NioCorp Developments Ltd. press release
Diamcor March 31, 2017 FYE Financial Results Summary and Operational Update
NASDAQ - Nasdaq Stock Market · Niobium · Scandium · Titanium · Rare Earth Elements · United States
Canada NewsWire
KELOWNA, BC, Aug. 3, 2017
Shares Issued and Outstanding: 54,659,623 TSXV:DMI OTCQX:DMIFF
KELOWNA, BC, Aug. 3, 2017/CNW/ - Diamcor Mining Inc. (TSXV:DMI / OTCQX:DMIFF), (the "Company") announces the results of its fiscal year ended March 31, 2017, and an operational update for the year at the Company's Krone-Endora at Venetia Project (the "Project").
Revenue During the fiscal year ended March 31, 2017, the Company generated revenue of $5,928,425(US $4,466,549) net of commission and fees, from the sale of 32,627.97 carats of rough diamonds for an average price per carat of US $136.89. This compares to revenue of $4,681,508(US $3,363,264) net of commission and fees, from the sale of 24,068.01 carats of rough diamonds for an average price of US $139.74, during the prior fiscal year. The recovery of all rough diamonds was incidental to the ongoing commissioning and testing exercises being performed by the Company given that the continuing development and expansion of the facilities at the Project were aimed at supporting increased processing volumes over the long-term. The average price per carat was in line with Company expectations given that the material being processed as part of the ongoing development exercises was largely limited to lower-grade material in the 1mm to 15mm size fractions, and the industry continued to experience price weaknesses in certain categories of rough diamonds during fiscal 2017.
Operating Expenses During the fiscal year ended March 31, 2017, the Company realized operating expenses of $4,789,342, an increase when compared to operating expenses of $3,668,955recognized during the same period in the prior fiscal year ended March 31, 2016. Operating expenses are comprised primarily of labour, management, contracted labour and equipment, utilities, fuel, and other associated expenses incurred at the Project. The increase, as compared to the prior fiscal year, was attributable to increased operating levels associated with the continued advancement of the Project in fiscal 2017. During the fiscal year ended March 31, 2017the Company continued to focus its efforts on the advancement of requirements necessary to support the stated objectives associated with advancing the Krone-Endora at Venetia Project, and to aid the Company in its determination of initial production decisions for the Project. Operating expenses associated with contract equipment, fuel, contractors, and plant consumables are expected to increase in fiscal 2018 as the Company increases the overall volumes of material being processed.
General and Administrative Expenses Total general and administrative expenses for the fiscal year ended March 31, 2017were $3,578,769, as compared to $5,778,281incurred during fiscal 2016. The decrease in expenses was primarily attributable to $2,182,398in non-cash expense realized according to the Black-Scholes pricing model for the issuance of options in fiscal 2016, as compared to no option related expense realized in fiscal 2017, and a reduction in management incentive compensation in fiscal 2017 as compared to fiscal 2016. Net of these non-cash charges, general and administrative expenses remained relatively constant year over year. General and administrative expenses for the fiscal year ended March 31, 2017were primarily incurred by the Company in support of the further advancement of the Project's recommended work programs, the Company's continued advancement of the plant commissioning and testing exercises, the operational equipment expansions, the Company's preparations for its planned move to large-scale bulk sampling and trial mining exercises, as well as the Company's planned move to 24/7 operations in conjunction with the granting of the required permitting and Mining Right by the South African Department of Mineral Resources. While the Company remains committed to managing its resources carefully and conserving cash, general and administrative expenses would be expected to increase during fiscal 2018, as the Company continues to expand and advance operations at the Project.
Net Earnings The Company realized net income from operating activities of $1,139,083in fiscal 2017. The Company incurred $3,578,769in general and administrative expenses, $51,572in interest and other income, a loss on disposal of assets of $69,079, a loss of $919for foreign exchange, and recorded deferred taxes of $307,957, which resulted in a net loss before tax of $2,766,069for the fiscal year ended March 31, 2017. This compares to a net loss of $4,232,982realized during the prior fiscal year ended March 31, 2016. The Company recorded a foreign currency exchange gain of $763,984for the fiscal year ended March 31, 2017, as compared to a loss of $1,393,874for the fiscal year ended March 31, 2016.
The following table provides a brief summary of the Company's financial operations:
| | Fiscal Year Ended March 31, | | | | | | | | | | 2017 | | 2016 | | 2015 | | | | | Total Revenue | $ | 5,928,425 | | $ | 4,681,508 | | $ | 3,073,905 | | Net Income (Loss) Before Tax | $ | (2,458,112) | | $ | (4,254,354) | | $ | (2,813,917) | | Basic & Diluted Earnings (Loss) Per Common Share | $ | (0.02) | | $ | (0.07) | | $ | (0.05) | | Total Assets | $ | 11,882,433 | | $ | 8,485,389 | | $ | 10,884,266 | | Total Long Term Liabilities | $ | 4,447,582 | | $ | 6,428,170 | | $ | 7,288,368 | | Cash Dividend | $ | Nil | | $ | Nil | | $ | Nil |
Liquidity and Capital Resources
The Company realized negative cash flow from operating activities of $86,269for the fiscal year ended March 31, 2017, as compared to negative cash flow from operating activities of $157,992for the fiscal year ended March 31, 2016.
As of March 31, 2017, the Company had cash and cash equivalents of $264,937($824,858March 31, 2016), rough diamond inventory of $1,220,918($826,603March 31, 2016), accounts receivable of $186,307($270,522March 31, 2016), and prepaid expenses of $28,470($33,934March 31, 2016). Subsequent to the fiscal year ended March 31, 2017, on June 12, 2017, the Company closed an oversubscribed, non-brokered private placement for gross proceeds of $4,213,372.65, with the majority of the offering subscribed for by existing institutional investors and large shareholders of the Company. $1,794,555of the net proceeds of the offering were used to make payments towards the Tiffany's debt facilities including the repayment in full of the outstanding balance on the Tiffany's Term Loan 1 facility. As a result, the payments required to service Company debt were reduced from $949,268to $520,293per quarter going forward. Other portions of the proceeds will be used to advance additional bulk sampling efforts, and for general and administrative purposes. The Company believes it has adequate cash, or the potential to access additional capital if required, for the continued development, commissioning, bulk sampling, and advancement of the recommended work programs, and the potential to generate future revenues from the incidental recovery and sale of rough diamonds from the combined efforts underway at the Project.
Working Capital As of March 31, 2017, the Company had 49,702,714 common shares issued and outstanding, and had working capital of ($3,254,275)as compared to working capital of ($1,078,653), at March 31, 2016. Working capital is calculated based on current assets less current liabilities, excluding prepaids.
The Company's complete financial results and associated Management Discussion and Analysis for its fiscal year ended March 31, 2017, can be accessed at www.sedar.com, or on the Company's website at www.diamcormining.com.
FYE MARCH 31, 2017OPERATIONAL EXPANSIONS OVERVIEW
During the fiscal year ended March 31, 2017, the Company continued to advance the combined testing, commissioning, and calibration exercises at the Project. During the period, the Company announced that, after a significantly longer waiting period than expected, the Company's application for a Water Use License to support long-term diamond mining operations at the Project was approved and granted by the South African Department of Water and Sanitation. The granting of this Water Use License represented the culmination of a multi-year effort in the ongoing advancement of the Project, and was seen as a significant milestone to further de-risking the Project by ultimately providing the Company with the desired allocation of water expected to be required to support the targeted design capacity of the processing facilities of the Project for the long-term. With the Water Use License successfully secured, the Company moved to finalize the installation of the remaining associated infrastructure. The completion of these infrastructure items was finalized early in the September 30, 2016quarter, allowing the Company to advance the testing and evaluation of its existing processing facilities at that time, and to compile key data from higher processing rates to ultimately assist the Company in decisions with regards to any further requirements of the facilities at the Project. These efforts led to the Company's decision to commence a brokered private placement of up to $5,000,000, with the use of proceeds aimed at acquiring additional operational equipment as part of a planned final expansion to support the continued advancement of the Project. The placement was ultimately oversubscribed with gross subscription proceeds of CND $5,820,700, and closed on August 31, 2016as announced on September 1, 2016. With the previously noted water infrastructure completed, the Company provided an update on November 2, 2016with respect to its intention to proceed with the planned upgrades and significant expansions to the Project's in-field dry screening plant, main treatment plant, and final recovery. These efforts were aimed at supporting increased processing volumes, incorporating the crushing and processing of larger material up to 45.0mm, establishing a dedicated large diamond recovery circuit, and increasing the capacity of the Project's final diamond recovery facilities. These efforts were originally targeted for completion prior to the end of the quarter ending December 31, 2016, however significant delays in delivery and installation resulted in a majority of these efforts not being finalized until late in the Company's fourth quarter ended March 31, 2017. The upgrades, additions, and expansions completed in these areas are aimed at supporting the Company's desired increases in processing volumes for the long-term. A brief overview of the work completed is summarized below.
Water Infrastructure The sourcing and availability of water for any mining project is critical, and the Company has expended considerable time and capital to establish the current infrastructure. With the water license successfully secured in the fiscal year, efforts began to complete the addition of four boreholes to supplement the Project's existing three boreholes in support of the current needs of the Project. These efforts were completed early in the quarter ended December 31, 2016. While no further requirements in this area are envisioned for the near-term, water remains a critical element in the Project, and the Company is continuing to evaluate additional sources of water which may be able to support potential growth requirements in the future. As of the end of the fiscal year ended March 31, 2017, the Company had completed the design, procurement, installation and commissioning of seven individual boreholes, approximately 20km of associated underground pipelines, the construction and establishment of large lined fresh water dams, settling dams, and the various pumping stations required to support this combined infrastructure.
In-Field Dry-Screening Plant The Project's in-field dry-screening plant has long been identified as an important element in the Project's success due to the high percentage of fine materials under 1.0mm in size, and the high percentage of small gem quality diamonds in the deposit. Due to these elements, the Company has expended considerable time and capital on the development of the Project's in-field dry-screening plant. The use of this facility is aimed at initially processing material recovered from the Project's quarry, prior to it being transported to the Project's main treatment plant. This facility is designed to crush, categorize, and then remove up to 60% of the total material being processed, via the removal of fine materials under 1.0mm in size. The facility uses no water and pre-concentrates the material recovered from the quarry, thus providing significant operational cost savings through the reduction of the total volume of material required to be processed at the Project's main treatment plant. It provides the added benefit of reducing both the initial cap-ex, and operating costs associated with the main treatment plant due to the reduction in processing capacity required as a result of the removal of the fine materials under 1.0mm by the in-field dry-screening plant. The Company completed significant development on the Project's in-field dry-screening plant over a period of several years through the processing of lower grade material in the 1.0mm to 15.0mm size fractions, due to this material's high content of fines under 1.0mm in size. Higher grade material in the 15.0mm to 45.0mm size fractions was largely screened off and stockpiled, pending the expansion of these facilities and the completion of the crushing circuit as part of the final upgrades undertaken. The addition of this crushing circuit was aimed at enhancing processing/recoveries by liberating any diamonds held in larger calcretized material previously stockpiled, while providing the potential to recover large diamonds above 15.0mm in a dedicated large diamond recovery circuit installed as part of the Project's main treatment plant and final recovery expansions. In addition to the efforts made to finalize the crushing circuit at the in-field dry-screening plant, the Company also installed an additional large high-frequency screen which was aimed at further reducing the content of fines reporting to the Project's main treatment plant. All expansions and upgrades were successfully completed by June 30, 2017. The completion of these initiatives allows the Company to begin processing materials at increasing levels through these facilities, and the focus on achieving sustained increases in run-times and volume levels is aimed at aiding the Company in arriving at initial production decisions for the Project.
Main Treatment Plant During the fiscal year ended March 31, 2017, and, as a result of the issuance of the required Water Use License, the Company significantly expanded its operational equipment and facilities, and began performing final refinements to the Project's main treatment plant to support planned increases in processing volumes, the processing of material up to 45.0mm in size, and the finalization of a dedicated large diamond recovery circuit. These expansions included increasing the size of the plant's Dense Media Separation (DMS) unit and the associated infrastructure required to support the desired increases in processing volumes. Given the modular nature of the facilities, many of the upgrade components were fabricated off-site to reduce the impact on current operations. Initially, the construction, delivery and installation of these upgrades was targeted for completion prior to the end of the third fiscal quarter ended December 31, 2016, however delays in both the delivery and construction of these items ultimately pushed the finalization of these items past the end of the fiscal year ended March 31, 2017. As of June 30, 2017, these efforts had been completed, and the current focus with the expanded main treatment plant is on achieving sustained increases in run-times and volume levels which can then be used to aid the Company in arriving at initial production decisions for the Project.
Final Recovery Expansion As part of the planned expansions aimed at supporting the Company's increase in processing levels, the Company elected to significantly expand and automate the Project's final recovery facilities. This included the addition of a new four-story facility and considerable expansion in all areas of the final recovery to support the long-term needs of the Project. Four additional x-ray diamond recovery units were supplied by Flow Electronics, increasing the total number of units being used at the facility from three to seven. Other additions included expansions to high security sorting areas, automation, the establishment of a dedicated large diamond recovery circuit, and a host of other associated items aimed at enhancing the overall capacities of these facilities. The majority of the expansion efforts in this area were completed prior to the end of the fiscal year ended March 31, 2017, with the balance completed by June 30, 2017. Extensive testing, commissioning, and calibration of these facilities has been ongoing since their completion.
Appointment of New Managing Director of Operations On April 10, 2017, the Company announced that in conjunction with its planned transition from project development to large-scale trial-mining, Mr. Rob De Prettohad been appointed as the new Managing Director of Operations – South Africaof the Company's operating subsidiary. Mr. De Pretto, a citizen and resident of South Africa, has an extensive, impressive, and a well established 33-year career in the diamond industry. He most recently held senior management, operational, and technical positions with Anglo Americanand De Beers Consolidated Mines. He has gained extensive experience through his direct involvement in the development of a majority of the De Beers' mines, including four years as the production manager of De Beers Venetia Diamond mine. Mr. De Pretto holds a B.Sc (Met Eng) and M.Sc (Met Eng) from the University of Witwatersrand. He later obtained a Management Advancement Programme certificate through University of Witwatersrand School of Business Administration. Mr. De Pretto is a member of the South African Institute of Mining & Metallurgy, a registered Professional Engineer with Engineering Council of South Africa, and has been educated and trained in a wide array of items directly related to diamond mining and the management of diamond mines over his 30+ year career.
Operational Summary While the planned efforts and advancement of the Project in the fiscal year ended March 31, 2017were delayed due to items surrounding the finalization of required permitting and the Company's ability to proceed with planned expansion items, significant progress was made throughout the year in various areas. Delays in the delivery and installation of certain portions of the expansion efforts limited the Company's ability to advance the Project as desired, however by the end of the fiscal year ended March 31, 2017, the vast majority of the planned expansions were completed, with the remaining items subsequently finalized prior to the end of the Company's first quarter ended June 30, 2017. Current efforts at the Project are now focused on increasing processing tonnages of material in all size fractions through these new facilities, and to achieve sustained run-times and increased tonnage levels over a period sufficient to allow the Company to arrive at initial production decisions for the Project as soon as practicable.
The combined testing, commissioning, and calibration exercises completed during the fiscal year ended March 31, 2017were designed to support the continued advancement of objectives consistent with the recommendations of the updated NI 43-101 Technical Report ("Updated Technical Report") filed by the Company on April 28, 2015, and to aid the Company in arriving at initial production decisions for the Project. The recovery of all rough diamonds during the period were incidental to the ongoing commissioning and testing exercises being performed at the Project. These testing exercises and incidental recoveries do not form part of the Updated Technical Report and therefore no general grade, price, or quality determination is intended by the Company at this time due to the nature and purpose of the processing of this material.