Namco still in the red

Still suffering the lingering effects of an underwater mining accident that damaged its NamSSol seabed crawler in January of this year, Namibian Minerals (NMR-T) has posted a US$940,000 loss for the three months ended September 30.

The loss which translates into 1 per share, compares with a loss of US$$665,000 (1 per share) during the year-ago period. Cash flow from operations swung to the negative side to the tune of US$9 million during the recent quarter, compared with positive cash flow of US$1.7 million a year earlier. Direct production costs nearly doubled to US$8.2 million, from US$4.4 million, as the MV Ya Toivo vessel began production and vessel charter rates increased.

For the first nine months of 2001, Namco’s loss tallied to US$26 million (35 per share), a significant turnaround from year-ago earnings of US$2.6 million (6 per share). Revenue slid to US$10.2 million from US$31.2 million. The number of carats sold was more than halved to 68,000 from 175,800.

Third quarter diamond production amounted to 28,100 carats, well off the 65,000 carats recovered a year earlier. The nine-month total was 52,600 carats, down from 163,500 carats a year earlier.

The sale of 30,600 carats generated US$4 million in revenue during the recent third quarter, down from US$9.3 million on sale of 58,100 carats the previous year. The drop off is attributed to lower diamond prices for smaller stones, commissioning of MV Ya Toivo, limited contribution from the MV Namibian Gem vessel and lack of production from MV Kovambo. During the quarter, the Leviev Group, Namco’s largest shareholder, began exclusively marketing the company’s diamond production.

The MV Ya Toivo, the support vessel to the Nam2 mining system, performed below expectations thanks to delays in resource delineation and technical obstacles. Namco says production levels should improve with increased mining availability and better mine planning data obtained from the MV Zacharias program.

Drill sampling on mining licence 51 from MV Zacharias resumed in September after some technical delays early in the quarter. By the end of September, 31 samples (5 sq. metres each) had been taken with the drilling system and 42 completed using the airlift system. So far, Namco has confirmed that mineralization extends for about 1 km south of mined areas in Feature 019 and the adjoining Feature 018 of Mining Licence 51. An 1,100-sq.km area contains some 200 geological features targeted for testing.

Since the end of the quarter, Namco has begun sampling feature 5 in Mining Licence 36A in an area known as Bakers Bay. An ongoing sampling program indicates potential for a significant new mining area. An interim report of results will be available shortly.

In Late September, the junior was granted another month to restructure its debt. The moratorium, which has yet to be ratified by Namibian’s credit insurers, means that repayments on US$21.25 million in outstanding loans will begin at the end of November. The rescheduling terms are being ironed out.

At the end of September, the company had US$2.4 million in cash and US$48.9 million in bank debt.

Namco has 18,000 sq. km of concession, most of which contain geological features only regionally surveyed.

The company recently received a payment of US$9 million from its business interruption claim covering operating costs and a profit element in relation to the damaged NamSSol mining system.