Stronger production and higher realized prices enabled marine diamond miner
Earnings topped US$17.1 million (or 43 per share) on 1999 revenue of US$42 million, compared with earnings of US$3.1 million (8 per share) on US$13 million in the final seven months of 1998. (Namibian changed its reporting period to Dec. 31.) Better equipment management helped keep expenses at bay.
Namibian cranked out 273,700 carats in 1999, or nearly three times as much as it did in all of 1998, when 101,100 carats were mined. The gems also fetched 7% more on the market, averaging US$151 per carat.
Earnings in the final three months of 1999 totalled US$1.1 million on revenue of US$8.4 million; this was lower than anticipated, owing to a loss of two months of production in the previous quarter, as a result of a port call. However, production returned to normal levels in the recent quarter, totaling 65,900 carats.
Namibian owes its newfound success to a remote-controlled, seabed crawler known as “NamSSol.” Unlike conventional techniques, the proprietary device creates its own suction while breaking through hard overburden to mine the most profitable areas with considerable precision.
Construction of a second, larger system is under way, with the 100-ton-per-hour marine diamond-processing plant now 20% complete. Land-testing of Nam II, the submersible pump, is scheduled for May, and modifications to the 8,000-ton support vessel are expected to wrap up in the third quarter.
In October 1999, Namibian took over Ocean Diamond Mining Holdings (ODM) by increasing its ownership to 92.5%. In addition to contributing 17,200 carats to 1999 output, ODM quadrupled the size of the company’s marine concessions while increasing its resources by nearly one-third.
“Nineteen ninety-nine was a year of outstanding growth,” says Namibian CEO Alastair Holberton. “Our NamSSol produced more than any other single diamond mining system operating off the African coast.”
Namibian financed the US$60-million takeover through a combination of internal cash, debt and equity. In 2000, another US$4 million will be spent upgrading the three air-lift ODM vessels, which, combined with Nam II, should enable the company to produce 400,000 carats by year-end.
Namibian now holds more than 26,000 sq. km of marine concessions off the coasts of Namibia and South Africa. Resources total a combined 3.67 million carats, though most are found in Namibian territorial waters, where mining is focused.
At year-end, Namibian had US$20 million in cash and working capital of US$1.68 million. The company’s long-term debt totalled US$14.3 million, and it had US$2.2 million in deferred taxes.
Namibian entered the new year with 33,200 carats in stockpile.
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