Namco shuts down subsids

Unable to strike a deal with its bankers and principal lenders for additional funding, marine diamond miner Namibian Minerals (NMR-T) has decided to immediately shut down certain of its South Africa and Namibia subsidiaries.

Earlier in the week, Namibian Minerals (Namco) said that it had “grave concerns regarding its ability to sustain its exploration and production programs,” should the necessary funding not come through. The admission was made in the company’s third quarter financial results.

Namco noted that it had been in talks with its bankers and lenders since the second quarter, but that to date it was only able to secure a 36-month waiver of royalty payments due the government of Namibia. Continuance of that waiver was conditional on new financial support from other lenders.

The company also noted that certain of its South African subsidiaries are subject to taxation queries concerning tax assessments up to 1997. The company’s tax advisors have estimated the potential liability at around US$2-US$3 million, including penalties and interest.

Despite record diamond production of 117,050 carats during the third quarter, Namco only managed to post a small quarterly profit of US$96,000 (nil per share) on revenue of US$15.2 million, compared with a year-earlier loss of US$940,000 (1 per share) on US$4 million. The company’s fleet of vessels ran through US$1.2 million to stay afloat, down from the year-ago negative cash flow of US$9 million. With the increase in production direct production costs climbed about US$1.3 million to just under US$9.5 million.

For the first nine months of 2002, Namco’s loss tallied to US$32.8 million (33 per share), compared with a loss of US$26 million (35 per share) during the corresponding period of 2001. Revenue between the two periods nearly tripled to US$27.2 million from US$10.2 million. Direct production costs were little changed at around US$27 million.

The bulk of the quarter’s production found its way from the Nam 2 seabed crawler to the deck of the MV Ya Toivo, which produced 85,444 carats, including a record daily haul of 16,417 carats from Feature 22 on the Hottentot Bay Grant in late July.

At the end of September, Namco had US$993,000 in cash.

Trading in Namco’s shares was halted at mid-afternoon in Toronto on Dec. 5, pending the news. In earlier trade, the shares had picked up a penny to hit 10.

Late in eth late on Thursday, the Toronto Stock Exchange announced that an immediate review of Namco’s shares to see if they meet the requirements for continued listing. A similar review on May 24, led to the company being delisted from the Nasdaq after its shares failed to exceed the minimum bid price of US$1.