Interim Results For The Second Quarter Ended June 30, 1999 Recently Announced Financing Closed |
08/05/1999 |
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Summary of Financial Results
For the three months ended June 30, 1999 Tahera Corporation ("Tahera") recorded a loss of $759,000 or $0.005 per share. As the amalgamation of Lytton Minerals Limited and New Indigo Resources Inc. to form Tahera Corporation has been accounted for as a purchase transaction, Tahera's loss in the second quarter of 1999 is compared to Lytton's income for the second quarter of 1998 which was $729,000 or $0.006 per share. Comparable figures for the first six months of 1999 and 1998 were a loss of $1,366,000 ($0.009 per share) and a gain of $358,000 ($0.003 per share) respectively.
Operating expenses for the second quarter of 1999 were $971,000 compared to $673,000 in 1998. For the first six months of 1999, operating expenses totaled $1,655,000 versus $1,507,000 in the comparable 1998 period.
Tahera completed a private placement of 10 million flow through shares at $0.20 per share for net proceeds of $1,982,000 in May, 1999. As a placement fee, 500,000 warrants were granted, exercisable for an equal number of common shares until May 3, 2001 at $0.23 per share.
Jericho Diamond Project
The Jericho Diamond Project, wholly owned by Tahera Corporation, is located in the new Territory of Nunavut, approximately 420 km northeast of Yellowknife, NWT, and 170 km northeast of Ekati, Canada's first diamond mine.
Feasibility Study Underway
Tahera Corporation commenced a feasibility study on the Jericho Diamond Project in May 1999. The feasibility study will consider the economics of constructing a modest sized diamond mining operation centered on the land-based Jericho kimberlite pipe. A formal project proposal for the Jericho Diamond Project was filed with the relevant authorities in May, 1999. This filing marked the formal commencement of the environmental assessment and regulatory approval process for the proposed project.
The preliminary timetable indicates that commercial diamond production at the Jericho Diamond Project could be achieved by late 2001 or 2002, subject to completion of the feasibility study and the permitting and environmental assessment process.
Contwoyto-1 Kimberlite
During the quarter, additional microdiamond results were returned from caustic fusion analysis of the Contwoyto-1 kimberlite drill core. DDH number C99-11, the second hole processed, returned 657 diamonds (+0.15 mm) from 121.9 kg of drill core. Of the total diamonds recovered, 54 measured greater than 0.5 mm in one dimension.
Based on these favorable results, Tahera has commenced a mini-bulk sampling program on the Contwoyto-1 kimberlite pipe. Approximately 60 tonnes of kimberlite will be extracted to determine the preliminary grade of the pipe. If the results of the mini-bulk sample indicate sufficient diamond grade, current plans call for the extraction of a bulk sample during the winter of 1999/2000. The bulk sample will provide a large parcel of diamonds for valuation purposes. Pending further evaluation, the Contwoyto-1 kimberlite resource may be added to the proposed Jericho Diamond Project mine plan.
Summer Exploration Program
A summer program of geological mapping, prospecting, till sampling and ground geophysics at the Jericho Diamond Project commenced in June 1999. During the program, which is expected to run until the end of August, further delineation of existing kimberlite mineral indicator trains will be performed, and new areas that exhibit anomalous concentrations of kimberlite indicator minerals and kimberlite float will be assessed. Future drill programs will target areas outlined during the current exploration program.
Strategic Alliances Kennecott Joint Venture
Kennecott Canada Exploration Inc. ("Kennecott") is in the third year of a joint venture agreement with Tahera. Under the agreement, Kennecott can earn a 50% interest in three extensive properties (Ice Claims, Rocking Horse Property and the Hood River Property) located in Nunavut and the Northwest Territories by making expenditures of $50 million by 2008, of which approximately $14 million has been spent to date.
Kennecott discovered two new kimberlites during the spring exploration program - the Vega kimberlite on the Ice Claims and the Altair kimberlite on the Rocking Horse Property, bringing the total to seven kimberlites discovered on the Kennecott joint venture properties. Caustic fusion analysis results from both kimberlites are expected in the near future.
During the summer field season, crews will be prospecting and conducting till sampling programs over selected regions of the Rocking Horse and Hood River Properties in an effort to further define areas that are believed to be prospective for additional kimberlite discoveries.
Roundrock Property Joint Venture
The 1999 exploration program, operated by Ashton Mining of Canada Inc. ("Ashton") will focus on mapping, prospecting and detailed sampling in order to further delineate existing kimberlite mineral indicator trains and discern potential new trains in the region. In preparation for future drilling, ground geophysics will also be conducted in select areas. Tahera has a 24.5% interest in the project.
Corporate Matters
The financing announced on July 23, 1999 has been revised to consist of a combination of a private placement of special notes exchangeable for secured convertible debentures and a secured debenture for a total amount of $3,417,000. The financing closed on August 4, 1999. Dundee Securities will receive a placement fee of $140,850.
The convertible debentures for an amount of $2,817,000 will have a 5 year term and an 8% coupon with interest payable semi-annually. Subject to regulatory approval, Tahera may elect to satisfy its obligation to pay the interest portion of the convertible debentures through the issuance of common shares. The convertible debentures will be convertible into common shares on the basis of 8000 common shares per $1000 convertible debentures at the option of the holder ($0.125 per common share). The convertible debentures will not be redeemable before August 4, 2000. Thereafter, the Company may redeem the convertible debentures at its option depending on the then trading price of the Tahera common shares.
The secured debentures for an amount of $600,000 will have a 5 year term and a 9% coupon. Subject to regulatory approval, Tahera may elect to satisfy its obligation to pay the interest portion of the secured debentures through the issuance of common shares. The secured debentures may be converted into common shares subject to shareholder approval within a 90 day period, and are convertible to common shares on the basis of 6450 common shares per $1000 at the option of the holder ($0.155 per common share). They rank pari passu in all respects with the convertible debentures.
Tahera intends to use the proceeds of this financing for the continued exploration of its wholly owned Jericho Properties, to conduct the feasibility study on the Jericho Diamond Project, to complete the mini-bulk sample of the Contwoyto-1 kimberlite pipe and for general working capital purposes.
In light of the above development, Tahera has decided not to proceed with the offering of Class A Units and Class B Units in respect of which it filed a preliminary prospectus dated May 31, 1999 with the British Columbia, Alberta, Ontario and Quebec securities commissions.
For further information, please contact:
Grant Ewing
VP Investor Relations and Corporate Development
Email: investor@tahera.com
Web site www.tahera.com
Tel: (416) 777-1998
Fax: (416) 777-1898
Toll Free: (877) 777-2004
Tahera Corporation (TAH:TSE) is engaged primarily in the exploration for and development of diamond deposits in Canada's Northwest Territories and Nunavut
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