Namco’s diamond production provides a glimmer

With all four of its vessels afloat, Namibian Minerals (NMR-T) enjoyed increased production during the three months ended June 30.

The company’s MV Kovambo, the support vessel for the Namssol I seabed crawler, returned to action in June after repairs to the crawler, which was damaged in a mining face collapse in early 2001.

The Kovambo chipped in 1,235 carats during the second-quarter, which saw a total of 46,379 carats recovered. The bulk of the stones were collected by the MV Ya Toivo, which hauled in 38,033 carats. The MV Namibian Gem contributed 6 872 carats and the MV Zacharias contributed 239 carats from sampling activity. The haul brings to 88,635 carats production for the first half of 2001 – more than tripling the 24,500 carats retrieved in all of 2001.

Still, Namco suffered a second-quarter loss of US$24.9 million (or 25 per share), compared with a year-ago loss of US$12.9 million (17 per share). The recent quarter’s loss includes an impairment provision relating to goodwill amounting to just less than US$15.7 million. Namco decided to reduce to nil the carrying value of its goodwill based on a lowering of projected cash flow from its acquisition of Ocean Diamond Mining. The increased loss is also attributed to higher direct production costs with the re-commissioning the MV Kovambo and increased sampling activity aboard the MV Zacharias.

Revenue between the two periods climbed to $5.7 million on the sale of 35,461 carats, compared with revenue of US$1.5 million from the sale of 9,120 carats. Direct production costs climbed to US$10 million from US$8.4 million.

For the first half of 2002, Namco’s loss came to US$32.9 million (33 per share) on revenue of US$12 million, compared with a year-ago loss of US$25.1 million (40 per share) on US$6.2 million. Direct production costs fell to $18.4 million from $19.2 million.

At the end of June, Namco’s working capital deficit stood at US$9.6 million, nearly a third of what it was a year earlier, thanks to the rescheduling of shareholder loans and the reallocation of the current portion of long-term bank debt to long-term liabilities.

At quarter’s end, Namco had US$2.5 million in cash and diamond stocks containing 28,739 carats.

Looking ahead, Namco’s CEO, Greg Walker, said. “We anticipate further improvements in diamond production and the Company’s revenue position during the third quarter. The company still requires additional funding to support its resource development program and discussions are continuing with the company’s senior lenders and principal shareholder, LL Mining Corp.”