Namibian still faced with difficulties

Last year saw Namibian Minerals (NMR-T) chalk up heavy losses as it struggled to remain afloat.

In early 2001, the marine diamond miner was forced into provisional liquidation after its NamSSol seafloor mining system was damaged off the coast of Namibia. The cash crunch exacerbated the company’s financial difficulties but was eventually overcome by the signing of a financing and marketing agreement with the Leviev Group of Israel, now the company’s largest shareholder.

Net losses in 2001 totalled US$56 million on revenue of US$12.7 million, compared with a net loss of US$45,000 on US$43.8 million in the previous year. The disruption to production was mostly to blame, though higher operating costs plus a US$19-million writedown on goodwill and development costs that was recorded in the final quarter were strong contributing factors.

Cash flow from operations was negative US$22.9 million, which compares with positive US$8.4 million in 2000. After investing and financing activities, the company had US$2.6 million in cash, or US$1.8 million less than it had at the year’s start.

Fourth-quarter results were similarly discouraging: net losses totalled US$29.6 million, versus US$1.6 million a year ago, and cash flow dipped below US$1 million from US$8.5 million. Revenue for the periods was US$2.3 million and US$10.6 million, respectively.

Last year Namibian Minerals produced 85,589 carats last year, well over a third of which was mined in the fourth quarter. This compares with 135,411 carats in all of 2000, of which 57,500 carats flowed in the final quarter.

Comparable operating costs were even more skewed, with the 2001 average ringing in at US$431 per carat, versus US$147 a year ago. The increase reflects the launch of a new production vessel, higher charter rates for existing ones, and exploration costs.

Namibian Minerals realized US$149 per carat on sales of 83,852 carats. In total, 237,000 carats were sold in the previous year at US$176 per carat.

At Dec. 31, Namibian Minerals had a working capital deficiency of US$7.8 million and long-term debt of US$54.7 million. Of the amount owing, US$49.5 million is owed to senior lenders.

On a fully diluted basis, Namibian has 273.5 million shares outstanding, of which 52.83% is held by the Leviev Group. Both amounts assume that all convertible loans, debentures and warrants are exercised by their holders.