Interim Results
Petra Diamonds Ld
28 February 2007
Petra Diamonds Limited
('Petra', 'the Group' or 'the Company')
Interim Results for the Six Months to 31 December 2006 (unaudited)
Highlights to 27 February 2007
• Trading update - for January 2007 Petra is pleased to report that, in line
with management expectations, the South African mines recorded a significant
uplift in performance as below:
(i) a 30% increase in US$ per carat prices received for January 2007
(US$166 per carat) compared to the average for the 6 months to December
2006 (US$127 per carat)
(ii) Diamond sales for January of 13,904 carats, up 28% on the average
monthly sales for the 6 months to December 2006
(iii) a 9% improvement in grade at Star, mainly due to plant
refurbishment, coupled with improved grade control at both Sedibeng and
Helam, led to an average grade of 34.0 carats per hundred tonnes ('cpht')
for January 2007 compared to an average of 31.1 cpht for the 6 months to
December 2006
• The Group - on 27th November 2006, Petra acquired Calibrated Diamonds
Investment Holdings (Pty) Limited ('CDIH'), giving the Company the ability
to cut and polish (beneficiate) its own production
• Angola - large diameter drilling operations at Alto Cuilo continue
alongside plant treatment; 73 kimberlites now identified; drill core sent
for external specialist analysis has given encouraging microdiamond counts;
analysis of drill core continues to give encouraging diamond indicator
mineral chemistry ('minchem') results
• Botswana - a 600 metre diameter negative gravity anomaly has been revealed
by gravity data in the Kukama project area over a previously identified
kimberlite proven to be diamondiferous
• Sierra Leone - encouraging diamond recoveries from mini samples at the
Kono project of 638 diamonds totaling 58.78 carats
• South Africa - Petra announces acquisition of Koffiefontein mining and
associated assets from De Beers; production from the other South African
mines of 71,928 carats for the six months (6 months to 30 June 2006: 86,371
carats)
Adonis Pouroulis, Chairman, said;
'It has been another formative period for the Company as the acquisition of CDIH
has transformed us into a vertically integrated business. Alongside this key
development, we have continued to make great strides in our exploration efforts
as well as significantly boosting our production portfolio through the
acquisition of the Koffiefontein mine and the achievement of improved
performance at our other South African assets.
'We believe that the diamond market is heading into a period of major deficit,
given the lack of new discoveries, as supplies of diamonds won't keep pace with
the growth in forecast demand. With our diversified asset base of quality
exploration and development projects and producing assets, we believe we are in
a very strong position from which to capitalise on a strengthening diamond
market.'
Summary of Results (unaudited)
6 months to 6 months to 6 months to
31 December 2006 30 June 2006 31 December 2005
Revenue US$8.2m US$11.1m US$9.7m
Production (carats) 71,928 86,371 88,640
Loss before depreciation,
amortisation and foreign
exchange movements US$3.7m US3.0m US$2.1m
Loss for the period US$9.5m US16.9m US$1.9m
Loss per share 6.33 cents 11.7 cents 1.40 cents
Cash at bank (period end) US$19.2m US$7.0m US$12.2m
Chairman's Statement
It is with great pleasure that I present the December 2006 interim financial
statements for a period that saw Petra Diamonds further consolidate its position
as a significant player in the diamond mining industry. As I write this, new
diamond companies are being listed and others are advancing plans to do the
same. I believe there to be investor appetite for exposure to the growing world
of diamonds and although the industry has recently attracted some negative
publicity, diamonds are a force for good, as has been shown many times over on
the African continent.
As we have grown the business, the Company's attention, effort and strategy
remain Africa focused. Petra's operations across the African continent now
employ over 2,500 people and through our various exploration and mining
initiatives, communities are being sustained, jobs are being created, investment
is going into various infrastructure and social projects and above all
sustainable value is being created in the countries in which we operate.
Further, through the recent acquisition of Calibrated Diamonds, Petra now has
the ability to cut and polish its own diamonds, giving the Company the ability
to trace its diamonds from 'mine to finger' and guaranteeing the end user a
product that has been ethically mined, processed and beneficiated.
Although the half year under review saw a softening of diamond prices, the
market in early 2007 is seeing prices firming up. The fundamentals of the
industry remain robust as continued demand is set to outpace production supply,
with the forecast deficit further exacerbated by the lack of any significant new
diamond discoveries. Petra's flagship exploration project is Alto Cuilo in
Angola; the first bulk sampling results are expected shortly and should the
results be in line with our expectations, Alto Cuilo has the potential to be a
major source of diamonds for years to come.
Petra's producing mines have also developed during the period, with the capital
expenditure invested at the Sedibeng and Star mines now seen to be bearing
fruit. Results for the month of January 2007 show an increase in the grade, as
forecast in the December quarterly statement, and the January tender results saw
higher vales being paid for our production than in any month during the 2006
calendar year. These developments, combined with the addition of the recently
acquired Koffiefontein mine to Petra's production portfolio, puts Petra in a
position to report a significant growth in production and revenues for the 6
month period to June 2007. The Company's goal is to achieve 500,000 carats total
production per annum by the financial year 2009/10, and the Board is confident
of achieving that goal over the next three years.
Results
A summary of the trading results for the period is set out below:
6 months to 6 months to 6 months to
31 December 30 June 2006 31 December 2005
2006 US$ US$
US$
Revenue 8,268,611 11,151,607 9,717,150
EBITDA on mine - South African operations 583,204 933,825 1,300,241
Care and maintenance - Koffiefontein (1,253,926) - -
Exploration expenses * (416,303) (1,621,295) (435,100)
Administration expenses * (2,184,543) (2,231,564) (2,968,617)
Net finance costs (489,730) (128,008) (26,086)
Loss before depreciation, amortisation and (3,761,298) (3,047,042) (2,129,562)
foreign exchange movements
Taxation 864,681 692,807 427,547
Loss for the period ** (9,469,559) (16,915,709) (1,948,747)
CAPEX 1,971,552 884,503 3,268,245
* Expenses before depreciation, amortisation,
interest and foreign exchange movements.
** Loss after non-cash flow items; unrealised
foreign exchange loss of US$1.7m, depreciation
and amortisation of US$4.8m
EBITDA on-mine was adversely impacted by declining diamond prices during the six
months under review, with $484,355 negative impact on revenue compared to prices
achieved during the six months to 30 June 2006. As mentioned earlier, January
tender results indicated a return to higher prices, and management is confident
that better prices will be achieved during the following six month period.
The loss for the period amounted to US$9,469,559 (6 months to 30 June 2006:
US$16,915,709), stated after foreign exchange losses of US$1,747,930 (6 months
to 30 June 2006: US$10,219,913), amortisation of intangibles of US$1,995,688 (6
months to 30 June 2006: US$1,808,526), and depreciation of US$2,829,324 (6
months to 30 June 2006: US$2,369,359).
Group net cash inflow for the period is stated after taking account of mining
development cash outflows in Sierra Leone of US$1,522,980 (6 months to 30 June
2006: US$1,648,838), other capital expenditure for the period of US$1,971,552 (6
months to 30 June 2006: US$884,503), CDIH acquisition of US$2,334,665, cash
inflows from the US$20 million convertible bond and US$2,075,106 from the issue
of new shares.
A charge of US$1,995,688 (6 months to 30 June 2006: US$1,808,526) is included
within operating expenditure in respect of the amortisation of prospecting
licences held by Sekaka Diamonds (Pty) Limited, the Group's Botswana operating
company. IFRS require that the cost of the licences be written off over their
estimated life, which the Board has estimated to be four years.
Alto Cuilo - Angola
Exploration developments at Alto Cuilo continue to exceed our expectations. To
date, 73 kimberlites have been discovered from 91 drill targets, again
confirming the effectiveness of the exploration programme, where the success
ratio of kimberlite discoveries stands at 80% of all targets drilled. There are
in excess of 100 targets that remain to be drilled, from which we expect there
to be further kimberlite discoveries.
As the large diameter drill rig arrived on site, bulk sampling commenced on
pre-selected kimberlites according to a ranking system. The purpose of
undertaking these bulk samples is that, after they have been processed, the
results will give a clearer indication of diamond quality and grade. The
micro-diamond and mineral chemistry results (associated with diamond discovery)
obtained thus far from the core drilling campaign have been very encouraging.
AC16 is currently being processed through a dedicated 10 tonne per hour Dense
Media Separation ('DMS') kimberlite sampling plant and AC63 is being bulk
sampled and stockpiled awaiting processing. We expect initial results from the
bulk sampling campaign in April 2007.
The alluvial exploration programme continues alongside the kimberlite programme
with bulk sampling resulting in over 1130 observation test pits and 7 bulk
sampling trenches being excavated so far.
The costs of exploration and associated activities on Alto Cuilo for the six
months to 31 December 2006 amounted to US$10.1 million, all such expenditure
being funded by BHP Billiton in accordance with the Alto Cuilo JV agreement. BHP
Billiton's cumulative spend as at 31 December 2006 amounted to US$32.9 million.
Kalahari Diamonds - Botswana
Petra is the largest holder of diamond exploration licences in Botswana, with
approximately 52,000 km(2) of diamond ground under exploration. This portfolio
includes five kimberlites in the Gope area and sixteen kimberlites in the Kukama
area. Gravity data in the Kukama project area has revealed a 600 metre diameter
negative gravity anomaly located over the Go173 S kimberlite; previous test work
over this kimberlite returned a grade of 9.6 cpht from one drill hole, whilst
another kimberlite, Go234 returned a sample grade of 11.9 cpht, also from one
drill hole. Petra will focus on the Kukama and Gope areas this year as they are
known to host diamondiferous pipes. Drilling will also be conducted in the Orapa
South area. We are nearing completion of our drilling programme in the Gope area
and further news will follow in the near future.
Production - South Africa
The South African mines recorded revenue of US$8.2 million for the six month
period and Petra continues to be South Africa's second largest producer of rough
diamonds by volume after De Beers. Production for the six months was 71,928
carats, and the board is confident that with the engineering and production
changes that are currently being implemented, we are on track for record
production, including Koffiefontein, of around 200,000 carats for the full year
to June 2007.
The commissioning of the refurbished plant at Star towards the end of the
December quarter and the construction of the new plant at Sedibeng, expected to
be completed in the quarter to March, are expected to yield improved recoveries
and further enhance cost efficiencies.
Koffiefontein
In December Petra entered into a conditional agreement with De Beers
Consolidated Mines Limited ('De Beers') to acquire the mining and associated
capital assets ('the Assets') previously used by De Beers in the operation of
the Koffiefontein diamond mine ('Koffiefontein') in South Africa. The addition
of the Koffiefontein mine to Petra's South African portfolio will serve to
significantly increase production and will also augment revenue by increasing
the average price per carat received; the diamonds are of exceptional quality
and we expect to achieve an average price of US$190 per carat. The mine is well
established and we believe there to be at least another 15 years of underground
mine life. In addition there are in excess of 50 million tonnes of untreated
primary tailings. The addition of Koffiefontein to the South African portfolio
illustrates Petra's ability to operate larger mines and management will actively
look to acquire similar operations.
The consideration for the Assets is R81.9 million ($11.61 million), to be
settled by Petra assuming De Beers' rehabilitation obligations at Koffiefontein,
which amount to R80 million ($11.34 million), plus the payment in cash by Blue
Diamond Mines (Petra's operating subsidiary in South Africa) to De Beers of R1.9
million ($269,000).
Petra plans to produce around 100,000 carats per annum from the mine, with 70%
attributable, the balance being allocated to our Koffiefontein Black Economic
Empowerment partners.
Petra has been, with permission from the Department of Minerals and Energy in
South Africa, maintaining the cave at Koffiefontein since July 2006 and the
costs of this maintenance and drawing the corresponding ore has been expensed in
the period. When production commences at the mine, which is expected to be
shortly, and this stockpiled ore is processed through the plant, gross profit
will be enhanced as a significant portion of the mining costs have already been
expensed as care and maintenance costs (6 months December 2006: US$1,25m).
Kono Project - Sierra Leone
Petra is very pleased to have delivered on its goal of first diamond recovery at
the Kono project in June 2006. Trenching continues on the various fissure
systems with the objective of establishing the continuity, width and grade of
each of these deposits. Two bulk sample shafts are down 30 metres and test
shafts are being excavated elsewhere on the concession areas. These bulk shafts
allow trial mining to take place thus getting a realistic sense of mining
conditions, grade, deposit continuity and costs. Fissure widths of up to 1.7
metres have been discovered and work is in progress to find and determine a
particular fissure or set of fissures that could be economic to mine. Mano River
Resources continues to co-fund the project, with Petra being the majority 51%
partner.
Calibrated Diamonds
In November 2006, Petra acquired Calibrated Diamonds Integrated Holdings
('CDIH'), a business focused on the cutting and polishing of rough diamonds
utilising a unique process developed by CDIH which allows the company to cut
diamonds to a very high and consistent standard.
The deal was significant for Petra as it is not only an avenue for Petra to
increase its revenues but also vertically integrates the company. The
possibility exists to significantly increase revenues by beneficiating the
product as by world wide standards around 50% gross value uplift can be achieved
by cutting and polishing a stone. The next step will see Petra set up a fully
fledged polishing and cutting business and operate this as a stand alone
business.
The move is also important as it consistent with Petra's commitment to operating
ethically in Africa. By beneficiating our rough diamond production in its
country of origin, we will be able to eventually bring further employment
opportunities, revenues and taxes directly to those African producer nations, as
well as helping to develop further skills base as part of a more sustainable
economy.
ASX Listing
Notice was given during the period that Petra would cease to trade on the
Australian Stock Exchange in March 2007. As less than 10% of Petra's share
holder base is in Australia we felt that due to the size of the company and the
complexities involved in working with two exchanges, a single listing would be
preferable.
Conclusion
The Company continues to grow rapidly and the coming six months will see the
first bulk sample results coming out of Alto Cuilo. Production will increase
from South Africa as Koffiefontein starts to add its product to the mix.
Botswana and Sierra Leone will be aggressively explored with the aim of getting
further production onto the table. We also hope to see the establishment of
Petra's first cutting and polishing factory in South Africa.
The Company has a strong treasury with nearly US$20 million in the bank and
increasing revenues from operations in South Africa. Underpinning all of the
above is a buoyant diamond market responding to the fundamentals of a
supply-demand market. The future for diamonds as an investment looks promising.
Adonis Pouroulis, Chairman
28 February 2007
For further information, please contact:
Cathy Malins / Annabel Leather Telephone: +44 (0) 20 7851 7480
Parkgreen Communications, London
PETRA DIAMONDS LIMITED
CONSOLIDATED INCOME STATEMENT
FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2006
Notes (Unaudited) (Unaudited) (Audited)
1 July 2006 - 1 July 2005 - 1 July 2005 -
31 December 2006 31 December 2005 30 June 2006
$ $ $
Revenue 8,268,611 9,717,150 20,868,757
Cost of Sales (9,831,860) (10,602,922) (23,178,587)
Gross (loss) (1,563,249) (885,772) (2,309,830)
Exploration expenditure (2,440,798) (1,305,480) (4,924,437)
Operating expenditure (5,840,463) (158,956) (12,596,449)
Financial income 113,814 252,363 411,107
Financial expense (300,784) (278,449) (565,201)
Net financing (costs) 6 (489,730) (26,086) (154,094)
Loss before tax (10,334,240) (2,376,294) (19,984,810)
Income tax 864,681 427,547 1,120,354
Loss for the period (9,469,559) (1,948,747) (18,864,456)
Basic and diluted loss per share - pence 7 (6.33) (1.40) (13.11)
CONSOLIDATED STATEMENT OF TOTAL RECOGNISED INCOME AND EXPENSE
FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2006
(Unaudited) (Unaudited) (Audited)
1 July 2006 - 1 July 2005 - 1 July 2005 -
31 December 2006 31 December 2005 30 June 2006
$ $ $
Loss for the period (9,469,559) (1,948,747) (18,864,456)
Exchange adjustments on translation of
subsidiary and branch undertakings
recognised directly in equity 8,283,906 1,791,775 1,561,653
Total recognised income and expenses (1,185,653) (156,972) (17,302,803)
PETRA DIAMONDS LIMITED
CONSOLIDATED BALANCE SHEET
AT 31 DECEMBER 2006
Notes (Unaudited) (Unaudited) (Audited)
31 December 31 December 30 June
2006 2005 2006
$ $
$
ASSETS
Property, plant and equipment 68,644,181 78,049,279 66,045,627
Intangible assets 5 14,308,597 16,227,462 13,105,561
Investments - available for sale 1,371,372 1,204,560 1,271,410
Investments - other 4,785,697 - 4,785,697
Trade and other receivables 200,576 187,349 164,402
Total non-current assets 89,310,423 95,668,650 85,372,697
Inventories 4,653,190 2,513,834 2,197,605
Trade and other receivables 4,030,737 2,953,251 2,760,378
Cash and cash equivalents 19,215,929 12,166,586 7,019,644
Total current assets 27,899,856 17,633,671 11,977,627
Total assets 117,210,279 113,302,321 97,350,324
EQUITY AND LIABILITIES
Equity
Share capital 9 29,522,189 25,524,177 27,031,103
Share premium account 10 134,654,784 116,341,557 123,189,903
Foreign currency translation reserve 10 (5,742,819) 5,678,357 2,541,087
Share based payment reserve 10 1,196,715 787,579 972,962
Other reserve 10 4,003,682 - -
Accumulated loss 10 (91,078,226) (62,277,053) (81,608,667)
Total equity 72,556,325 86,054,617 72,126,388
Liabilities
Interest-bearing loans and borrowings 3,115,295 6,061,774 2,914,960
Convertible bond 8 16,299,078 - -
Trade and other payables 2,021,556 816,231 867,823
Provisions 1,824,427 1,871,012 1,697,756
Deferred tax liabilities 9,713,898 12,073,847 9,932,634
Total non-current liabilities 32,974,254 20,822,864 15,413,173
Interest-bearing loans and borrowings 3,264,394 911,152 1,149,646
Trade and other payables 6,560,671 4,185,058 6,658,735
Provisions 1,854,635 1,328,630 2,002,382
Total current liabilities 11,679,700 6,424,840 9,810,763
Total liabilities 44,653,954 27,247,704 25,223,936
Total equity and liabilities 117,210,279 113,302,321 97,350,324
PETRA DIAMONDS LIMITED
CONSOLIDATED CASH FLOW STATEMENT
FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2006
Notes (Unaudited) (Unaudited) (Audited)
1 July 2006- 1 July 2005- 1 July 2005 -
31 December 2006 31 December 2005 30 June 2006
$ $ $
Loss after taxation for the period (9,469,559) (1,948,747) (18,864,456)
Depreciation of property plant and equipment 28,807 538,120 35,687
- exploration
Depreciation of property plant and equipment 2,784,064 2,745,547 5,630,717
- mining
Depreciation of property plant and equipment 16,453 18,265 40,573
- other
Amortisation of intangible assets 5 1,995,688 1,023,847 2,832,355
Loss/(Profit) on sale of property plant and - (5,828) 26,717
equipment
Interest received (113,814) (252,363) (411,107)
Interest paid 300,784 278,449 565,201
Deemed interest paid - Convertible bond 302,760 - -
Foreign exchange (gain)/loss 1,747,930 (4,105,133) 6,114,780
Share based payment provision 223,753 241,909 -
Present value adjustment on rehabilitation 73,857 66,555 140,783
provision
Operating loss before working capital changes (2,109,277) (1,399,379) (3,888,750)
Decrease/(increase) in trade and other (1,334,699) (176,687) 140,515
receivables
(Decrease) / increase in trade and other 1,294,367 (2,588,474) (3,604,742)
payables
(Increase) in inventories (2,801,123) (1,216,480) (792,440)
Cash utilised in operations (4,950,732) (5,381,020) (8,145,417)
Interest paid (300,784) (278,449) (565,201)
Taxation movement (864,681) (427,547) (1,120,354)
Net cash utilised by operating activities (6,116,197) (6,087,018) (9,830,972)
Cash flows from investing activities
Proceeds from sale of property, plant and - 56,287 41,447
equipment
Acquisition of subsidiary net of cash 4 (2,334,665) 5,560,464 5,560,464
acquired
Interest received 113,814 252,363 411,107
Increase in investments (99,960) (1,271,410) (1,271,410)
Acquisition of property, plant and equipment (1,971,552) (3,268,245) (4,152,748)
Development expenditure (1,522,980) (784,432) (4,069,863)
Net cash from investing activities (5,815,343) 545,027 (3,481,003)
Cash flows from financing activities
Net proceeds from the issue of share capital 2,075,106 - 469,404
Increase/(decrease) in long term borrowings 22,293,600 (9,781,066) (7,605,319)
Net cash from financing activities 24,368,706 (9,781,066) (7,135,915)
Net increase/(decrease) in cash and cash 12,437,166 (15,323,057) (20,477,890)
equivalents
Cash and cash equivalents at beginning of the 7,019,644 27,591,394 27,591,394
period
Effect of exchange rate fluctuations on cash (240,881) (101,751) (123,860)
held
Cash and cash equivalents at end of the 19,215,929 12,166,586 7,019,644
period
PETRA DIAMONDS LIMITED
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTH PERIOD ENDED 31 DECEMBER 2006
1. ACCOUNTING POLICIES
The interim results, which are unaudited, have been prepared in accordance with
International Financial Reporting Standards (IFRS) adopted by the International
Accounting Standards Board (IASB). The interim financial statements have been
prepared in accordance with the requirements of International Accounting
Standard 34. This interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this report is to
be read in conjunction with the Annual Report for the year ended 30 June 2006
and any public announcements made by the Company during the interim reporting
period.
The unaudited interim financial statements for the six months ended 31 December
2006 do not constitute statutory accounts and have been drawn up using
accounting policies and presentation consistent with those applied in the
audited accounts for the year ended 30 June 2006 as adjusted for the adoption of
any new IFRS's which are applicable to the group for the year ended 30 June
2007.
The financial information for the year ended 30 June 2006 has been extracted
from the statutory accounts for that period. The auditors report for the year
ended 30 June 2006 was unqualified.
The financial information for the 6 months ended 31 December 2005 has been
extracted from the interim results released to 31 December 2005 after the
adjustment for the adoption of IFRS 2 and adopting the US Dollar as the
functional currency. The interim results to 31 December 2005 were translated at
a rate of US$1.72 to £1 for balance sheet items and average rate of US$1.76 to
£1 for income statement items.
2. DIVIDENDS
No dividends were proposed or paid during the period.
3. SEGMENTAL INFORMATION
The Group comprises the following business segments:
Mining - extraction and sale of rough diamonds from mining operations in South
Africa.
Exploration - exploration operations carried out in Angola, Sierra Leone,
Botswana and South Africa.
Beneficiation - cutting and polishing of rough diamonds.
Business segments Mining Exploration Beneficiation Consolidated
1 July 2006 - 1 July 2006 - 1 July 2006 - 1 July 2006 -
31 December 31 December 31 December 31 December
2006 2006 2006 2006
$ $ $ $
Revenue from external customers 8,268,611 - - 8,268,611
Gross loss (1,563,249) - - (1,563,249)
Segment result (3,335,440) (6,424,202) (84,868) (9,844,510)
Net financing income (447,074) (42,656) - (489,730)
Income tax 864,681 - - 864,681
Loss for the period (2,917,833) (6,466,858) (84,868) (9,469,559)
Business segments Mining Exploration Beneficiation Consolidated
1 July 2005 - 1 July 2005 - 1 July 2005 - 1 July 2005 -
31 December 31 December 31 December 31 December
2005 2005 2005 2005
$ $ $ $
Revenue from external customers 9,717,150 - - 9,717,150
Gross loss (885,772) - - (885,772)
Segment result 511,117 (2,861,325) - (2,350,208)
Net financing income/(cost) (183,964) 157,878 - (26,086)
Income tax 427,547 - - 427,547
Loss for the period 754,700 (2,703,447) - (1,948,747)
Business segments Mining Exploration Beneficiation Consolidated
1 July 2005 - 1 July 2005 - 1 July 2005 - 1 July 2005 -
30 June 30 June 30 June 30 June
2006 2006 2006 2006
$ $ $ $
Revenue from external customers 20,868,757 - - 20,868,757
Gross loss (2,309,829) - - (2,309,829)
Segment result (4,862,172) (14,968,544) - (19,830,716)
Net financing income/(cost) (1,178,884) 1,024,790 - (154,094)
Income tax 1,120,354 - - 1,120,354
Loss for the period (4,920,702) (13,943,754) - (18,864,456)
4. ACQUISITION OF SUBSIDIARY
On 27 November 2006, the Company acquired the issued share capital in Calibrated
Diamonds Investment Holdings (Pty) Limited ('CDIH'), for $2,334,665, satisfied
by a cash payment. CDIH is focused on the cutting and polishing
('beneficiation') of rough diamonds utilising a unique process developed by the
CDIH Group, which enables CDIH to produce polished diamonds of a very high and
consistent standard. In the one month to 31 December 2006, CDIH made a loss,
before depreciation and amortisation, of $81,393. If the acquisition had
occurred on 1 July 2006, the Group's loss for the period ending 31 December 2006
would have increased by $551,960.
Effect of the acquisition
The acquisition had the following effect on the Group's assets and liabilities.
CDIH's net assets at acquisition date: Book Values Fair value Carrying Values
Adjustments
$ $ $
Consolidated fair value of net assets of entity
acquired:-
Intellectual property 362,689 2,447,300 2,809,989
Plant and equipment 283,985 283,985
Cash assets 9,185 9,185
Receivables 30,446 30,446
Inventory 345,537 345,537
Accruals and payables (62,079) (62,079)
Non interest bearing non-current liabilities (1,082,398) (1,082,398)
Consideration settlement satisfied in cash (112,635) 2,447,300 2,334,665
The fair value adjustment of $2,447,300 arose as a result of the premium attributable to the
Intellectual Property purchased from Calibrated Diamonds Investment Holdings (Pty) Limited. The
allocation of the premium to intellectual property is deemed to be final.
5. INTANGIBLE ASSETS
Goodwill Mineral Intellectual Prospecting Total
rights Property licences
$ $ $ $ $
Cost
At 1 July 2006 8,671,552 152,916 - 15,927,538 24,752,006
Transfer to property plant - - - - -
and equipment
Exchange differences - - - 351,655 351,655
Acquisition by business - - 2,809,989 - 2,809,989
combination
At 31 December 2006 8,671,552 152,916 2,809,989 16,279,193 27,913,650
Amortisation
At 1 July 2006 (8,671,552) (152,916) - (2,821,977) (11,646,445)
Exchange differences - - - 37,080 37,080
Provided in the period - - (1,995,688) (1,995,688)
-
At 31 December 2006 (8,671,552) (152,916) - (4,780,585) (13,605,053)
Net book amount 31 December - - 2,809,989 11,498,608 14,308,597
2006
Net book amount 30 June 2006 - - 13,105,561 13,105,561
-
Goodwill Mineral Intellectual Prospecting Pre-production Total
rights Property licences expenditure
$ $ $ $ $ $
Cost
At 1 July 2005 - - - - 335,947 335,947
Transfer to property - - - - (335,947) (335,947)
plant and equipment
Exchange differences - - - (368,949) - (368,949)
Acquisition by business - - - 17,620,258 - 17,620,258
combination
At 31 December 2005 - - - 17,251,309 - 17,251,309
Amortisation -
At 1 July 2005 - - - - - -
Exchange differences - - - - - -
Provided in the period - - (1,023,847) - (1,023,847)
-
At 31 December 2005 - - - (1,023,847) - (1,023,847)
Net book amount 31 - - - 16,227,462 - 16,227,462
December 2005
Net book amount 30 June - - - 335,947 335,947
2005 -
1 July 2006 - 1 July 2005 - 1 July 2005
31 December 31 December - 30 June
2006 2005 2006
$ $ $
6. NET FINANCING COSTS
On bank loans and overdrafts (263,795) (190,915) (412,485)
On convertible bond (302,760) - -
Other debt finance costs (36,989) (87,534) (152,716)
Financial expense (603,544) (278,449) (565,201)
Interest received 113,814 252,363 411,107
(489,730) (26,086) (154,094)
1 July 2006 - 1 July 2005 - 1 July 2005 -
31 December 31 December 30 June
2006 2005 2006
$ $ $
7. LOSS PER SHARE
Loss for the period (9,469,559) (1,948,747) (18,864,456)
Shares Shares Shares
Basic weighted average number of ordinary shares in 149,679,152 139,565,621 143,916,416
issue
Cents Cents Cents
Basic loss per share - pence (6.33) (1.40) (13.11)
Due to the Group's loss for the period, the diluted
loss per share is the same as the basic loss per
share.
8. CONVERTIBLE NOTES AND BOND
On 19 September 2006 the Company issued a US$20 million unsecured interest free
convertible bond ('the Convertible').The Convertible is convertible at an
exercise price of 130 pence per Petra share. If not converted, the Convertible
is repayable in full on 18 September 2009. On 29 September 2006 the Company drew
down on the Convertible. The Convertible is exercisable at the election of the
holder.
31 December 31 December
2006 2005
$ $
Movements in convertible notes and bond
Balance at beginning of period - 2,206,678
Issue of convertible bond 20,000,000 -
Equity portion (4,003,682) -
Interest amortised for the period 302,760 -
Exchange differences - (36,953)
Redeemed during the period - (1,273,110)
Converted to ordinary Shares - (896,615)
Balance at the end of period 16,299,078 -
9. ISSUED CAPITAL
Number of 31 December Number of shares 31 December
shares 2006 2005
$ $
Authorised - ordinary shares of 10p each
As at 31 December 2005 and 31 200,000,000 35,982,000 200,000,000 35,982,000
December 2006
Issued and fully paid
At 1 July 148,825,098 27,031,103 130,949,456 23,500,190
Allotments during the period 1,867,509 2,491,086 16,365,939 1,840,179
Conversion of convertible notes - - 1,011,993 183,808
At 31 December 150,692,607 29,522,189 148,327,388 25,524,177
10. RESERVES
Share premium Foreign currency Share based Other Accumulated
account translation payment reserve reserve loss
reserve
$ $ $ $ $
6 Month period ending 31 December
2005:
At 1 July 2005 101,775,127 4,102,740 354,670 - (62,550,955)
Implementation of IFRS 2 - - 197,409 - (197,409)
Restated balance at 1 July 2005 101,775,127 4,102,740 552,079 - (62,748,364)
Loss for the period - - - - (1,948,747)
Equity based share options - - 241,909 - -
Exchange differences - adoption of (4,695,321) (216,158) (6,409) - 2,420,058
US$ reporting currency
Exchange differences - 1,791,775 - - -
Premium allotments during the year 18,600,255 - - - -
Share issue costs (56,238) - - - -
Convertible notes issued 717,734 - - - -
At 31 December 2005 116,341,557 5,678,357 787,579 - (62,277,053)
6 Month period ending 31 December
2006:
At 1 July 2006 123,189,903 2,541,087 972,962 - (81,608,667)
Loss for the period - - - - (9,469,559)
Equity portion of convertible bond - - - 4,003,682 -
Equity based share options - - 223,753 - -
Exchange differences 9,685,360 (8,283,906) - - -
Premium allotments during the year 1,792,182 - - - -
Share issue costs (12,661) - - - -
At 31 December 2006 134,654,784 (5,742,819) 1,196,715 4,003,682 (91,078,226)
11. POST-BALANCE SHEET EVENTS
Koffiefontein
The South African Competition Commission has approved the acquisition of the
assets associated with Koffiefontein diamond mine ('Koffiefontein') by the
Company's wholly owned subsidiary, Blue Diamond Mines (Pty) Limited ('BDM'),
from De Beers Consolidated Mines Limited ('De Beers'). The approval was one of
the conditions precedent for completion of the acquisition.
12. CONTINGENT LIABILITIES
Acquisition of CDIH
As part of the CDIH acquisition a deferred consideration is payable should
agreed production threshold levels be achieved using the CDIH cutting
technology.
The deferred consideration is triggered in four stages, when CDIH cuts rough
input of four threshold levels, being 2,500, 5,000, 7,500 and 10,000 carats per
month, for a consecutive period of two months in each case and will be settled
by;
(i) the issue of warrants over 750,000 Petra shares per threshold level at an
exercise price of 114.5 pence per share (the closing mid market price on 2
October 2006, the day prior to the signing of the heads for the transaction)
(subject to the approval of the granting of such warrants by the South African
Reserve Bank), or at Petra's election (or if Reserve Bank approval is not
received), by way of a cash amount equivalent to the notional gain in the value
of the warrants had they been granted; and
(ii) the payment of an amount based on the EBITDA of CDIH. This amount will be
calculated as a three times multiple of 28.36% of the EBITDA of CDIH when each
of the above threshold levels is met, less any such EBITDA payments already made
in respect of meeting earlier thresholds.
This information is provided by RNS
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