TORONTO, Aug. 20 /CNW/ - Tahera Corporation is focused on exploring its prospective landholdings in Nunavut and the Northwest Territories. In conjunction with this diamond exploration focus, Tahera is pursuing various alternatives to develop its Jericho Diamond Project, including potential joint ventures with major mining companies.
Tahera is continuing to seek regulatory approval for the development of the Jericho Diamond Project as Nunavut's first diamond mine. The initial review of the draft Environmental Impact Statement ("EIS") is ongoing. The final EIS will be submitted for the public hearing process following the initial review period. Tahera now expects to conclude the regulatory approval process for the development of the Jericho Diamond Project by the second quarter of 2002, leading to commercial diamond production as early as 2004.
Summary of Financial Results
For the three months ended June 30, 2001, Tahera recorded a net loss of $838,000 or $0.003 per share compared to a net loss of $1,027,000 or $0.006 per share for the second quarter of 2000. Operating expenses for the second quarter of 2001 were $904,000 compared to $997,000 for the comparable period of 2000.
Flow-Through Financing
----------------------
In August 2001 Tahera completed a flow-through private placement of 8,333,333 Units at $0.18 per Unit for gross proceeds of approximately $1.5 million. Each Unit consists of one flow-through common share and one common share purchase warrant. Each common share purchase warrant is exercisable into an equal number of common shares for a period of two years at $0.25 per share.
Exploration
The Company's summer exploration program on the Jericho properties was mobilized in early August. The program will include extensive regional and follow-up till sampling, and geophysical surveys to further define priority kimberlite target areas. A portable drill rig will be utilized to test
kimberlite targets identified during the program.
Kennecott Joint Venture
Kennecott Canada Exploration Inc. has the option to earn a 62.5% interest in Tahera's Rockinghorse and Hood River diamond exploration properties in Nunavut by funding all costs up to and including bankable feasibility studies.
Two new kimberlites have been discovered on the Rockinghorse property during 2001, including the Anuri kimberlite. Preliminary microdiamond results from the Anuri kimberlite were encouraging, indicating that the kimberlite is diamondiferous. Following additional microdiamond analysis and completion of the current summer exploration program, the next phase of exploration will be
finalized.
Preliminary microdiamond analysis of the Amaraq kimberlite sill, discovered in June 2001, returned one microdiamond from 13.9 kilograms of kimberlite processed. Due to the low diamond count, Kennecott does not plan further work on the Amaraq kimberlite at this time.
BHP Joint Venture
BHP Diamonds Inc. recently advised Tahera that it wishes to enter into a joint venture on Tahera's Ranch Lake kimberlite and ICE Claims. The formal joint venture agreement is currently being finalized. The general terms of the agreement stipulate that BHP fund all exploration and development programs on the property to earn a 60% to 70% interest in the claims.
Appointments
Mr. Joseph Gutnick was appointed President and CEO of Tahera Corporation following the Company's annual meeting held on June 19, 2001. Mr. Gutnick also serves as Chairman of the Board. Mr. Hugo Dummett, a geologist who led the team that was responsible for the discovery of the world class Ekati diamond pipes, and Dr. Stephan Meyer, a geologist who held senior management positions with CRA Limited (merged with Rio Tinto) and Astro Mining for diamond exploration in Australia and overseas, recently joined the Company's board of directors. Both Mr. Hugo Dummett and Dr. Stephan Meyer will serve as technical consultants to Tahera Corporation as the Company continues to explore and develop its extensive diamond landholdings.
To find out more about Tahera Corporation (TSE: TAH), visit our website, www.tahera.com; To view Tahera Landholdings, view http://files.newswire.ca/150/TaheraMap.ppt
AHERA CORPORATION
Consolidated Balance Sheets
(unaudited)
-------------------------------------------------------------------------
June 30, December 31,
2001 2000
-------------------------------------------------------------------------
ASSETS
Current Assets
Cash and short-term deposits $3,387,694 $4,212,500
Accounts receivable 278,738 231,823
Prepaid expenses 250,611 150,725
------------ -------------
3,917,043 4,595,048
Exploration and Development Projects
(note 3) 60,321,048 58,299,231
Fixed Assets 1,192,996 1,289,229
Reclamation Deposits (note 4) 857,805 456,463
Deferred Financing Costs 380,530 442,238
Investments 17,952 17,952
------------ ------------
$66,687,374 65,100,161
------------ ------------
------------ ------------
LIABILITIES
Current Liabilities
Accounts payable and accrued
liabilities $1,174,995 $1,304,091
------------ ------------
1,174,995 1,304,091
Secured Convertible Debentures 3,417,000 3,417,000
------------ ------------
4,591,995 4,721,091
------------ ------------
SHAREHOLDERS' EQUITY
Share Capital (note 5)
Common Shares 76,451,020 73,232,441
Equity component of secured
convertible debentures 265,360 265,360
Preferred shares 30,018 30,018
------------ ------------
76,746,398 73,527,819
Deficit (14,651,019) (13,148,749)
------------ ------------
62,095,379 60,379,070
------------ ------------
$66,687,374 $65,100,161
------------ ------------
------------ ------------
TAHERA CORPORATION
Consolidated Statements of Loss and Deficit
(unaudited)
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------- ---------------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
-------------------------------------------------------------------------
Revenues
Interest $ 73,658 $ 5,451 $ 123,577 $ 16,075
Contract
processing 15,237 - 15,237 -
--------------------------- ---------------------------
88,895 5,451 138,814 16,075
--------------------------- ---------------------------
Expenses
Salaries
and benefits 172,523 192,391 344,557 412,628
Office and
general 191,086 206,310 274,479 340,066
Depreciation 123,272 111,794 237,582 225,836
Debenture
interest and
financing
costs
amortization 100,502 106,696 200,239 213,393
Travel 99,800 154,545 177,601 241,051
Legal and audit 105,434 83,040 142,441 142,181
Directors' fees
and expenses 45,863 29,866 85,560 61,708
Consulting 50,728 1,080 52,828 20,137
Financing cost 22,500 80,266 45,000 117,438
Transfer agent
and listing
fees 4,553 8,745 17,038 19,679
Interest on
short term
borrowings 451 29,945 447 34,453
Capital tax (12,906) (8,067) - 20,583
--------------------------- ---------------------------
903,806 996,611 1,577,772 1,849,153
--------------------------- ---------------------------
Loss for the
Period before
Income Taxes (814,911) (991,160) (1,438,958) (1,833,078)
Provision for
Income Taxes
- Current
(note 6) (23,328) (36,000) (63,312) (90,000)
--------------------------- ---------------------------
Net Loss
for the Period (838,239) (1,027,160) (1,502,270) (1,923,078)
Deficit -
Beginning
of Period (13,812,780) (9,494,232) (13,148,749) (8,598,314)
--------------------------- ---------------------------
Deficit -
End of Period $(14,651,019) $(10,521,392) $(14,651,019) $(10,521,392)
--------------------------- ---------------------------
--------------------------- ---------------------------
Loss per Share
(Basic and
Fully Diluted
- note 2) $ (0.003) $ (0.006) $ (0.006) $ (0.011)
--------------------------- ---------------------------
--------------------------- ---------------------------
TAHERA CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Three Months Ended Six Months Ended
--------------------------- ---------------------------
June 30, June 30, June 30, June 30,
2001 2000 2001 2000
-------------------------------------------------------------------------
Cash flows from
(used in)
operating
activities:
Loss for
the period $ (838,239) $ (1,027,160) $ (1,502,270) $ (1,923,078)
Items not
affecting
cash -
Depreciation 123,272 111,794 237,582 225,836
Debt
principal
accretion
and
financing
costs
amortization 30,854 37,238 61,708 74,476
Debenture
interest
paid by
shares 62,954 - 131,837 -
--------------------------- ---------------------------
(621,159) (878,128) (1,071,143) (1,622,766)
Changes in
non-cash
working
capital items -
Accounts
receivable 125,893 14,355 99,437 467
Prepaid
expenses (5,861) (53,884) (99,886) (65,879)
Accounts
payable
and accrued
liabilities (67,667) 394,460 (49,386) 599,454
--------------------------- ---------------------------
(568,794) (523,197) (1,120,978) (1,088,724)
--------------------------- ---------------------------
Cash flows from
(used in)
investing
activities:
Exploration and
development
projects (1,307,174) (570,601) (2,166,945) (1,449,310)
Reclamation
deposits (103,296) (103,979) (401,342) (362,929)
Fixed assets (69,854) (17,718) (222,283) (50,989)
Proceeds
on sale of
investment in
equity
affiliate - - - 125,000
--------------------------- ---------------------------
(1,480,324) (692,298) (2,790,570) (1,738,228)
--------------------------- ---------------------------
Cash flows from
(used in)
financing
activities:
Issue of
common
shares
for cash 3,250,000 - 3,250,000 504,000
Share issuance
costs (163,258) (151,243) (163,258) (151,243)
Secured
convertible
debentures
(net) - 1,450,000 - 1,450,000
Redemption of
preferred
shares - (195) - (520)
--------------------------- ---------------------------
3,086,742 1,298,562 3,086,742 1,802,237
--------------------------- ---------------------------
Net Increase
(Decrease)
in Cash 1,037,624 83,067 (824,806) (1,024,715)
Cash - Beginning
of Period 2,350,070 25,889 4,212,500 1,133,671
--------------------------- ---------------------------
Cash - End
of Period $ 3,387,694 $ 108,956 $ 3,387,694 $ 108,956
--------------------------- ---------------------------
--------------------------- ---------------------------
Cash and cash
equivalents
are
comprised of:
Cash $ 183,756 $ 108,956 $ 183,756 $ 108,956
Short-term
deposits 3,203,938 - 3,203,938 -
--------------------------- ---------------------------
$ 3,387,694 $ 108,956 $ 3,387,694 $ 108,956
--------------------------- ---------------------------
--------------------------- ---------------------------
TAHERA CORPORATION
Consolidated Statements of Cash Flows
(unaudited)
-------------------------------------------------------------------------
Supplemental Disclosure of Non-Cash Investing and Financing Activities
The following transactions are not reflected in the consolidated
statements of cash flows:
During the period ended June 30, 2001:
(i) The Company issued common shares for the payment of debenture
interest (note 5(b)).
During the period ended June 30, 2000:
(i) The Company issued 898,500 common shares at a price of $0.12 per
share on January 6, 2000 for payment of interest on the convertible
debentures. The share price was determined in accordance with an
agreement between the holder of the debentures and the Company,
which states that the share price is to be based on the aggregate
sale price of all Tahera shares sold or traded during the 20
consecutive trading days ending on the fifth trading day before
December 31, 1999, divided by the total number of shares sold or
traded during the same period.
(ii) The Company issued 500,000 common shares at a price of $0.06 per
share on January 6, 2000 for payment of a portion of management
salaries for the year ended December 31, 1999. The share price was
determined in accordance with the related employment contract,
which states that the share price is to be based on the arithmetic
average of the closing prices of the Company's shares for the
twenty trading days prior to December 1 of each year.
(iii) The Company issued 100,000 common share purchase warrants on
April 6, 2000 in connection with the private placement of
$1,000,000 in convertible debentures, which were converted on
August 29, 2000. These warrants are exercisable into an equal
number of common shares at $0.19 per share until April 6, 2002.
TAHERA CORPORATION
Notes to the Financial Statements
(unaudited)
-------------------------------------------------------------------------
1. Significant Accounting Policies
These consolidated interim financial statements have been prepared in
accordance with Canadian generally accepted accounting principles. The
accounting policies followed in preparing these financial statements are
those used by Tahera Corporation (the "Company") as set out in the
audited financial statements for the year ended December 31, 2000 with
the exception detailed in note 2 below. Certain information and note
disclosure normally included in consolidated financial statements
prepared in accordance with generally accepted accounting principles has
been omitted. These interim financial statements should be read together
with the Company's audited consolidated financial statements for the year
ended December 31, 2000.
In the opinion of management, all adjustments considered necessary for
fair presentation have been included in these consolidated financial
statements.
2. Change in Accounting Policy
During the six months ended June 30, 2001 the Company adopted the new
recommendations issued by the Accounting Standards Board of the Canadian
Institute of Chartered Accountants with respect to loss per share.
3. Exploration and Development Projects
Balance Incurred Balance Incurred Balance
December 31 During the December 31 During the June 30
1999 Period 2000 Period 2001
-------------------------------------------------------------------------
Acquisition
Expendit-
ures -
ICE
Project $ 303,485 $ - $ 303,485 $ - $ 303,485
Jericho
Project
Incur-
red 17,411,599 - 17,411,599 - 17,411,599
Written
down - (718,181) (718,181) - (718,181)
Roundrock
Property
Project 284,750 - 284,750 - 284,750
------------ ------------ ------------ ------------ ------------
17,999,834 (718,181) 17,281,653 - 17,281,653
------------ ------------ ------------ ------------ ------------
Exploration
and
Development
Expenditures -
ICE
Project
Incur-
red 17,585,793 (2,082) 17,583,711 4,809 17,588,520
Written
down (6,637,228) - (6,637,228) - (6,637,228)
Jericho
Project
Incur-
red 53,926,245 3,255,862 57,182,107 2,017,008 59,199,115
Written
down (27,555,900) (941,270) (28,497,170) - (28,497,170)
Roundrock
Property
Project
Incur-
red 4,823,987 24,211 4,848,198 - 4,848,198
Written
down (3,940,401) (3,940,401) - (3,940,401)
New Dolly
Varden
Project
Incur-
red 1,238,594 363 1,238,957 - 1,238,957
Written
down (760,596) - (760,596) - (760,596)
------------ ------------ ------------ ------------ ------------
38,680,494 2,337,084 41,017,578 2,021,817 43,039,395
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
$56,680,328 $ 1,618,903 $ 58,299,231 $ 2,021,817 $60,321,048
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
Exploration and development project expenditures do not include any
allocation of administration or corporate overhead expenses.
a) During the six months ended June 30, 2001, the agreement with
Kennecott Canada Exploration Inc. ("Kennecott") was amended so that
Kennecott can earn a 62.5% undivided interest (50% under the old
agreement) in certain of the claims comprising the Jericho Project.
Also, Kennecott will receive a 1% gross royalty based on future
diamond production from kimberlites discovered on the ICE Claims
before April 23, 2001. In return, Kennecott has relinquished its right
to earn a 50% interest in the ICE Claims.
4. Reclamation Deposits
The Company is required to provide reclamation deposits under the Nunavut
Land Claims Agreement. To date the Company has made deposits which
satisfy the current requirement made by the Nunavut Water Board.
5. Share Capital
Authorized -
- Unlimited number of common shares
- Unlimited number of a class of preferred shares issuable in series
(none of which have been issued)
- A number of preferred shares, all of which have been called for
redemption and cancellation at $0.325 per share
Issued and outstanding -
Number of Share
Common Shares: Note Shares Capital
-------------------------------------------------------------------------
Balance - December 31, 1999 169,295,697 $ 62,537,425
Management salary paid in shares 1,000,000 99,500
Issuance to settle debenture
interest liability 2,881,583 375,117
Private placement 5,600,000 504,000
Private placement 75,847,459 8,950,000
Shares issued on convertible
debenture conversion 14,085,874 1,750,000
Share issuance costs (983,601)
-------------------------------------------------------------------------
Balance - December 31, 2000 268,710,613 73,232,441
Private placement (a) 21,666,667 3,250,000
Issuance to settle debenture
interest liability (b) 759,870 131,837
Share issuance costs (c) (163,258)
Balance - June 30, 2001 291,137,150 $ 76,451,020
-------------------------------------------------------------------------
-------------------------------------------------------------------------
a) The Company issued 21,666,667 common shares at a price of $0.15 per
share on April 23, 2001 upon the exercise of an equal number of
Special Mechanism Warrants.
b) The Company issued 759,870 common shares at a price of $0.17 per share
on June 29, 2001 for payment of interest on the convertible
debentures.
The share price was determined in accordance with an agreement between
the holder of the debentures and the Company, which states that the
share price is to be based on the aggregate sale price of all Tahera
shares sold or traded during the 20 consecutive trading days ending on
the fifth trading day before June 30, 2001, divided by the total
number of shares sold or traded during the same period.
c) The Company has incurred share issuance costs totaling $163,258 with
respect to the private placement (note 5(a)) and the issuance of
shares to settle the debenture interest liability (note 5(b)).
d) Fully diluted common shares at June 30, 2001 including all convertible
securities, warrants and options total 403,112,586.
6. Income Taxes
The provision for income taxes consists of federal large corporation
taxes and does not include any income taxes as the company has incurred a
loss for the period. The Company has future tax assets which have been
fully offset by a valuation allowance at June 30, 2001.
7. Stock-Based Compensation Plans
The shareholders approved a resolution to increase the number of common
shares reserved for issuance under the 1999 Stock Option plan to
23,473,000 at the annual general meeting held on June 19, 2001. During
the six months ended June 30, 2001 the Company granted 2,450,000 stock
options to its directors, officers and employees. The total number of
outstanding options at June 30, 2001 was 14,529,500.
Common share stock options outstanding as at June 30, 2001 are as
follows:
June 30, 2001 December 31, 2000
--------------------------------------------- -------------------------
Weighted Weighted
Average Average
Exercise Exercise
Fixed options Shares Price Shares Price
--------------------------------------------- -------------------------
Outstanding at
beginning of year 12,224,500 $ 0.29 13,934,500 $ 0.27
Granted 2,450,000 0.17 1,875,000 0.15
Exercised - - - -
Forfeited (145,000) 1.75 (3,585,000) 0.16
--------------------------------------------- -------------------------
Outstanding at end
of period 14,529,500 $ 0.25 12,224,500 $ 0.29
--------------------------------------------- -------------------------
Options exercisable
at end of period 10,566,159 9,714,500
--------------------------------------------- -------------------------
Options Outstanding Options Exercisable
--------------------------------------------- -------------------------
Number Weighted
Outstan- Average
ding Remaining Weighted Number Weighted
Range of at Contrac- Average Exercisable Average
Exercise June 30, tual Exercise at June 30, Exercise
Prices 2001 Life Price 2001 Price
--------------------------------------------- -------------------------
$ 0.15-
0.21 10,554,500 3.4 years $ 0.16 6,591,159 $ 0.16
0.35 3,125,000 1.5 years 0.35 3,125,000 0.35
0.80 750,000 1.1 years 0.80 750,000 0.80
2.75-
3.10 100,000 1.3 years 3.10 100,000 3.10
------------- -------------
$ 0.15-
3.10 14,529,500 2.9 years $ 0.25 10,566,159 $ 0.29
------------- -------------
------------- -------------
8. Related Party Transaction
a) During the six months ended June 30, 2001 the Company incurred general
consulting expenses totaling $19,900. This amount was owed to a
director of the corporation at June 30, 2001.
b) During the year ended December 31, 2000 the Company incurred
consulting expenses, totaling $102,500, relating to the settlement of
legal proceedings. This amount was paid to a company controlled by a
former director of the Company in February 2001.
9. Contingencies
Following the Company's annual general meeting in June 2001 the then
President and CEO was terminated. The Company is currently negotiating
separation arrangements. The outcome of these negotiations cannot be
determined at this time.
10. Subsequent Events
On August, 2, 2001, the Company issued 8,333,333 flow-through common
shares on a private placement basis at a price of $0.17 per share. Also,
8,333,333 common share purchase warrants were issued at a price of $0.01
per warrant, exercisable into an equal number of common shares at $0.25
per share until July 31, 2003.
TAHERA CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
During the second quarter of 2001, Tahera followed its two-pronged
strategy of focusing on the development of the Jericho Diamond Project and
exploration of the prospective area in the general vicinity of the Jericho
kimberlite pipe. As per the announcement made at the annual general meeting,
Tahera is currently investigating the possibility of entering into further
joint ventures on its projects in order to reduce its cash and/or equity
requirements to fund projects.
Financial Condition
Tahera's working capital position improved to $2,742,000 at June 30, 2001
from $1,193,000 at March 31, 2001. The final stage of its financing with
Edensor Nominees Pty. Ltd. closed on April 23, 2001 resulting in net proceeds
of $3,091,000. Subsequent to the end of the quarter, Tahera entered into a
share purchase agreement to raise gross proceeds of $1,500,000 in order to
fund planned exploration programs. This financing, which resulted in the issue
of flow-through shares and purchase warrants, was completed on July 31, 2001.
Results of Operations
Tahera recorded a net loss of $1,502,000 ($0.006 per common share) in the
six months ended June 30, 2001, compared to a net loss of $1,923,000 ($0.011
per common share) in the comparable period of 2000. The second quarter loss
was $838,000 ($0.003 per common share) compared with $1,027,000 ($0.006 per
common share) in 2000. The Company has continued its commitment to reduce
operating costs in order to conserve its cash reserves.
Interest income for the three months and six months ended June 30, 2001
increased compared with the same periods in 2000 as cash reserves were
maintained. Part of the increase was due to interest earned on the deferral of
the closing payment of the final stage of the Edensor placement.
Total operating expenses before income taxes were $271,000 and $93,000
lower, for the six months ended and the quarter ended June 30, 2001 compared
to 2000. The total of these expenses for the quarter ended June 30, 2001 was
$904,000 compared with $674,000 during the first quarter of 2001. This
quarterly increase was mainly due to expenditures related to the annual
general meeting and production of the annual report.
The year-to-date and quarter-to-date decreases in salary costs compared
with the same periods in 2000 reflect a reduction in administrative staff. The
number of salaried administrative employees fell to four at June 30, 2001 from
seven at June 30, 2000. The Company expects to achieve substantial savings in
this area during the remainder of the year.
Other savings during the quarter and six months ended in 2001 were
achieved in the areas of travel and office and general costs. Travel costs
were higher in 2000 as costs associated with the completion of the feasibility
study, completed in June 2000, were incurred. Office and general costs were
reduced in several areas including insurance, communication and supply
expenses.
The year-to-date interest expense decreased compared to the same period
in 2000 as the Company's cash position has improved. Financing costs during
the first half of 2000 included charges related to a cancelled rights
offering. Costs for the same period in 2001 decreased to $45,000 as similar
costs were not incurred.
Directors' fees and expenses for the quarter ended and six months ended
June 30, 2001 increased compared to 2000 as the number of directors on the
board increased to eight from five during the first half of 2000.
Liquidity and Capital Resources
Cash outlays related to exploration and development programs were
$737,000 and $718,000 higher for the quarter and six-month periods ending June
30, 2001 compared to 2000. The increase is due to increased expenditures
required to develop and permit the Jericho Diamond Project. Operating cash
outflows for the same period remained consistent year over year even though
operating expenses decreased in 2001 compared to 2000. This lack of change is
due to a funding of expenditures through accounts payable in 2000.
At June 30, 2001, Tahera held cash and short-term deposits of $3,388,000.
This balance will be augmented by gross proceeds totaling $1,500,000 from the
flow-through issue in July 2001 and should be sufficient to fund operations
and planned exploration programs for the next twelve months. The Company will
continue to monitor its expenditure programs as well as its cash position;
however, there can be no assurance that funding will be available for
operating and exploration programs in the long-term.
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