Tahera Corporation (TSE: TAH) - Interim results for the third quarter ended September 30, 1999 |
11/26/1999 |
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TORONTO, Nov. 26 /CNW/ -
Summary of Financial Results
Operations
For the three months ended September 30, 1999 Tahera Corporation('Tahera') recorded a loss of $1,035,000 or $0.007 per share. As theamalgamation of Lytton Minerals Limited and New Indigo Resources Inc. to formTahera Corporation has been accounted for as a purchase transaction, Tahera'sloss in the third quarter of 1999 is compared to Lytton's loss for the thirdquarter of 1998 which was $35,915,000 or $0.31 per share. Comparable figuresfor the first nine months of 1999 and 1998 were a loss of $2,401,000 ($0.016per share) and a loss of $35,557,000 ($0.307 per share) respectively. The mostsignificant item affecting the 1998 results was the write down of the carryingvalue of the Company's mineral properties for $35.6 million which was recordedin the third quarter of 1998.
Operating expenses for the third quarter of 1999 were $1,079,000 comparedto $1,184,000 in 1998. For the first nine months of 1999, operating expensestotalled $2,733,000 versus $2,691,000 in the comparable 1998 period.
Financing
On August 4, 1999 Tahera completed a financing consisting of a privateplacement of special notes exchangeable for secured convertible debentures anda secured convertible debenture for a total amount of $3,417,000. Proceeds ofthe financing were used for exploration and development activities at theCompany's Jericho Diamond Project and for general working capital purposes. OnNovember 17, 1999 Tahera received $2,300,000 from the sale of its bulk sampleprocessing facility to Winspear Resources Ltd.
Jericho Diamond Mine Development Project
The Jericho Diamond Project, wholly owned by Tahera Corporation, islocated in the new Territory of Nunavut, approximately 420 km northeast ofYellowknife, NWT, and 170 km north of Ekati, Canada's first diamond mine.
Feasibility work to determine the economics of constructing the JerichoDiamond Project is continuing, and SRK Consulting and DRA Mineral Plant DesignEngineers are in the final stages of completing a pre-feasibility study forthe project. The Jericho Diamond Project is centered on the Jericho pipe, aland based kimberlite located 28 km northwest of Lupin Gold Mine (owned byEcho Bay Mines Ltd.).
Tahera is encouraged by the feasibility work performed to date on theJericho Diamond Project and is planning, subject to completing the feasibilitystudy and receiving regulatory approvals, the construction of a full scalediamond processing plant to treat material from the proposed Jericho DiamondMine. The full-scale plant will be partially located in the building at theLupin Mine Site that is currently occupied by the bulk sample processingfacility, subject to implementing the Facilities Use Agreement between Taheraand Echo Bay. The proposed full-scale diamond processing plant will alsoenable Tahera to treat bulk sample material from future kimberlitediscoveries.
Exploration
Tahera's wholly owned landholdings in Nunavut Territory are subdividedinto four main properties: the Jericho Group, the Contwoyto Group, theBurnside Group, and the Northern Group. In total, Tahera has interests inapproximately 700,000 hectares in the Northwest Territories and Nunavut.
Jericho Group
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Three diamondiferous kimberlites (Jericho or JD-1, JD-2 and JD-3) havebeen discovered thus far on the 93,000 hectare Jericho Group. Tahera's 1999summer exploration program included a comprehensive mapping and samplingprogram, and ground geophysical surveys over a large portion of the JerichoGroup. Two priority target areas - the Jericho West area and the Bird Lakearea have been selected for follow-up during the winter 2000 explorationprogram. These areas were chosen due to the abundance of kimberlite indicatorminerals present, coupled with the fact that the target areas lie in closeproximity to the Jericho kimberlite. Following further data analysis, targetswill be prioritized for an exploration drilling program in early 2000.
Tahera is focused on discovering more kimberlites in close proximity tothe Jericho kimberlite to provide additional material for the proposed JerichoDiamond Project.
Contwoyto Group
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Tahera's 1999 summer exploration program over the Contwoyto Group claimsincluded a comprehensive mapping and sampling program, and ground geophysicalsurveys over selected areas. An extensive kimberlite float train wasprospected and extended to 18 km in a north south direction and up to 3 kmwide in places. Due to the abundance of kimberlite indicator minerals andkimberlite float mapped, the Contwoyto area has been selected as a priorityarea for follow-up during the winter 2000 exploration program.
Contwoyto-1 Mini-bulk Sample
Tahera completed processing the mini-bulk sample extracted from theContwoyto-1 kimberlite in early November 1999. The 50.1 tonne kimberlitesample was processed at Tahera's 1 tonne per hour DMS (dense media separation)plant in North Vancouver using a square screen bottom cut-off size of 1.18 mm.In total, 13.60 carats were recovered from 50.1 tonnes of kimberlite treated,for a preliminary diamond grade of 0.27 carats per tonne. Due to therelatively low grade indicated, Tahera does not plan further evaluation of theContwoyto-1 kimberlite at this time.
Burnside Group
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A regional program of mapping and till sampling was performed during thesummer over the Burnside claims. Sample processing and data interpretation areongoing.
Kennecott Joint Venture
Kennecott Canada Exploration Inc. ('Kennecott') is entering the fourthyear of a joint venture agreement with Tahera Corporation. Under theagreement, Kennecott can earn a 50% interest in three extensive propertieslocated in Nunavut and the Northwest Territories by making expenditures of $50million by 2008, of which approximately $14.9 million has been spent to date.Seven kimberlites have been discovered on the Kennecott joint ventureproperties thus far. The 2000 exploration program, budgeted at approximatelyC$2.5 million, will focus on target generation followed by drilling prioritykimberlite targets.
Roundrock Property Joint Venture
Tahera Corporation has a 24.5% interest in the Roundrock property. AshtonMining of Canada Inc., as operator of the joint venture, conducted anexploration program focused on heavy mineral sampling and field investigationof geophysical anomalies in 1999. The winter 2000 exploration program willconcentrate on the area of the diamondiferous Aquila kimberlite, and willconsist of ground geophysical surveys and drilling of priority targets.
Corporate Matters
On September 27, 1999 Tahera Corporation announced the appointment ofAndre Louw as a Director of the corporation. Following the completion ofcertain regulatory matters, Mr. Louw will also be appointed President andChief Operating Officer. Mr. Louw brings a wealth of diamond operations andmarketing experience to Tahera. Glenn Laing resigned from his position asPresident and a Director of Tahera effective September 23, 1999.
In addition to the above appointment, Roy Meade was appointed as aDirector and Deputy Chairman of the corporation in September 1999. Roy Meade,a professional mining engineer with 26 years experience in the miningindustry, will provide technical expertise as coordinator of the JerichoDiamond Project feasibility study. Patricia Sheahan, a geologist and Presidentof Konsult International Inc. has also been appointed as a Director of thecorporation and will assist in directing Tahera's exploration programs in thefuture.
The above appointments reflect Tahera's continued focus on developing itswholly owned Jericho Diamond Project and continuing diamond explorationactivities over its extensive and prospective landholdings.
Year 2000 Readiness
Tahera completed a Y2K Impact Assessment Plan in October 1999. Aninventory of all products and services at the Corporation's two offices whichhave the potential to be impacted by the year 2000 issue was completed and arisk assessment of all of the selected products and services was performed. Inaddition, Tahera has substantially completed a year 2000 product complianceassessment with all of its applicable vendors in order to validate that theproduct is year 2000 compliant. Appropriate recommendations were developed andan implementation plan has been substantially executed. The approximate costof the Y2K assessment was $10,000.
TAHERA CORPORATION
CONSOLIDATED BALANCE SHEETS
(unaudited)
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September 30, December 31,
1999 1998
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ASSETS
Current Assets:
Cash and short-term deposits $ 974,668 $ 3,691,122
Accounts receivable 252,930 147,707
Due from related parties - 5,193,888
Prepaid expenses 365,666 48,019
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1,593,264 9,080,736
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Reclamation Deposit 103,000 -
Exploration and Development Projects 57,297,534 35,117,185
Plant and Equipment 5,076,877 3,437,996
Investment in Equity Affiliates 996,817 897,559
Deferred Financing Costs 599,968 -
Other Investments 17,950 17,950
Deferred Amalgamation Costs - 235,936
----------------------------
$ 65,685,410 $ 48,787,362
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LIABILITIES
Current Liabilities
Accounts payable and accrued liabilities $ 3,049,300 $ 2,040,805
Debenture interest payable 44,391 -
Settlement with Fern Trust - 913,414
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3,093,691 2,954,219
Secured convertible debentures 3,417,000 -
----------------------------
6,510,691 2,954,219
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SHAREHOLDERS' EQUITY
Share Capital
Common shares 62,537,425 82,246,570
Preferred shares 31,042 31,042
Equity component of secured convertible
debentures 265,360 -
----------------------------
62,833,827 82,277,612
Common share purchase warrants - 45,000
----------------------------
62,833,827 82,322,612
Deficit (3,659,108) (36,489,469)
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59,174,719 45,833,143
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$ 65,685,410 $ 48,787,362
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TAHERA CORPORATION
CONSOLIDATED STATEMENTS OF LOSS AND DEFICIT
(unaudited)
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Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
-------------------------------------------------------------------------
Revenues
Interest $ 8,583 $ 137,366 $ 105,991 $ 228,894
Contract
processing 62,227 - 347,561 -
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70,810 137,366 453,552 228,894
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Expenses
Salaries &
benefits 389,025 154,880 912,713 421,158
Legal and audit 149,670 381,885 299,101 477,104
Financing costs 44,809 - 126,093 -
Office & general 135,543 104,949 377,017 657,312
Directors' fees &
expenses 18,014 8,532 178,002 83,532
Depreciation 106,372 186,653 386,782 246,653
Debenture interest
and financing
costs 65,080 - 65,080 -
Travel 130,741 46,768 241,908 208,396
Transfer agent and
listing fees 33,391 7,029 98,897 39,075
Capital tax 5,445 9,000 29,445 27,000
Interest on short
term borrowings 698 1,892 2,302 4,020
Amalgamation costs - 255,378 - 255,378
Consulting - 27,331 16,085 271,701
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1,078,788 1,184,297 2,733,425 2,691,329
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Loss before other
items (1,007,978) (1,046,931) (2,279,873) (2,462,435)
Other Items
Share of loss of
equity affiliates - (392,333) - (47,426)
Gain on sale of
shares of equity
affiliates - 970,236 - 1,936,679
Write down of
exploration and
development
projects - (35,577,221) - (35,577,221)
Gain on dilution
of investment in
equity affiliate - 165,440 - 695,510
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Loss for the
period before
income taxes (1,007,978) (35,880,809) (2,279,873) (35,454,893)
Provision for
income taxes (26,709) (34,000) (120,709) (102,000)
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Loss for the
period (1,034,687) (35,914,809) (2,400,582) (35,556,893)
Deficit
Beginning of
period (2,624,421) (12,822,829) (36,489,469) (13,180,745)
Capital
reduction - - 35,185,943 -
Assigned value
of expired
warrants - - 45,000 -
--------------------------- ---------------------------
End of period $ (3,659,108) $(48,737,638) $ (3,659,108) $(48,737,638)
--------------------------- ---------------------------
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Earnings (loss)
per share $ (0.007) $ (0.310) $ (0.016) $ (0.307)
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TAHERA CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
-------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
1999 1998 1999 1998
-------------------------------------------------------------------------
Cash flows used
in operations
Loss for the
period $ (1,034,687) $(35,914,809) $(2,400,582) $(35,556,893)
Items not
affecting cash:
Depreciation and
amortization 106,372 186,653 386,782 246,653
Debt principle
accretion &
financing costs 20,688 - 20,688 -
Loss on sale of
fixed asset - - 379 -
Share of loss of
equity
affiliates - 392,333 - 47,426
Gain on sale of
shares of
equity affiliate - (970,236) - (1,936,679)
Write off of
deferred
amalgamation
costs - 255,378 - 255,378
Write down of
exploration and
development
projects - 35,577,221 - 35,577,221
Gain on dilution
of investment
in equity
affiliate - (165,440) - (695,510)
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(907,627) (638,900) (1,992,733) (2,062,404)
Changes in non-
cash working
capital items
Accounts
receivable 21,303 (34,975) 69,921 (43,374)
Prepaid expenses 9,022 (12,429) (317,647) (33,093)
Accounts payable
and accrued
liabilities 319,512 108,121 (439,073) 81,868
---------------------------- -------------------------
(557,790) (578,183) (2,679,532) (2,057,003)
---------------------------- -------------------------
Cash flows used
in (from)
investing
activities
Exploration and
development
projects (1,931,783) (1,242,771) (4,241,043) (3,588,442)
Plant and
equipment (85,550) (49,729) (172,252) (344,971)
Proceeds on
sale of fixed
asset - - 14,471 -
Deferred
amalgamation
costs - (2,011) (20,676) (204,937)
Cash acquired on
purchase of New
Indigo Resources
Inc. - - 13,992 -
Investments in
equity
affiliates (15,460) 2,968,510 (99,258) 4,558,143
Reclamation
deposit (35,000) - (103,000) -
---------------------------- -------------------------
(2,067,793) 1,673,999 (4,607,766) 419,793
---------------------------- -------------------------
Cash flows from
(used in)
financing
activities
Due to or from
related parties - (1,056,974) (516,877) 33,959
Issue of common
shares for cash - - 1,981,625 3,943,037
Redemption of
preferred shares - (520) - (520)
Convertible
Debentures - net
of issue costs 3,106,096 - 3,106,096 -
---------------------------- -------------------------
3,106,096 (1,057,494) 4,570,844 3,976,476
---------------------------- -------------------------
Net Increase
(Decrease) in
Cash 480,513 38,322 (2,716,454) 2,339,266
Cash - Beginning
of Period 494,155 2,626,808 3,691,122 325,864
---------------------------- -------------------------
Cash - End of
Period $ 974,668 $ 2,665,130 $ 974,668 $ 2,665,130
---------------------------- -------------------------
-------------------------------------------------------
Balances with
banks $ 920,416 $ 2,665,130 $ 920,416 $ 2,665,130
Short-term
investments $ 54,252 $ - $ 54,252 $ -
--------------------------- --------------------------
974,668 2,665,130 974,668 2,665,130
--------------------------- --------------------------
--------------------------- --------------------------
Tahera Corporation
Consolidated Statements of Cash Flows
September 30, 1999
(Unaudited)
-------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Investing and Financing Activities
(a) During the nine months ended September 30, 1998:
(i) 896,667 common shares were issued at a deemed value of $1.50
per share to purchase assets.
(ii) 217,000 common shares were issued at a deemed value of $0.83
per share to acquire additional lands as part of the amended
Birch Mountain Agreement.
(b) During the nine months ended September 30, 1999:
(i) Lytton Minerals Limited ('Lytton') and New Indigo Resources
Inc. ('New Indigo') amalgamated to form Tahera Corporation
('Tahera') effective February 28, 1999. Tahera issued
115,673,934 common shares to shareholders of Lytton on the
basis of one Tahera share for one Lytton share and
38,621,763 common shares to shareholders of New Indigo on
the basis of 2.43 Tahera shares for each share of New
Indigo, including the shares of Tahera to be issued on the
exercise of 1,000,000 New Indigo Special Warrants. All of
the 1,000,000 New Indigo Special Warrants have been
exercised as of September 30, 1999.
The business combination is accounted for as a purchase
transaction with Lytton being identified as the acquirer and
New Indigo identified as the acquired. The consideration
given has been allocated to the fair value of net assets
acquired as follows:
Fair value of net assets acquired:
Current assets $ 41,011
Plant and equipment 1,835,239
Exploration and development projects 16,949,814
Investments 1
------------
18,826,065
Current liabilities 5,824,280
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$ 13,001,785
------------
------------
Consideration given:
38,621,763 common shares at $0.33 per share $ 12,745,173
Lytton's transaction costs 256,612
------------
$ 13,001,785
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(ii) 5,000,000 common shares were issued at $0.15 per share for
the settlement of $750,000 in legal fees.
(ii) In August 1999, in connection with the issue of secured
convertible debentures in the principal amount of
$3,417,000, Tahera allocated $265,360 to the equity
component of the secured convertible debentures, and
established a deferred financing cost in the same amount.
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For further information: Grant Ewing, Vice President Investor Relations and Corporate Development, Tel: (416) 777-1998, Fax: (416) 777-1898; Email: investor@tahera.com; www.tahera.com
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