Namco puts subsidiaries in dry dock

Unable to secure additional funding from its bankers and principal lenders, marine diamond miner Namibian Minerals (NMR-T) has been forced to shut down certain of its South Africa and Namibia subsidiaries.

Just days before the announcement, Namco admitted in its third-quarter financial report that it had “grave concerns regarding its ability to sustain exploration and production programs” should the extra funding be unavailable.

Namco had been in talks with its bankers and lenders since the second quarter but was only able to secure a 36-month waiver of royalty payments owed to the government of Namibia. Continuance of that waiver was conditional on new financial support from other lenders.

Adding to the gloom, certain of the company’s South African subsidiaries are subject to taxation queries concerning tax assessments up to 1997. The company’s tax advisors have estimated the potential liability at around US$2-3 million, including penalties and interest.

“The company is working with the South African Revenue Service to resolve this matter,” Namco states.

Meanwhile, the company is reviewing last year’s sampling results from Mining Licence 36A in Baker Bay. Pending re-sampling, the company plans to downgrade areas in question from the probable-reserves category.

The only glimmer of light during the third quarter was record diamond production of 117,050 carats. Nonetheless, the company only managed to eke out a small quarterly profit of US$96,000 (nil per share) on revenue of US$15.2 million, which was still better than the year-earlier loss of US$940,000 (1 per share) on US$4 million. The company’s fleet of vessels ran through US$1.2 million to stay afloat, down from the year-earlier negative cash flow of US$9 million. With the increase in production, direct production costs climbed about US$1.3 million to just under US$9.5 million.

For the first nine months of 2002, Namco’s loss amounted to US$32.8 million (33 per share), compared with a loss of US$26 million (35 per share) during the corresponding period of 2001. Revenue between the two periods nearly tripled to US$27.2 million from US$10.2 million. Direct production costs were little changed at around US$27 million.

The bulk of the quarter’s production found its way from the Nam 2 seabed crawler to the deck of the MV Ya Toivo, which produced 85,444 carats, including a record daily haul of 16,417 carats from Feature 22 on the Hottentot Bay Grant in late July.

At quarter’s end, Namco had US$993,000 in cash and 19,141 carats of diamond stocks, against a working-capital deficiency of US$8.5 million.

In early December, the Toronto Stock Exchange announced it would immediately review Namco’s shares to see if they met the requirements for continued listing. A similar review in May led to the company being delisted from the Nasdaq after its shares failed to exceed the minimum bid price of US$1.

On resuming trading this month, Namco’s shares plummeted a nickel to 4 on a volume of more than a million. Shortly after presstime, on Dec. 11, the shares were half a penny up on their previous close at 4. The company’s shares trade in a 52-week range of 3-32 and have steadily declined since early 2000.