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Jericho Diamond Mine:
- Given the recent appreciation of the Canadian dollar versus the U.S.
dollar, the rise of oil prices, the relatively modest increases of
diamond prices and ongoing operational and production issues,
management determined that a valuation of its Jericho Diamond Mine was
necessary. As a result, the Company recorded an asset impairment
charge against the carrying value of the Jericho Diamond Mine at
September 30, 2007 of $73 million.
- The operational review of the Jericho Diamond Mine, which began in
March 2007, continued through the third quarter. Improvements with
regard to plant throughput, carats recovered, volume of kimberlite and
waste rock mined and grade were all achieved. The Company believes
that further improvements are achievable in the coming months.
- The total number of dry tonnes processed during the third quarter of
2007 was 127,500 tonnes at an average grade of 0.78 carats per tonne,
resulting in carat production of 99,300 carats. The number of tonnes
processed and carats produced increased by 33% and 34%, respectively,
compared with the second quarter.
- The value of production for the third quarter of 2007, based on
Government Diamond Valuation ("GDV") values, was US$8.4 million. When
applying exchange rates in effect at the GDV valuation dates, the
equivalent Canadian dollar value of production was $8.6 million. The
total cash operating cost related to the production of these goods was
$17.9 million.
- Pit development continued in a positive fashion with a total of
0.214 million tonnes of kimberlite and 1.9 million tonnes of waste
being mined in the quarter, representing an overall 13% increase
quarter over quarter.
- The batching program continued with a batch consisting of 16,073 dry
tonnes of F4N material yielding 11,806 carats, for an average grade of
approximately 0.73 carats per tonne. The goods were valued by the
Company's valuators separately from the normal run-of-mine production
and were assigned a value of US$71 per carat.
- During the month of October, the Company processed 55,000 tonnes at an
average grade of 0.85 carats per tonne, resulting in approximately
47,000 carats. The carat output for October 2007 is the highest
monthly total since the Jericho operation began.
Corporate:
- Although the Company has continued to make progress with its
improvement plan, additional financial losses have been incurred and,
as a result, its financial position has deteriorated. Tiffany & Co.
("Tiffany") has agreed to defer scheduled debt repayments due on
September 30, 2007 to December 31, 2007. The Company intends to raise
new equity through a share purchase rights offering to its common
shareholders. It is anticipated, barring any delays, that the rights
offering would close before the year end of 2007.
- In addition, the Company has held discussions with Tiffany regarding
the conversion into equity of certain of its scheduled debt
repayments. Tiffany has indicated that it is prepared to convert the
repayments due at December 31, 2007, which total approximately
$12.5 million. The Company's mining contractor has indicated its
willingness to provide certain concessions. Definitive agreements on
the Tiffany conversion and the mining contractor concessions are
contingent upon the other components of the financing plan being
completed, including the successful rights offering.
Exploration:
- The JD-03 kimberlite bulk sample returned 3,746 diamonds larger than
0.85 millimetres, weighing 134.7 carats, resulting in an average grade
of 0.27 carats per tonne. These diamonds were valued by the government
diamond valuators at an average price of US$40 per carat.
- Based on the grade and value results of the 2007 bulk sample, no
further exploration work is planned on the JD-03 kimberlite at this
time. As a result, the Company recorded a write down of the deferred
exploration and development expenditures associated with this property
in the amount of $21.4 million during the third quarter of 2007.
>>
Please refer to Tahera's website (www.tahera.com) or www.SEDAR.com to view the complete third quarter report, including management's discussion and analysis, consolidated financial statements and the notes thereto.
Mr. Dale Mah, P. Geol., is Tahera's qualified person, as defined in National Policy 43-101, and has supervised the preparation of the technical information included in this press release. Mr. Mah is an employee of Tahera and is not considered independent of Tahera.
Tahera has scheduled a conference call at 11:00 a.m. Eastern Standard Time on Tuesday, November 6, 2007. Interested parties are invited to participate in the call by dialing 416-644-3425 or toll-free 1-800-591-7539. To access a conference replay (available at 1:00 p.m. EST), dial 416-640-1917 or toll-free 1-877-289-8525 and enter pass code 21252196, followed by the number sign.
2007 Third Quarter Results
At September 30, 2007, Tahera's cash and cash equivalents balance is $7,782,000, a decrease of $19,775,000 from the balance at December 31, 2006. The Company realized revenues of $20,654,000 and an operating loss of $45,470,000 during the period. The Company recorded a net loss for the first nine months of 2007 of $143,117,000 ($0.71 per share), as compared to a net loss of $8,218,000 ($0.05 per share) for the comparable period of 2006. The current year net loss includes asset impairment charges of $73,000,000 and write downs of deferred exploration and development balances of $21,444,000.
Financial Statement Highlights (in thousands of Canadian dollars, except for per share data):
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As at As at
Sep. 30, 2007 Dec. 31, 2006
(unaudited)
Current Assets $ 32,098 $ 44,885
Capital and Other Assets 108,041 203,069
-------------- --------------
$ 140,139 $ 247,954
-------------- --------------
-------------- --------------
Current Liabilities $ 53,875 $ 31,469
Long-Term Liabilities 37,917 43,624
Share Capital - Common Shares 205,432 189,509
Common Share Purchase Warrants 11,631 9,212
Contributed Surplus 5,212 5,049
Deficit (174,026) (30,909)
Accumulated Other Comprehensive Income 98 -
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$ 140,139 $ 247,954
-------------- --------------
-------------- --------------
Nine Months Nine Months
Ended Ended
Sep. 30, 2007 Sep. 30, 2006
(unaudited) (unaudited)
Revenues $ 20,654 $ 1,279
Cost of Goods Sold 66,124 10,131
-------------- --------------
Operating Loss (45,470) (8,852)
Corporate, General
and Administrative Expenses (2,746) (3,641)
Amortization of Non-Operating Assets (316) (249)
Asset Impairment Charge (73,000) -
Write down of deferred exploration
and development (21,444) (61)
Other Items (3,161) (353)
-------------- --------------
Loss for the Period before Income Taxes (146,137) (13,156)
Recovery of Income Taxes - Current - 83
Recovery of Income Taxes - Future 3,020 4,855
-------------- --------------
Net Loss for the Period $(143,117) $ (8,218)
-------------- --------------
-------------- --------------
Loss per Share - Basic and Diluted $ (0.71) $ (0.05)
-------------- --------------
-------------- --------------
Cash Flows From (Used In):
Operating Activities $ (27,229) $ 6,704
Investing Activities (14,947) (47,816)
Financing Activities 22,401 36,525
-------------- --------------
Net Decrease in Cash and Cash Equivalents (19,775) (4,587)
Cash and Cash Equivalents
- Beginning of Period 27,557 15,445
-------------- --------------
Cash and Cash Equivalents - End of Period $ 7,782 $ 10,858
-------------- --------------
-------------- --------------
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Cautionary Statement Regarding Forward-Looking Information
This press release contains "forward-looking information" that reflects Tahera Diamond Corporation's current beliefs, plans, objectives, estimates, intentions, 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 information, which is based on the opinions and estimates of management at the date the statements are made. By its very nature, forward-looking information is 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, forward-looking information. These risks, uncertainties and factors may include, but are not limited to exposure to interest rate fluctuations, foreign currency risks, changes in federal, provincial and territorial laws, rules and regulations relating to the Company's business and environmental matters, changes in tax regulations and accounting pronouncements, the inherent risks involved in the exploration, development, and mining of mineral properties, the uncertainties involved in interpreting drilling results and other data, fluctuating commodity prices, unforeseeable adverse climate conditions, the possibility of cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future, other factors and the accuracy of management's assumptions.
Specifically, in making statements concerning future estimated grades, the Company has assumed that mining operations will proceed in the normal course according to schedule and that the statistical computations and the assumptions used and judgments made in interpreting engineering and geological information will prove to be correct. There is significant uncertainty in any mineral resource estimate and the actual deposits encountered may differ materially from the Company's estimates. With respect to statements concerning diamond prices, Tahera has assumed that current world economic conditions and current rough diamond supply and demand fundamentals will not materially change. Operating cost estimates have been based on the Company's experience to date; however increases in labour and fuel costs and any unforeseen mining issues could materially impact these forecasts. While the Company considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.
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 information, whether as a result of new information, future events or otherwise.
The above press release makes reference to certain non-GAAP financial measures such as cash operating costs and value of production, to assist the reader in assessing the Company's financial performance. Non-GAAP financial measures do not have any standard meaning prescribed by GAAP and are therefore unlikely to be comparable to similar measures presented by other issuers. See "Non-GAAP Financial Measures" in the Management's Discussion & Analysis.
On Behalf of the Board,
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R. Peter Gillin Chairman and CEO
Tahera Diamond Corporation
>>
%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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