, the artisanal miners are mining into TanzaniteOne's designated licensearea. Mining Operations Safety Operations reported an overall improvement in the LTIFR for the year, below thecomparative industry benchmark emphasising the increased overall commitment tosafety and supported improved efficiencies. Production A significant improvement was achieved in production rates due to the varioussteps implemented to enable multiple producing faces to be mined concurrently.Delta Shaft produced for the first time with exceptional colour and qualitybeing recovered. Production for the period saw some overall improvements, aresult of simultaneous tanzanite production from three shafts: Askari, Main andBravo Shafts. Operations The major challenge to the operation remains the ongoing illegal mining activitymainly taking place from Block "B". Continued communication with officials fromthe Ministry of Home Affairs is starting to yield results with initiativesundertaken to identify offending operators. Management recognise that a highstaff turnover at an operational level is mainly attributable to theftinfringements. To minimise the effects on efficiencies recruitment and trainingpolicies have been strengthened as have additional security procedures beenimplemented. Like much of Sub Saharan Africa, frequent national power interruptions continueto occur. It is anticipated that this will be alleviated in 2008 with thecompletion of a power stabilising project commissioned in late 2007. Delays in the delivery of key equipment and the challenges of ongoing illegalundermining resulted in some internal project start dates not being met. Themechanisation trial at CT Shaft, and the commissioning of the Investor Shaftwinder is now scheduled to be initiated early in 2008. Stoping tonnagecontribution was disappointing as stoping resources were allocated to productionareas. Processed tonnes increased significantly to 25,367 tonnes from 15,896 tonnes in2006. Two stoping operations were conducted with the stope in Main Shaft showinga recovery of 124 ct/tonne. Further areas will be stoped in 2008, bothmechanically and manually as the development of multiple fold stacks continue. Carats recovered increased by 38% to 1,700,134 carats from 1,230,600 carats in2006. "A" and "B"-quality recoveries were 21.7% of total production. Delta shaftis showing the most promise of continued top quality production, although theother three shafts have yielded good results. On Mine Cash Costs Cash costs for the period decreased to $3.39 per carat from $4.47 in 2006largely due to a significant increase of production up from 1.2m carats inFY2006 to 1.7m in FY2007. The increased number of carats recovered was afunction of increased processed tonnes, up 60% to 25,367 tonnes from 15,896tonnes in FY2006. On mine cash costs include operating costs, mineadministration costs and royalty charges incurred at Merelani mine. Forcomparative purposes, the on-mine cash costs figure for FY2006 ($2.54) has beenrevised to include mining overhead costs previously reported as part ofadministration and other costs. Production statistics+-----------------------+---------------+---------------+----------------+| | 2007 | 2006 | Movement |+-----------------------+---------------+---------------+----------------+|Tonnes Processed | 25,367 | 15,896 | +60% |+-----------------------+---------------+---------------+----------------+|Carats per tonne | 67 | 77 | (13%) |+-----------------------+---------------+---------------+----------------+|Production (carats | 1.7 | 1.2 | +38% ||recovered) | | | |+-----------------------+---------------+---------------+----------------+|On mine cash costs per | $3.39 | $4.47** | (24%) ||carat * | | | |+-----------------------+---------------+---------------+----------------+|On mine revenue per | $9*** | $12 | (25%) ||carat | | | |+-----------------------+---------------+---------------+----------------+ * On mine cash costs include operating costs, mine administration costs and royalty charges incurred at Merelani mine. ** For comparative purposes, the on mine cash costs figure for FY2006 ($2.54) has been revised to include ongoing mining overhead costs previously reported as part of administration and other costs. *** Reduction in revenue per carat achieved is as a direct result of the lower overall quality of produced material since the year saw an average 10% increase in the quality-for-quality price achieved. Askari/Investor Shaft: Equipping of the surface infrastructure is 70% completewith completion of the 135kw hoist and bin anticipated in early 2008. Thesurface security building and X-Scan facility are 80% complete. It is planned tohave this shaft operational by mid-2008, to sink to 600 metres and to be themain hoisting shaft for Delta production. Newly recruited teams commenced with the construction of the security complex onthe shaft bank, the new winder has been delivered and the shaft is expected tobe commissioned by the end of the year. Main Shaft: The shaft has reached a depth of 620 metres with development for thesub-shaft infrastructure being carried out. This includes a dedicatedventilation and second access shaft to enable the ultimate depth ofapproximately 1,200 metres to be attained. In addition to planned development for stoping operations in old workings,efforts are currently concentrating on shaft sinking to intersect fold-stacks atgreater depths. Bravo Shaft: The 17-Level structure has been producing for over a year. Asub-shaft off this structure is yielding exceptional results with a large scalestoping operation being laid out and planned to be worked over the next year.Stoping in the upper levels continues with the main aim to remove all potentialmining areas to reduce the temptation for illegal mining activities. Development of the 17-Level fold-stack resulted in the intersection of a highlymineralised area. Trial stoping was temporarily stopped to assist with theexcavation of the 17-Level superstructure. Incursions from Block B minersrequired the reallocation of mining personnel from other development areas. Delta Shaft: Mining of the twofold stacks continues and will be linked toInvestor Shaft in 2008 to improve ventilation and hoisting efficiencies. Onceagain, the areas are proving to be larger that predicted with good stopingpotential areas being developed. New geological structures believed to be linked to the highly productivefold-stack discovered in late 2006 have been discovered in Delta and haveyielded reasonable production. Exploration and development work in and aroundthese structures are ongoing with further production anticipated. JW Shaft: No work was carried out at JW Shaft during 2007 due to the lack ofsupervisors. This situation has been addressed and the vacuumation (extractionmethod) and stoping exercise is being developed for 2008. Planned stoping trials were delayed on account of ground handling, supervisionand security constraints. CT Shaft: The surface infrastructure is now in place except for the X-Scan unit,which will be commissioned, in early 2008. The 135kw hoist will allow this shaftto be sunk to a depth of 600 metres from the current depth of 410 metres. The scoop-tram has been commissioned on Level-30 with exceptional efficiencyfigures being shown. The development of the scraper and mechanisation section from Bravo Shaft to CTShaft is progressing with production planned to commence in mid 2008. Production continues from the fold stacks intersected below Level-30 with goodcolour and quality material being recovered. Development at the shaft bottom remains a priority with the aim of intersectingthe next fold stack below the current stack, from which various boudins wereremoved. The depth of the shaft has been increased to approximately 370 metres,which has exposed new structures. In addition, it is planned to commission thenew 135kw winder during the third quarter. This combined with a larger capacityskip is expected to result in significant improvements in efficiencies. The introduction of five security specialists into the production areas hasincreased the recoveries and reduced shrinkage from mine faces due to asignificantly increased security presence at the production faces. Planned changes in mining operations aimed at introducing greater mechanisation,including the introduction of a scoop-tram and greater emphasis on selectivestoping remain viable options for continued growth, and will result in asignificant increase in material passing through the processing plant andsorthouse. To ensure recovery rates are not adversely affected by increasedthroughput, the micro-sort unit has been re-programmed to sort only the mediumto smaller sizes, with larger gems selected by hand in a gloved sorting box.This has resulted in a dramatic improvement in the recovery rate of smallersizes, whilst freeing sorthouse personnel to concentrate their efforts onhand-sorting the larger, higher value, material. Exploration Activities in 2007 centred on the exploration of the area surrounding the 7kilometre tanzanite controlled area. The first area of focus was PL2148 (AEGIS) with area reconnaissance and outcropmapping. The field team was subsequently moved to the Shamberai region, namelyPL2939 and PL4195. Work in this region comprised pitting and trenching with theaim of putting together a surface geology map of the region. As most of the rockhad a competent overburden and very little outcrop, a 20 kilometre squared areawas systematically worked over a period of 7 months. The exploration team willbe moving to the Lemshuku area in early 2008. A drilling programme comprising 2,300 metres of long-hole core drilling wasapproved during the year with drilling to commence in early 2008. Two holes havebeen scheduled to be drilled within PL2148 (AEGIS), and single deep holes inPL4691 and in the PML region to the SW of Block C. In addition to the 'off-site'exploration, three short holes are going to be drilled on-site, exploring theUpper Horizon of the tanzanite deposit. The exploration team has also focused on long-hole core drilling and geophysics over the existing licence area (SML 8/92) to determine the extent ofmineralisation at greater depths. Favourable results from the first two drillholes: LHD 15 and 16, warranted the drilling of an additional two holes: LHD 17and 18. The graphitic host rock or JW-zone was intersected in all four-drillholes. The second two holes; LHD 17 and 18, intersected the JW-Zone at a down-dipextent of over 1,400 metres. The overall drilling programme indicates that theLower Horizon, which hosts the economic mineralisation, extends three timesfurther down-dip than previously established. All of the four drill holes intersected the JW-zone. The ore-bearing horizonintersected at depth was shown to be geochemically similar to the tanzanite-bearing zone currently being mined. The drilling programme has also revealedthat the JW-zone appears to thicken out at deeper levels. Tanzanite One Trading The focus of TanzaniteOne Trading continued to be the purchasing of medium tofine quality rough tanzanite of 2.5 carats and above. This medium to finequality rough was in short supply for the first four months of 2007 due tolimited production from the adjacent mining areas. Much of the rough availableon the Arusha market during this time was a lighter colour, which TanzaniteOneTrading refrained from procuring. Finer colour was available in May and by July2007 medium to fine rough was readily available; however, a premium was paid tosecure finer colours. Good supplies continued throughout the second half of the year and October sawrecord purchases. The material being purchased during this period waspredominantly of larger size and better colour. With the larger volumes beingavailable TanzaniteOne Trading placed strong focus on procuring much of the"A"-quality rough supply. Through new and strengthened relations with prominentMasai brokers TanzaniteOne Trading's purchases of "A"-quality rough increasedthreefold compared to 2006. The retailing of cut tanzanite continued to be successful from the Tradingoffice with all the cut tanzanite being sold as certified by The TanzaniteLaboratory, as endorsed by the Tanzanite Foundation. Sales have increasedsignificantly and are expected to continue to increase in 2008. Although retailis not the Company's primary focus this initiative has been successful inincreasing awareness and confidence in the Arusha retail market. Human Resources and Social Responsibility In December 2007, the Tanzanian Government announced a 268% increase in minimumwages for the mining sector. Following successful representation by the Company,it has been agreed by representative bodies that non-core employees be paidsector rates as opposed to mining sector rates. This proposal was put forward togovernment and accepted, thus minimising the effect of the proposed wageincrease. Regular meetings with local community leaders continue. At Naisinyai Village,the roof at the local secondary school is complete and we are working togetherwith the Tanzanite Foundation to secure 205 double bunk beds, mattresses andmosquito nets to equip the boarding facilities at the school. A further eye clinic is scheduled for early 2008 following the success of theoperation conducted in late 2007 where more than 300 people received treatmentfrom the TanzaniteOne sponsored project implemented by the Charitable EyecareMission Tanzania, a locally registered NGO. Meetings with the Chairman of theNaisinyai Village and the Merelani Ward continued at regular intervals, with thefocus on ways to improve the cooperation and mutually beneficial relationshipbetween all the company employees and its neighbours. Corporate Matters Acquisition of the Lemshuku-Shamberai Tsavorite Project On 22nd July 2007, Tanzanite One announced the commencement of a strategy toleverage its position as a leading premium coloured gemstone producer, followingthe acquisition of the Lemshuku-Shamberai Tsavorite Project (the "TsavoriteProject", the "Acquisition") through its 75% owned Tanzanian subsidiary,TsavoriteOne Mining Limited ("TsavoriteOne"). The Tsavorite Project: • Comprises 12 prospecting licenses covering 100 square kilometres.• Could potentially represent the largest known single-source of tsavorite.• Is located approximately 20 kilometres to the southwest of TanzaniteOne's existing tanzanite operations.• Tsavorite enjoys a current quality-for-quality market-price per carat of approximately two to four times that of tanzanite. Further updates will be provided on the Tsavorite Project as the venture advances. Board and Management The past 12 months have seen TanzaniteOne Limited and its subsidiariesrepositioned and refocused for strategic, operational and financial growth. Thecurrent results are testament to this process which has taken place under theguidance of Mr Ian Harebottle and the senior management team. To position theCompany for the next stage of operational growth, both within the tanzanitebusiness and in the recently acquired Lemshuku-Shamberai Tsavorite Project, anumber of Board and senior management changes are announced. Ian Harebottle hasstepped down as CEO of TanzaniteOne Limited and will leave the company withimmediate effect to pursue other interests. Mr Harebottle joined the Groupfollowing TanzaniteOne's acquisition of Afgem's tanzanite assets in 2004.Commencing as Chief Operating Officer, he took on the role as CEO in May 2006. The Board wishes to record its thanks and appreciation to Mr Harebottle andacknowledges his dedication and contribution to the growth of the Group,particularly in Tanzania. Mr Zane Swanepoel has been appointed Managing Director of TanzaniteOne Limitedeffective immediately and will be driving the operational performance and growthof the tanzanite operations and the tsavorite project. Mr. Swanepoel joined theCompany in September 2005 as General Manager - Mining. He has 25 yearsexperience in mining of which 18 years has been at senior mine management level.Mr. Swanepoel has been instrumental in coordinating and developing the Group'soperational growth to date and will continue to be based at the mine inMeralani. In view of Mr. Swanepoel's appointment as Managing Director, Mr Greg Moss hasbeen appointed Mine Manager at the Group's Merelani mine in Tanzania. In addition, Mr Ami Mpungwe, currently non-executive director of TanzaniteOneLimited, will assume the role of Executive Deputy Chairman. Mr Mpungwe holdsdirectorships in a number of companies including National Bank of Commerce,Tanzania Breweries and Air Tanzania. He has an honours degree in InternationalRelations and Political Science and has spent 25 years in the diplomaticservice. Mr Mpungwe will be responsible for guiding the Company's presence inTanzania. The restructured Board of the Company is: • Michael Adams - Non-executive Chairman• Ami Mpungwe - Executive Deputy Chairman• Zane Swanepoel - Managing Director• Ed Nealon - Non - executive director• Nicholas Sibley - Non-executive director• Mark Summers - Non-executive director Tanzanite One LimitedIncorporated in BermudaExempt company number EC33385 Quoted on the London Alternative Investment Market: TNZ.LCompany ISIN: BMG8672E1021Company SEDOL: B01RP04Number of shares in issue at 31 December 2007: 73,584,834Number of unlisted options at 31 December 2007: 871,000 Board of DirectorsMichael Adams - Non-executive ChairmanAmi Mpungwe - Executive Deputy ChairmanZane Swanepoel - Managing DirectorEdward Nealon - Non-executive DirectorNicholas Sibley - Non-executive DirectorMark Summers - Non-executive Director Audit/Risk CommitteeNicholas Sibley (Chairman)Michael AdamsAmi Mpungwe Remuneration/Succession Planning CommitteeMichael Adams (Chairman)Ami MpungweEdward Nealon Mining and Geology CommitteeEdward Nealon (Chairman)Zane SwanepoelGreg Moss Nominations CommitteeThe Nominations Committee comprises the Full Board Company SecretaryWilli Boehm ManagementZane Swanepoel - Managing DirectorFarai Manyemba - Chief Finance OfficerGreg Moss - TanzaniteOne Mining, General ManagerAdrian Banks - TanzaniteOne Trading, Managing DirectorCandice Nunn - TanzaniteOne Marketing, Managing Director Nominated Advisor & Broker (AIM) Joint Broker (AIM)Evolution Securities Ltd Ambrian Partners LimitedSimon Edwards/Neil Elliot Richard ChaseTelephone: +44 (0)20 7071 4300 Telephone: +44 (0)20 7776 6400 For more information please contact:Nicholas Bias Willi BoehmInvestor Relations Company Secretary+44 (0)7887 920 530 +61 409 969 955nick.bias@tanzaniteone.com www.tanzaniteone.com Glossary ct carat dollar or $ United States Dollar g/t Grammes per tonne, measurement unit of grade (1g/t = 1 part per m) JORC code Australasian code for reporting of Mineral Resources and Ore Reserves LTIFR Lost time injury frequency rate, being the number of lost-time injuries expressed as a rate per 200,000 man-hours worked NOSA National Occupational Safety Association On-mine cash costs On-mine cash costs include mine operating costs, mine administration costs and royalty charges incurred at Merelani mine. tonne 1 Metric tonne (1,000kg). This information is provided by RNS The company news service from the London Stock Exchange