7 Jan 2010 11:26
7th January 2010
INTERIM STATEMENT FOR THE SIX MONTHS ENDING OCTOBER 31st 2009
In the six months under review, WAD did well. The Bomboko mine came on stream. Diamond sales realised an average $117 per carat at auction. This was lower than expected due to poor market conditions in early 2009, but due to a marked recovery in the diamond market in the latter part of 2009 higher prices are expected. The Company made the decision to continue with an expansion programme by installing an additional plant to boost production capacity. The mine is now fully operational and capable of producing 1500 carats a month.
Joint ventures were agreed on both of our Sierra Leone projects. This relieves WAD of financial obligations and allows us to focus our resources on delivering cash flow from Bomboko. We transferred our interest in the Pipe 3 kimberlite and surrounding dykes to Thunderball, a Lebanese/ Japanese consortium with an aggressive plan for exploration and exploitation. WAD retains a 20 per cent free carry though to production.
The WAD mining licence over the Plant 11 undersize tailings near Koidu has been transferred to a local company, Pyramid Resources, in return for a 5 per cent production royalty. Pyramid will mine diamonds from the tailings.
The highlight of the recent period has been the decision in principle to merge West African Diamonds (WAD) with Stellar Diamonds, a privately held diamond explorer and miner.
The combined venture, which subject to approvals and a successful fundraise, will relist in quarter one 2010, will have two producing diamond mines in Guinea, Bomboko and Mandala, as well as three joint ventures in Sierra Leone. The new company will also hold 100% interests in two high grade kimberlite projects, Droujba in Guinea and Tongo in Sierra Leone.
The agreement being proposed to shareholders will combine WAD and Stellar on a 25/75 % basis, prior to new funding. Subject to successful funding, the new enlarged company will increase mining capacity and revenue at both existing alluvial mines as well as continuing development of the kimberlite projects.
The Board of WAD considered the company too small to attract significant investor interest and deemed it essential to grow by consolidation. Merging with Stellar will result in a company with two producing mines delivering robust cash flow. The planned financing will strengthen the balance sheet and enable our high grade kimberlite projects to be developed. The Company will continue to grow by consolidation activity in what is a fragmented and undervalued industry.
Enquiries:
| West African Diamonds | |
| John Teeling, Chairman | + 353 1 8332833 |
| James Campbell, Deputy Chairman | +27 83 457 3724 |
| Astaire Securities Lindsay Mair / Toby Gibbs | +44 (0)20 7448 4400 |
| College Hill Nick Elwes | +44 (0) 20 7457 2020 |
www.westafdiamonds.com
| West African Diamonds plc | |||||||||||
| Financial Information (Unaudited) | |||||||||||
| Condensed Consolidated Income Statement | Six Months Ended | Year Ended | |||||||||
| 31 Oct 09 | 31 Oct 08 | 30 April 09 | |||||||||
| unaudited | unaudited | audited | |||||||||
| £'000 | £'000 | £'000 | |||||||||
| Revenue | 135 | 27 | 27 | ||||||||
| Cost of sales | (135) | (27) | (27) | ||||||||
| Gross profit | 0 | 0 | 0 | ||||||||
| Administrative expenses | (128) | (113) | (247) | ||||||||
| OPERATING LOSS | (128) | (113) | (247) | ||||||||
| Investment income | 0 | 0 | 3 | ||||||||
| Finance costs | (2) | (11) | (2) | ||||||||
| LOSS BEFORE TAXATION | (130) | (124) | (246) | ||||||||
| Income tax expenses | 0 | 0 | 0 | ||||||||
| LOSS AFTER TAXATION | (130) | (124) | (246) | ||||||||
| Loss per share - basic and diluted | (0.17p) | (0.30p) | (0.48p) | ||||||||
| Condensed Consolidated Balance Sheet | 31 Oct 09 | 31 Oct 08 | 30 April 09 | ||||||||
| unaudited | unaudited | audited | |||||||||
| £'000 | £'000 | £'000 | |||||||||
| ASSETS: | |||||||||||
| NON CURRENT ASSETS | |||||||||||
| Intangible assets | 9,591 | 7,158 | 9,468 | ||||||||
| Property, plant & equipment | 1,485 | 1,314 | 2,067 | ||||||||
| 11,076 | 8,472 | 11,535 | |||||||||
| CURRENT ASSETS | |||||||||||
| Receivables and prepayments | 126 | 14 | 7 | ||||||||
| Cash and cash equivalents | 71 | 1,578 | 242 | ||||||||
|
| 197 | 1,592 | 249 | ||||||||
|
|
|
| |||||||||
| TOTAL ASSETS | 11,273 | 10,064 | 11,784 | ||||||||
| LIABILITIES: | |||||||||||
| CURRENT LIABILITIES | |||||||||||
| Trade and other payables | (190) | (775) | (196) | ||||||||
| NET CURRENT ASSETS/(LIABILITIES) | 7 | 817 | 53 | ||||||||
| NET ASSETS | 11,083 | 9,289 | 11,588 | ||||||||
| EQUITY: | |||||||||||
| Share capital | 10,939 | 9,908 | 10,313 | ||||||||
| Reserves | 144 | (619) | 1,275 | ||||||||
| TOTAL EQUITY | 11,083 | 9,289 | 11,588 | ||||||||
| Condensed Consolidated Statement of Changes in Equity | |||||||||||
| Share based | |||||||||||
| Share | Share | Payment | Retained | Translation | Total | ||||||
| Capital | Premium | Reserves | Losses | Reserve | Equity | ||||||
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | ||||||
| As at 1 May 2008 | 407 | 7,768 | 356 | (851) | - | 7,680 | |||||
| Shares issued for cash | 174 | 1,566 | - | - | - | 1,740 | |||||
| Share issue expenses | - | (7) | - | - | - | (7) | |||||
| Loss for the period | - | - | - | (124) | - | (124) | |||||
| As at 31 October 2008 | 581 | 9,327 | 356 | (975) | - | 9,289 | |||||
| Shares issued for cash | 101 | 304 | - | - | - | 405 | |||||
| Exchange differences arising on | |||||||||||
| translation of foreign operations | - | - | - | - | 2,016 | 2,016 | |||||
| Loss for the period | - | - | - | (122) | - | (122) | |||||
| As at 30 April 2009 | 682 | 9,631 | 356 | (1,097) | 2,016 | 11,588 | |||||
| Shares issued for cash | 217 | 433 | - | - | - | 650 | |||||
| Share issue expenses | - | (24) | - | - | - | (24) | |||||
| Share based payments | 54 | 54 | |||||||||
| Exchange differences arising on | |||||||||||
| translation of foreign operations | - | - | - | - | (1,055) | (1,055) | |||||
| Loss for the period | - | - | - | (130) | - | (130) | |||||
| As at 31 October 2009 | 899 | 10,040 | 410 | (1,227) | 961 | 11,083 | |||||
| Condensed Consolidated Cash Flow | Six Months Ended | Year Ended | |||||||||
| 31 Oct 09 | 31 Oct 08 | 30 April 09 | |||||||||
| unaudited | unaudited | audited | |||||||||
| £'000 | £'000 | £'000 | |||||||||
| CASH FLOW FROM OPERATING ACTIVITIES | |||||||||||
| Loss for the period | (130) | (124) | (246) | ||||||||
| Exchange movements | 9 | (16) | (4) | ||||||||
| Share based payments | 18 | 0 | 0 | ||||||||
| Finance cost | 2 | 11 | 2 | ||||||||
| Investment revenue | 0 | 0 | (3) | ||||||||
| OPERATING CASH OUTFLOW BEFORE MOVEMENT IN WORKING CAPITAL | (101) | (129) | (251) | ||||||||
| (Decrease)/increase in trade and other payables | (6) | 451 | (128) | ||||||||
| Decrease in trade and other receivables | (119) | 9 | 15 | ||||||||
| CASH (USED IN)/GENERATED BY OPERATIONS | (226) | 331 | (364) | ||||||||
| Finance costs | (2) | (11) | (2) | ||||||||
| Investment revenue | 0 | 0 | 3 | ||||||||
| NET CASH (USED IN)/GENERATED BY OPERATING ACTIVITIES | (228) | 320 | (363) | ||||||||
| Payment for intangible assets | (548) | (549) | (1,335) | ||||||||
| Payment for tangible assets | (12) | (21) | (281) | ||||||||
| NET CASH USED IN INVESTING ACTIVITIES | (560) | (570) | (1,616) | ||||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | |||||||||||
| Proceeds from issue of equity shares | 650 | 1,740 | 2,145 | ||||||||
| Share issue costs | (24) | (7) | (7) | ||||||||
| NET CASH GENERATED FROM FINANCING ACTIVITIES | 626 | 1,733 | 2,138 | ||||||||
| NET INCREASE/(DECREASE) IN CASH | (162) | 1,483 | 159 | ||||||||
| Cash and Cash Equivalents at beginning of the period | 242 | 79 | 79 | ||||||||
| Effect of foreign rate changes on cash held in foreign currencies | (9) | 16 | 4 | ||||||||
| CASH AND CASH EQUIVALENTS AT END OF THE PERIOD | 71 | 1,578 | 242 | ||||||||
Notes:
1. INFORMATION
The financial information for the six months ended October 31st, 2009 and the comparative amounts for the six months ended October 31st, 2008 are unaudited. The financial information above does not constitute full statutory accounts within the meaning of section 240 of the Companies Act 1985.
The Interim Financial Report has been prepared in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union. The accounting policies and methods of computation used in the preparation of the Interim Financial Report are consistent with those used in the Group 2009 Annual Report, which is available at www.westafdiamonds.com
The interim financial statements have not been audited or reviewed by the auditors of the Group pursuant to the Auditing Practices board guidance on Review of Interim Financial Information.
2. No dividend is proposed in respect of the period.
3. LOSS PER SHARE
Basic earnings or loss per share is computed by dividing the profit or loss after taxation for the year available to ordinary shareholders by sum of the weighted average number of ordinary shares in issue and ranking for dividend during the year.
Diluted earnings or loss per share is computed by dividing the profit or loss after taxation for the year by the weighted average number of ordinary shares in issue, adjusted for the effect of all dilutive potential ordinary shares that were outstanding during the year.
The following table sets forth the computation for basic and diluted loss per share (EPS):
| 31 Oct 09 £ | 31 Oct 08 £ | 30 April 09 £ | |||
| Numerator Numerator for basic EPS - retained loss | (129,552) | (124,026) | (246,465) | ||
| Denominator Denominator for basic and diluted EPS | Number 78,399,896 | Number 41,110,099 | Number 52,147,985 | ||
| Basic and diluted EPS | (0.17p) | (0.30p) | (0.48p) |
Basic and diluted loss per share is the same as the effect of the outstanding share options is anti-dilutive and is therefore excluded.
4. INTANGIBLE ASSETS
| Exploration and evaluation assets: | 31 Oct 09 £'000 | 31 Oct 08 £'000 | 30 April 09 £'000 | ||
| Cost | |||||
| Opening balance | 9,468 | 6,609 | 6,609 | ||
| Additions during the period | 584 | 549 | 1,335 | ||
| Transfer from assets under construction | 263 | - | - | ||
| Net foreign exchange differences | (724) | - | 1,524 | ||
| Closing balance | 9,591 | 7,158 | 9,468 | ||
| Segmental analysis | |||||
| Sierra Leone | 6,660 | 5,734 | 6,874 | ||
| Guinea | 2,931 | 1,424 | 2,594 | ||
| 9,591 | 7,158 | 9,468 |
Exploration and evaluation assets relate to expenditure incurred in diamond and gold exploration and related expenditure in Sierra Leone and Guinea.
The directors are aware that by its nature there is an inherent uncertainty in exploration and evaluation, and therefore inherent uncertainty in relation to the carrying value of capitalised exploration and evaluation assets.
The realisation of these intangible assets is dependent on the successful discovery and development of economic resources, and is subject to a number of significant potential risks including;
Price fluctuations;
Uncertainties over development and operational costs;
Political and legal risks, including arrangements with governments for licences, profit sharing and taxation; and
Funding requirements.
Should these prove unsuccessful the value included in the balance sheet would be written off to the income statement.
Having reviewed the deferred exploration and evaluation expenditure at 31 October 2009, the directors are satisfied that the value of the intangible asset is not less than carrying value.
Included above is an amount of £36,400 (April 2009: £Nil) of capitalised expenses related to equity-settled share-based payment transactions during the year.
5. PROPERTY, PLANT AND EQUIPMENT
| Plant & Equipment | Assets in the course of construction -Diamond interests | Total | |||
| Cost: | £'000 | £'000 | £'000 | ||
| At 1 May 2008 | 39 | 1,254 | 1,293 | ||
| Additions during the period | - | 21 | 21 | ||
| At 31 October 2008 | 39 | 1,275 | 1,314 | ||
| Additions during the period | - | 260 | 260 | ||
| Net foreign exchange differences | - | 493 | 493 | ||
| At 30 April 2009 | 39 | 2,028 | 2,067 | ||
| Additions during the period | - | 12 | 12 | ||
| Transfer to development | - | (263) | (263) | ||
| Net foreign exchange differences | - | (331) | (331) | ||
| At 31 October 2009 | 39 | 1,446 | 1,485 | ||
£1,446,000 relates to assets in the course of construction in Sierra Leone and Guinea. The carrying value of the above assets is dependent on the successful discovery and development of economic reserves, including the ability to raise finance to develop future projects. Should this prove unsuccessful the value included in the balance sheet would be written down to their net recoverable value.
In the opinion of the directors, the carrying value is not less than its recoverable amount. No depreciation has been charged in respect of these assets as they are not in a condition necessary for them to be capable of operating in the manner intended by management.
6. CALLED-UP SHARE CAPITAL
| Number | Total £'000 | |||
| Authorised: | ||||
| Ordinary shares of 1p each | 200,000,000 | 2,000 | ||
| Allotted Called-up and fully paid: | ||||
| Opening balance 1 May 08 | 40,750,758 | 407 | ||
| Issued during the period | 17,400,000 | 174 | ||
| At 31 October 08 | 58,150,758 | 581 | ||
| Issued during the period | 10,130,086 | 101 | ||
| At 30 April 09 | 68,280,844 | 682 | ||
| Issued during the period | 21,666,675 | 217 | ||
| At 31 October 09 | 89,947,519 | 899 |
Movements in issued share capital
On 6th August 2009
21,666,675 new ordinary shares were issued at 3p per share to fund ongoing operations; these shares were issued for cash consideration.
7. The Interim Report for the six months to October 31st, 2009 was approved by the Directors on 7th January 2010.
8. 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. The Interim Report may also be viewed at West African Diamond plc's website at www.westafdiamonds.com