Highlights:
- Tahera completed construction of its wholly-owned Jericho Diamond
Mine, and began production of rough diamonds during the first quarter.
Commissioning of the process plant is complete and production ramp-up
is ongoing.
- During the first quarter, 63,070 tonnes of kimberlite were processed,
yielding 28,318 carats. The Company expects this number to rise as
throughput and grade increase as more kimberlite from the main body of
the pipe is processed. The kimberlite mined and processed during the
first quarter was comprised primarily of transition material that was
either unclassified or classified as low grade inferred resource
material. In some instances the kimberlite was diluted with transition
overburden material and granite country rock intrusions, resulting in
a lower grade of material being processed. This lower grade material
was appropriate plant feed during the commissioning and build up
phases, as various areas of the diamond processing plant were still
undergoing commissioning activities. In April, 44,707 tonnes of
kimberlite were processed, yielding 28,316 carats.
- Two diamond valuations were conducted during the quarter. The average
value achieved for diamonds produced during the first quarter was
$88 USD. A third diamond valuation occurred in April, comprising
production from March and April, resulting in a value of $97 USD per
carat. Taking into account the mix of material from the different
zones of the Jericho pipe and the different values associated with
each zone, the average value for the diamonds produced to date
generally met or exceeded Company expectations.
- The largest and most valuable stone recovered during the first quarter
was a 40 carat diamond valued at $100,000 USD.
- Subsequent to the April valuation, a 63 carat diamond was recovered,
which is the largest diamond produced to date from the Jericho
deposit.
- Throughput in March was negatively impacted due to issues caused by
excessive wear and availability of the primary roll crusher in the
diamond processing plant. The supplier of the crusher has agreed to
provide a replacement unit with more serviceable and interchangeable
wear parts, at no charge to Tahera. The portable crushing plant used
during the construction phase will be used to crush kimberlite until
the new unit is installed. It is expected that the new crusher will be
operational during the third quarter. The processing plant is expected
to achieve a production rate of 2,000 tonnes per day during the second
quarter.
- Capitalized costs relating to the Jericho Diamond Project total
approximately $115 million at March 31, 2006 (net of depreciation of
$1.8 million). The increase in the capital cost total (previously
disclosed as $99.7 million) relates primarily to the recording of
operating costs totaling $12.7 million to construction-in-progress as
Tahera had not yet reached commercial production at March 31, 2006.
The remaining capital cost increase of $4.4 million relates to a
higher than anticipated cost for frozen core dam construction, cost
escalation, and extra work carried out in various areas of the site.
Included in the $4.4 million total is a diamond cleaning facility,
costing approximately $1 million, which was constructed in order to
clean production on site, whereas Tahera had originally planned to use
an off-site contractual cleaning service.
- Total operating costs incurred during the quarter total $12.7 million.
The total tonnes mined for the quarter were lower than expected as
mining was curtailed due to the reduced fuel supply. The Company
incurs cost for its mining contractors calculated using fixed and
variable rates depending on type of equipment and personnel. Since the
number of tonnes mined was reduced due to fuel supply, the mining cost
per tonne of ore is not representative of normalized operations.
- Due to unseasonably warm weather, the winter road that is used
annually to mobilize bulk supplies to the Jericho Diamond Mine became
operational approximately two weeks later than in previous years and
was closed for the season on March 19, 2006. During the 17-day
(typically 40-50 days) period the winter road was open to the Jericho
site, the Company received 60% of its planned loads, including over
half of its planned fuel supply. Despite this lower supply, the
Company expects diamond processing and diamond production to be
maintained at planned levels. Management has taken immediate action to
defer waste stripping and other non-essential capital projects, which
includes extending the project site airstrip, to 2007, to mitigate the
impact of the reduced fuel supply.
- The Muskox evaluation program is progressing well and nearing
completion. The exploration program is anticipated to result in the
collection of over 5,000 metres of drill core and over 900 tonnes of
reverse circulation ("RC") kimberlite chips. As at March 31,
approximately 3,700 metres of core ("HQ") drilling in 14 drill holes
had been completed. The bulk sample is being collected using a 17.5"
RC drill. During March, two drill holes totalling 597 metres were
completed. This equates to approximately 235 tonnes of kimberlite
sample.
- By the end of April, over 4,600 metres of core drilling in 17 drill
holes had been completed. Tahera expects to complete a further
400-600 metres of core drilling by mid-May. To date, 2,155 metres of
RC drilling in seven drill holes has been completed, which equates to
approximately 850 tonnes of kimberlite sample. It is expected that one
further RC hole will be completed by the end of the first week of May,
bringing the final expected tonnage for the program to over
920 tonnes. The RC drill rig will then be demobilized to the Jericho
mine-site, where it will be temporarily stored and ready for any
potential further work in 2006 or 2007.
- The Muskox bulk sample will be processed at Rio Tinto's Thunder Bay
diamond laboratory. Sample processing is slated to begin in June with
results and interpretation expected during the third or fourth quarter
of 2006. Tahera crossed the $11 million spending threshold in April
and therefore has earned its 50% interest in the Polar project, which
includes the Muskox kimberlite. Tahera has the option to earn a
further 25% interest in the project from partner De Beers Canada
Exploration Inc. by making certain payments to De Beers depending on
the net present value of the project.
- Substantially all of the common share purchase warrants issued in June
2005 were exercised during the first quarter for total proceeds of
approximately $13 million.
- In early April 2006, the Company announced a proposal to consolidate
the common shares of the Company on a one-for-five basis. Management
believes that a reduced number of shares will have numerous benefits
to the Company, including a broadened base of potential institutional
investors and enhanced eligibility of the Company's common shares for
inclusion in certain stock market indices or for listing on an
international stock exchange. In addition, the reduced number of
shares will allow for more meaningful reporting of financial results
on a per share basis. The proposal will be put forward for approval by
special resolution of the shareholders at the Company's Annual and
Special Meeting of Shareholders on May 15, 2006.
Mr. Eugene Flood, P. Geol., is Tahera's qualified person as defined in
National Instrument 43-101 for its exploration programs, who has supervised
the preparation of the technical information included in this press release.
Mr. Flood is a consultant of Tahera and is not considered independent of
Tahera.
Tahera has scheduled a conference call at 10:00 a.m. Eastern Standard
Time on Friday May 5, 2006. Interested parties are invited to participate in
the call by dialing 866-249-1964. To access a conference replay (available
from 1:00 p.m.) dial 416-640-1917 or toll-free 877-289-8525 and enter pass
code 21188085, followed by the number sign.
2006 First Quarter Results
At March 31, 2006, Tahera's cash and cash equivalents balance was
$19,502,000, an increase of $4,057,000 from the balance at December 31, 2005.
Capital and other non-current assets increased by $26,208,000 during the first
quarter of 2006, primarily due to the capitalized costs associated with the
commissioning of the Jericho Diamond Mine and exploration expenditures
associated with the Muskox kimberlite drilling program. The Company recorded
net income for the first quarter of $3,432,000 ($0.00 per share), as compared
to net income of $134,000 ($0.00 per share) for the quarter ended March 31,
2005. Operating expenses increased to $1,464,000 for the quarter, compared to
$965,000 for the same quarter in the prior year. The net income for 2006
includes a recovery of future income taxes of $4,855,000, as compared to a
recovery of $1,084,000 during the first quarter of 2005.
Financial Statement Highlights (in thousands of Canadian dollars, except
for per share data):
<<
As at As at
Mar. 31, Dec. 31,
2006 2005
(unaudited)
Current Assets $ 32,281 $ 22,810
Capital and Other Assets 194,277 168,069
----------- -----------
$ 226,558 $ 190,879
----------- -----------
----------- -----------
Current Liabilities $ 26,108 11,496
Long-Term Liabilities 39,077 31,149
Share Capital - Common Shares 159,160 148,599
Common Share Purchase Warrants 252 1,290
Contributed Surplus 3,842 3,658
Deficit (1,881) (5,313)
----------- -----------
226,558 190,879
----------- -----------
----------- -----------
Three Months Three Months
Ended Ended
Mar. 31, Mar. 31,
2006 2005
(unaudited) (unaudited)
Operating Expenses $ (1,464) $ (965)
Other Items 115 44
----------- -----------
Loss for the Period before Income Taxes (1,349) (921)
Provision for Income Taxes - Current (74) (29)
Recovery of Income Taxes - Future 4,855 1,084
----------- -----------
Net Income for the Period $ 3,432 $ 134
----------- -----------
----------- -----------
Earnings per Share - Basic and Diluted $ 0.00 $ 0.00
----------- -----------
----------- -----------
Cash Flows From (Used In):
Operating Activities $ (659) $ (878)
Investing Activities (18,841) (21,221)
Financing Activities 23,557 1,175
----------- -----------
Net Increase (Decrease) in Cash and
Cash Equivalents 4,057 (20,924)
Cash and Cash Equivalents - Beginning
of Period 15,445 57,889
----------- -----------
Cash and Cash Equivalents - End of
Period $ 19,502 $ 36,965
----------- -----------
----------- -----------
Please refer to Tahera's website (www.tahera.com) or www.SEDAR.com to
view the complete first quarter report.
Forward-Looking Statements
This press release contains "forward-looking statements" that reflect
Tahera Diamond Corporation's current expectations and projections about its
future results. When used in this press release, words such as "estimate",
"intend", "expect", "anticipate" and similar expressions are intended to
identify forward-looking statements, which are based on the opinions and
estimates of management at the date the statements are made. By their very
nature, they are not guarantees of Tahera's future operational or financial
performance, and are subject to risks and uncertainties and other factors that
could cause Tahera Diamond Corporation's actual results, performance,
prospects or opportunities to differ materially from those expressed in, or
implied by, these forward-looking statements. These risks, uncertainties and
factors may include, but are not limited to the inherent risks involved in the
exploration and development of mineral properties, the uncertainties involved
in interpreting drilling results and other data, fluctuating commodity prices,
the possibility of cost overruns or unanticipated costs and expenses,
uncertainties relating to the availability and costs of financing needed in
the future and changes to regulations affecting the Jericho Diamond Mine and
other factors.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this press
release or as of the date otherwise specifically indicated herein. Due to
risks and uncertainties, including the risks and uncertainties identified
above and elsewhere in this press release, actual events may differ materially
from current expectations. Tahera Diamond Corporation disclaims any intention
or obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
On Behalf of the Board,
R. Peter Gillin Chairman and CEO
Tahera Diamond Corporation
Grant Ewing Executive Vice President
>>
%SEDAR: 00003313E
SOURCE: Tahera Diamond Corporation
Investor Relations, Tel: (416) 777-1998, Fax: (416) 777-1898, Toll free: (877)
777-2004, Email: investor_relations@tahera.com
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