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From: Nigel
ArtDate: 29th September 2006
Section: (FILLYABOOTS NEWS RELEASES)
Remote Name: 87.74.115.61
Date: 10/10/06
Time: 22:51
29th September 2006
Tanzanite One Interim Results
News Item - Conduit PR
TANZANITE ONE LIMITED INCORPORATED AND REGISTERED IN BERMUDA EXEMPT COMPANY NUMBER EC33385
INTERIM RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2006
HIGHLIGHTS
Net loss of US$153,198, after $2.8 million provision following the decision to withdraw from the wholesale jewellery business. Improvement in mining capabilities has increased grade, 75 carats per tonne up from 47 carats per tonne in the comparable period. Ongoing exploration efforts continue to deliver encouraging results. Cash profit US$2.65 million. US$16.3 million revenue, down due to lower proportion of gem quality tanzanite recovered. Interim dividend of US 2 cents per share. Decision to focus on mining and cease wholesale jewellery manufacture. Key statistics: Half year ended 30 June 2006 Half year ended 30 June 2005 Movement
Tonnes processed 7,605 tonnes 12,161 tonnes (37%)
Carats recovered 570,405 cts 576,933 cts (1%)
Carats per tonne 75 ct/ton 47 ct/ton 60%
On mine cash cost per carat US$2.32 US$2.00 16%
Average price per carat (rough tanzanite) $9.63 $13.00 (26%)
Revenue US$16.3 million US$22.4 million (27%)
Gross margin 31% 66% (53%)
Commenting on the half year results, Ian Harebottle, Tanzanite One Limited's Chief Executive said, “Whilst I cannot say that I am pleased to report the US$153,198 net loss for the six months ended 30 June 2006; a reduction caused by the proportion of gem quality tanzanite recovered remaining at historical lows; reduced cut and polished sales, as well as a US$2.8 million write down on account of our decision to divest the jewellery segment of our business, I am encouraged by the results achieved in our core mining business. Grades of 75 carats per tonne have been achieved over the period and our ongoing exploration projects continue to deliver encouraging results. Our management team has designed a business model focused on delivering increasingly sustainable results from our mining operations”.
Tanzanite One announces a net loss for the half year to 30 June 2006 of US$153,198 (0.25 cents per share). The net loss for the half year is after a non-cash provision of US$2.8 million for the closure of the Company’s wholesale jewellery business. Cash earnings (before depreciation, amortisation and write downs) for the period were $2.65 million.
The Directors have declared an interim dividend of 2 US cents per share (2005: 1 US cent per share) payable on 10 November 2006 to shareholders registered on 20 October 2006. The dividend payment (US$1.4 million) will be funded from current cash reserves.
Following a review of its principal business activities, the Board has decided to divest the Group’s wholesale jewellery business to focus the Company’s resources fully on the mining of and exploration for tanzanite in Tanzania for sale to the jewellery market.
The Company has had a difficult twelve months. The quality of recovered tanzanite has remained unusually low and mining operations have been restricted by un-anticipated national power cuts. These problems are being addressed. First, by development of mining techniques through a better understanding of the geology at the mine, and second, by the installation of an independent power supply. The key drivers behind group profitability are the grade and quality of tanzanite recovered. During the period, the mine recovered 570,405 carats (2005: 576,933 carats) of tanzanite from 7,605 tonnes (2005: 12,161 tonnes) of processed ore, resulting in a grade of 75 carats per tonne (2005: 47 carats per tonne), a 60% increase. The increased grade however did not translate into additional profits because of a significant drop in the proportion of gem quality tanzanite (“A” quality material) recovered during the period. Gem quality tanzanite represented 0.4% of production, down from historical levels of 1.5%, a 73% decrease. The reduced amount of “A” quality tanzanite recovered was the major reason for the lower profits recorded in the period under review.
As a result of the overall lower quality of produced material, revenue for the period under review was US$16.3 million (2005: US$22.4 million), down 27%. Although grades continue to remain high and production is trending towards higher quality tanzanite, the proportion of “A” quality tanzanite remains below historical levels.
On mine costs at US$2.32 per carat were up 16% compared to the previous corresponding period and reflect the impact of local inflation and increases in fuel associated primarily with the need for an increased reliance on self generation of power. Operating expenses are expected to decline with the closure of the wholesale jewellery business in South Africa and an increased emphasis on pure mining activity.
Inventory was US$5 million lower at US$9.4 million (2005: US$14.4 million) reflecting in part the impact of closure of the wholesale jewellery business.
Cash and cash equivalents at 30 June were US$6.6 million (2005: US$5.1 million). The Group’s operations generated net cash of $4.2 million during the period.
Interest income for the period was US$421,736.
Finance charges of $20,608 were incurred for the period on the draw down of US$1 million on an existing NBC Bank facility. The bank facility was put in place to fund, among other requirements, the development of the Company’s new power generation facility at the mine.
The Company is increasing its presence in Tanzania, the home of tanzanite. The increased focus on Tanzania demonstrates its commitment to the tanzanite industry and to providing opportunities to local Tanzanians.
Jos Simson Conduit PR Ltd 76 Cannon St EC4N 6AE Office: +44 (0) 20 7429 6666 Direct: +44 (0) 20 7429 6603 Fax: +44 (0) 20 7429 6699 Mob: +44 (0) 789 987 0450
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