 |
| | March 16, 2010
Interim Report for the six months ended 31 December 2009
|
| | Highlights for the second half of calendar 2009 for Kopane Diamond Developments Plc ("Kopane" or "the Company") were as follows: - 141% increase in indicated resource to 38.5 million tonnes follows resource block modelling of LDD data, potentially increases the depth of a future open pit to 180 metres.
- 90.7 million tonnes of kimberlite - Main Pipe total resource, an increase of 19.1% over the interim resource statement issued in November 2008.
- 31.1 million carats (Kopane attributable 23.4 million) gross diamond resource contained in the Main Pipe to an average depth of 510 metres, with an estimated in situ value of $2.7 billion based on September 2008 bulk sample diamond values.
- 34.3 cpht average resource grade to at least 510 metres average depth supported by large diameter reverse circulation drilling results.
- £1.2 million loss for the period (2008: loss of £3.1 million).
- Memorandum of Understanding signed for funding power line to Liqhobong.
- £9.9 million of funding secured during period: November 2009 of £3.9 million and a further £6 million in January 2010.
- In January 2010, a non-binding MOU was entered into with a mining company regarding their possible investment in the Liqhobong assets.
- In February 2010, there was an announcement of talks regarding a possible offer for the Company.
Definitive Feasibility Study
Following completion of a programme of Large Diameter Drilling ("LDD"), the Company issued a resource statement on 7 December 2009, prepared by independent mining and geological consultants ACA Howe International Limited ("Howe") which showed substantially more kimberlite and rough diamonds than estimated in the Interim resource statement published in November 2008, as follows:
Category |
Attributable to LMDC (100%) |
Net Attributable to Kopane (75%) |
MAIN PIPE
Mineral Resources |
Tonnes
(millions) |
Grade
(cpht) |
Contained
Diamonds
(million carats) |
Tonnes
(millions) |
Grade
(cpht) |
Contained
Diamonds
(million carats) |
Indicated |
38.54 |
32.8 |
12.64 |
28.90 |
32.8 |
9.48 |
Inferred |
52.12 |
35.5 |
18.49 |
39.09 |
35.5 |
13.87 |
Total |
90.66 |
34.3 |
31.14 |
67.99 |
34.3 |
23.35 |
Source: ACA Howe International Limited
The above resource statement updated an earlier statement issued In September 2009 which showed an overall grade estimate of 33 cpht, which was the lowest estimate in a range of grade results ultimately possible in the Main Pipe due to anomalies arising from the diamond recovery analysis of the LDD samples because of the loss of stones from the drilling process. The revised higher grade of 34.3 cpht shown in the table above results from further review by Howe of the LDD results and the kimberlite rock density and confirms the Company's opinion of grade.
The estimated in-situ value of the Main Pipe increased to $2.7 billion, based on an independent run of mine valuation of $86 per carat in September 2008 of rough diamonds recovered from bulk sampling.
The $86 per carat run of mine valuation does not include the impact of large and bonanza stones, which could provide material economic enhancement to the project value. This is illustrated by the sale, at the end of 2006, of four stones which totalled 78 carats in aggregate and had a total value of $1.43 million and by the sale in July 2008 of three premium stones, totalling, 27 carats for $0.63 million. All of these stones were sourced from the K5 facies. In addition, Kopane has seen the occurrence in the Main Pipe of several large pieces of polycrystalline boart of over 100 carats, including one of 263 carats. This is consistent with the report of Howe in respect of the PFS, in mid 2007, which identified two potential areas of upside for the economics of the Main Pipe project, namely ore grade and stone value.
The Company deferred incurring expenditure on certain elements of the DFS in favour of proposing to incur expenditure on other items which will have a more immediate revenue generation potential. These include the re-commencement of diamond production at Liqhobong alongside investing in a significant expansion of the existing Satellite Plant, which currently has a capacity of approximately 450,000 tonnes per annum, in order to take advantage of a sustained increase in diamond prices.
Operations
The Company is not currently producing rough diamonds, having suspended production from its Satellite Plant operations at the beginning of December 2008 due to the sharp fall in prices available for rough diamonds as a result of the world economic situation. Prices fell by some 50% from October 2008 until the first quarter of calendar 2009; since then prices have improved considerably and are reported to be near previously prevailing levels, although market indications are that there could be some short term price turbulence. The medium and long term outlook for rough diamond prices is likely to be robust in the face of projected supply shortages.
Financing and development strategy
The Company arranged £3.9m of finance in November 2009 and a further £6 million in January 2010 before expenses to provide it with flexibility to restart production and invest in the facilities at Liqhobong as well as to progress certain key parts of the DFS. Part of this funding is payable to the Company over periods of 24 and 18 months under equity swap arrangements, whereby the amounts to be received by the Company will vary according to its share price.
The Company has been assessing the feasibility of operating the Satellite Plant with diesel generated power ahead of connection to the grid electricity supply planned in 2011. A further review is ongoing to assess the most economical ways of expanding production to potentially 1.4 million carats per annum with the aim of limiting Shareholders' equity dilution as much as possible. This review will encompass trade off studies to assess the timing and impact of further expansion of the Satellite Plant as well as the possible gradual construction of the new Main Pipe plant and funding options for the Main Pipe Project.
Power line arrangement
The successful development of the Liqhobong Main Pipe will be totally dependent upon the provision of grid electrical power from an extension of the Lesotho electricity grid. A Memorandum of Understanding ("MOU") between the Company's subsidiary, Liqhobong Mining Development Company ("LMDC"), Lesotho Electricity Company ("LEC"), the Government of the Kingdom of Lesotho ("GoL") and Standard Lesotho Bank, in respect of funding of the construction of an electrical power line to the Company's mine at Liqhobong, was signed and announced on 17 August 2009.
The MOU contemplates that funds will be lent by the bank to the LEC to fund the construction of the power line from the LEC's sub-station at Ha Lejone, which is approximately 30 kilometres from Liqhobong. In addition, the LEC and the GoL will contribute funds towards the cost of the project and the GoL has agreed to provide a sovereign guarantee to the bank in respect of the loan funding. LMDC will finance the servicing of the loan and its repayment on terms which are expected to be agreed shortly.
The engineering specifications of the power line, together with environmental impact assessment studies, have been completed in readiness for to start construction once funding is in place. It is planned that the loan documentation will be finalised shortly between the parties and that construction will commence by the third quarter of 2010, which should allow grid electricity to be connected to the mine site by the end of 2011.
Corporate
In October 2009, the Company entered into a period of exclusivity with a mining company to facilitate review of the Liqhobong assets with a view to an investment in the Liqhobong project. The period of exclusivity was extended until 15 December 2009 when it ended so that the Company could further investigate expressions of interest at a corporate level received from other organisations, to determine whether they would better serve the development of the Main Pipe and the interests of shareholders.
On 26 January 2010, the Company announced that it had entered into a non-binding Memorandum of Understanding ("MOU") with the mining company to develop its Liqhobong assets in Lesotho. The principal terms of the MOU were that the mining company would fund and operate the recommencement of production at Liqhobong and remaining work on the DFS and would have an option to acquire 51% of the Company's interest in the Main Pipe in return for funding 80% of the cost of developing Liqhobong to production of in excess of one million carats per annum. The mining company estimated that the cost of constructing new plant will be approximately $80 million and on this basis would invest $64 million for a 51% of the Company's interest in Liqhobong, which is currently 75% of the project, the other 25% being owned by the GoL.
The Board of Directors announced on 10 February 2010 that it is in discussions which may or may not lead to an offer being made for the entire issued and to be issued share capital of Kopane. The discussions are at a preliminary stage and there can be no certainty that an offer will be made for Kopane or as to the terms on which any offer would be made. In these circumstances the discussions, regarding the co-development of the Company's Liqhobong kimberlite asset, pursuant to the non-binding MOU announced on 26 January 2010, were put on hold.
Outlook
As indicated in the trading update announcement on 15 December 2009, the Company believes the outlook for 2010 to be very positive. The market price for rough diamonds has substantially recovered from falls in late 2008 and early 2009 and progress is being made towards the funding and commencement of construction of a power line to connect Liqhobong to the Lesotho electricity grid by 2011.
The Finnish Joint Venture
The Company's Finnish assets are being operated, financed and developed under a joint venture agreement with Mantle Diamonds Limited. Under this agreement, Mantle can earn up to a 70% interest in the Finnish assets by expending $5 million, including producing a definitive feasibility study on the Lahtojoki property and issuing Kopane with 10 million shares in Mantle. To date, Mantle has spent approximately £725,000 in respect of the feasibility study at Lahtojoki.
The Company owns 3.3 million shares in Mantle, which have an attributed value of £334,000 at 31 December 2009. Under the terms of the joint venture agreement, in January 2010 the Company has earned a further 3.3 million shares in Mantle.
Financial
The interim unaudited consolidated financial statements for the six months ended 31 December 2009 are attached.
These unaudited consolidated financial statements have been prepared on the basis of International Financial Reporting Standards ("IFRS") as adopted by the European Union and implemented in the UK.
The consolidated net loss for the six months ended 31 December 2009, after taxation, was £1.2 million (loss per share 0.5p) compared to the consolidated net loss of £3.1 million (loss per share 1.8p) for the same period last year. The consolidated loss for the period is after expensing £0.1 million in respect of the fair value of share options issued (2008 - £0.1 million). The Liqhobong mine was on a care and maintenance basis throughout the period with no diamond production since December 2008, with a consequent substantial reduction in operating costs in the current period. This has also resulted in a reduction in employee expenses to £0.3 million (2008 - £1.0 million) and in other expenses to £0.3 million (2008 - £1.3 million). In addition, as a consequence of extending the useful life of the mining assets at 30 June 2009, depreciation charged in the period reduced to £0.4 million (2008 - £0.6 million).
Property, plant and equipment of £3.2 million in the consolidated balance sheet at 31 December 2009 (2008 - £2.8 million) represent primarily the cost of the mine at Liqhobong, Kingdom of Lesotho, after depreciation and differences on exchange.
The intangible assets of £6.7 million in the consolidated balance sheet at 31 December 2009 (2008 - £5.0 million) represent primarily accumulated deferred exploration and evaluation costs in respect of the Company's exploration of the Main Pipe at Liqhobong of £5.8 million (2008 - £4.1 million). Expenditure in the 6 month period to December 2009 was lower at £0.2 million (2008 - £2.0 million) due to the earlier completion of field evaluation work. The Company's accounting policy in respect of these costs is to capitalise them pending determination of the feasibility of the project to which they relate. In addition, there is Goodwill of £0.9 million (2008 - £0.9 million) included in intangible assets.
The Company's investment in its Finnish joint venture is £2.0 million (2008 - £2.1) and there is an additional £0.3 million (2008 -- £0.7m) shown in available for sale investments representing its holding in Mantle Diamonds Limited.
Current assets in the consolidated balance sheet at 31 December 2009 were £1.8 million (2008 - £1.7 million), primarily consisting of cash of £0.2 million (2008 -- £0.7 million), inventories of rough diamonds of £0.5 million (2008 - £0.8 million) and derivative financial instruments of £1.1 million (2008 -- nil) which represent the fair value of the monthly amounts due under equity swap arrangements. Amounts due after 12 months of £0.9 million (2008 -- nil) are shown in derivative financial instruments within non-current assets.
The Consolidated Income Statement has been presented under the 'nature of expense' method as permitted under IFRS to provide the most relevant presentation of information.
Francesco Scolaro
Chairman
Corporate Information:
Stock Exchange listing London AIM
Trading symbol KDD
Shares in issue 301,511,651
Website www.kopanediamonds.com
E-mail address enquiries@kopanediamonds.com
For further information contact:
Kopane Diamond Developments Plc
Frank Scolaro, Chairman
James Cable, Finance Director
+44 (0) 20 7963 9590
Threadneedle Communications
Laurence Read/Beth Harris
+44 (0) 20 7653 9855
FinnCap
Matthew Robinson/Ed Frisby
+44 (0) 20 7600 1658
e-mail: ir@kopanediamonds.com
website: www.kopanediamonds.com
Consolidated balance sheet
As at 31 December 2009
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
As at 31 Dec 09 |
As at 31 Dec 08 |
As at 30 Jun 09 |
|
£'000 |
£'000 |
£'000 |
Assets |
|
|
|
Property, plant and equipment |
3,193 |
2,833 |
3,321 |
Intangible assets |
6,716 |
5,033 |
6,173 |
Investments in joint venture entity |
1,960 |
2,092 |
1,669 |
Available for sale investments
Derivative financial instruments |
333
898 |
333
- |
333
- |
Trade and other receivables due after more than
one year |
2,584 |
2,583 |
2,584 |
Total non-current assets |
15,684 |
12,874 |
14,080 |
|
|
|
|
|
|
|
|
Inventories |
518 |
811 |
474 |
Trade and other receivables -- due within one year |
1,176 |
244 |
61 |
Cash and cash equivalents |
235 |
651 |
869 |
|
|
|
|
Total current assets |
1,929 |
1,706 |
1,401 |
Total assets |
17,613 |
14,580 |
15,484 |
|
|
|
|
Equity |
|
|
|
Issued share capital |
9,297 |
8,481 |
8,981 |
Share premium |
28,394 |
24,933 |
26,111 |
Merger reserve |
3,242 |
3,242 |
3,242 |
Share-based payment reserve |
1,435 |
1,131 |
1,301 |
Foreign exchange translation reserve |
1,717 |
580 |
868 |
Retained loss |
(27,428) |
(24,868) |
(26,271) |
|
|
|
|
Total equity |
16,657 |
13,499 |
14,232 |
|
|
|
|
|
|
|
|
Trade and other payables |
892 |
1,037 |
1,196 |
Total current liabilities |
892 |
1,037 |
1,196 |
|
|
|
|
Provisions |
64 |
44 |
56 |
|
|
|
|
Total non-current liabilities |
64 |
44 |
56 |
|
|
|
|
Total liabilities |
956 |
1,081 |
1,252 |
|
|
|
|
Total equity and liabilities |
17,613 |
14,580 |
15,484 |
Consolidated income statement
For the 6 months ended 31 December 2009
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
6 month ended 31 Dec 09 |
6 months ended 31 Dec 08 |
Year ended 30 Jun 09 |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
Revenue |
- |
1,615 |
1,925 |
Changes in inventories |
44 |
83 |
(253) |
Mining and processing costs |
(224) |
(2,092) |
(2,367) |
Employee benefits expense |
(349) |
(1,038) |
(1,711) |
Impairment of investments and deferred income |
- |
(334) |
(359) |
Depreciation expense |
(355) |
(543) |
(582) |
Gain on exchange |
48 |
67 |
140 |
Other expenses |
(316) |
(898) |
(1,334) |
|
|
|
|
Operating loss |
(1,152) |
(3,140) |
(4,541) |
|
|
|
|
Investment income |
- |
40 |
42 |
Share of loss in joint venture |
(5) |
(14) |
(18) |
|
|
|
|
Loss for the period |
(1,157) |
(3,114) |
(4,517) |
|
|
|
|
Basic and diluted loss per share (pence) |
0.5p |
1.8p |
2.5p |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of cash flows
For the 6 months ended 31 December 2009
|
(Unaudited) |
(Unaudited) |
(Audited) |
|
6 month ended Dec 09 |
6 months ended 31 Dec 08 |
Year ended 30 Jun 09 |
|
£'000 |
£'000 |
£'000 |
Cash flows from operating activities |
|
|
|
Operating loss for the period
Adjustments for:
Depreciation
Impairment of investments and deferred income
Exchange Difference
Equity-settled share-based payment transactions |
(1,152)
355
-
(26)
134 |
(3,140)
543
334
159
143 |
(4,541)
582
359
388
314 |
|
(689) |
(1,961) |
(2,898) |
|
|
|
|
(Increase)/decrease in trade and other receivables |
(55) |
(14) |
145 |
(Increase)/decrease in inventories |
(2) |
42 |
289 |
Increase in provisions for liabilities and charges |
8 |
6 |
18 |
(Decrease)/increase in trade and other payables |
(309) |
(16) |
104 |
Net cash used in operating activities |
(1,047) |
(1,943) |
(2,342) |
|
|
|
|
Cash flows from investing activities |
|
|
|
Interest received |
- |
40 |
42 |
Acquisition of intangibles |
(180) |
(1,994) |
(3,039) |
Acquisition of property, plant and equipment |
- |
(181) |
(199) |
Net cash used in investing activities |
(180) |
(2,135) |
(3,196) |
|
|
|
|
Cash flows from financing activities |
|
|
|
Proceeds from issue of share capital |
768 |
- |
1,750 |
Proceeds from derivative financial instruments |
88 |
- |
- |
Payment of transaction costs |
(263) |
- |
(72) |
Net cash from financing activities |
593 |
- |
1,678 |
|
|
|
|
Net (decrease) in cash and cash equivalents |
(634) |
(4,078) |
(3,860) |
Cash and cash equivalents at start of period |
869 |
4,729 |
4,729 |
|
|
|
|
Cash and cash equivalents at end of period |
235 |
651 |
869 |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of changes in shareholders' equity
For the 6 months ended 31 December 2009
|
Share |
Share |
Merger |
Share based |
Foreign |
Retained |
Total |
|
capital |
premium |
reserve |
payment |
exchange |
earnings |
equity |
|
|
|
|
reserve |
reserve |
|
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
Opening balance 1 July 2008 |
8,481 |
24,933 |
3,242 |
987 |
(879) |
(21,754) |
15,010 |
Loss for the period
Foreign exchange loss |
-
- |
-
- |
-
- |
-
- |
-
1,459 |
(3,114)
- |
(3,114)
1,459 |
Total recognised loss for period |
- |
- |
- |
- |
1,459 |
(3,114) |
(1,655) |
Share based payments |
- |
- |
- |
144 |
- |
- |
144 |
As at 31 December 2008 |
8,481 |
24,933 |
3,242 |
1,131 |
580 |
(24,868) |
13,499 |
Loss for the period
Foreign exchange loss |
-
- |
-
- |
-
- |
-
- |
-
288 |
(1,403)
- |
(1,403)
288 |
Total recognised loss for period |
- |
- |
- |
- |
288 |
(1,403) |
(1,115) |
Shares issued for cash |
500 |
1,250 |
- |
- |
- |
- |
1,750 |
Share based payments |
- |
- |
- |
170 |
- |
- |
170 |
Share issue costs |
- |
(72) |
- |
- |
- |
- |
(72) |
As at 30 June 2009 |
8,981 |
26,111 |
3,242 |
1,301 |
868 |
(26,271) |
14,232 |
Loss for the period
Foreign exchange gain |
-
- |
-
- |
-
- |
-
- |
-
849 |
(1,157)
- |
(1,157)
849 |
Total recognised gain/(loss) for period |
- |
- |
- |
- |
849 |
(1,157) |
(308) |
Shares issued for cash |
316 |
2,861 |
- |
- |
- |
- |
3,177 |
Share issue costs |
- |
(578) |
- |
- |
- |
- |
(578) |
Share based payments |
- |
- |
- |
134 |
- |
- |
134 |
|
|
|
|
|
|
|
|
As at 31 December 2009 |
9,297 |
28,394 |
3,242 |
1,435 |
1,717 |
(27,428) |
16,657 |
|
|
|
|
|
|
|
|
Notes to the consolidated financial statements
These unaudited consolidated financial statements have been prepared on the basis of the recognition requirements of International Financial Reporting Standards ("IFRSs") as adopted by the European Union ("EU") and implemented in the UK and their interpretations adopted by the International Accounting Standards Board ("IASB"). They have also been prepared in accordance with those parts of the Companies Act 2006 applicable to those companies reporting under IFRS.
1. NATURE OF OPERATIONS AND GOING CONCERN
The Group owns diamond interests in Lesotho and Finland. In Lesotho, production continued from both the Satellite and Main Pipes until 1 December 2008 when production was suspended due to falling rough diamond prices and the plant placed on a care and maintenance basis. There were no sales of rough diamonds in the reporting period. The Definitive Feasibility Study into the viability of the Main Pipe continued through the period.
The Company's Finnish diamond interests are operated and financed under a Joint Venture Agreement ("JVA") by Mantle Diamonds Limited. Under the JVA, Mantle is able to earn up to 70% interest in the assets by spending US$5 million on exploration and evaluation of the properties, including a bankable feasibility study in respect of the Company's Lahtojoki property, and by paying the Company 10 million Mantle shares over three years. At 31 December 2009, Mantle had complied with its expenditure requirements under the JVA although it has requested deferral of future expenditure and other obligations, which are under discussion with them. If agreement is not reached regarding such deferrals, the Company may at its option elect to have the assets returned, in which event the Company would seek other means of financing the evaluation of the properties. Consequently, the Company has not impaired the carrying value of its interest in the Finnish assets and this will be reviewed following agreement with Mantle, or, otherwise, clarification of financing.
The Company's expenditure has been reduced as a result of production at Liqhobong being suspended at December 2008. In order to provide the ability to re-start production, invest in the Liqhobong facilities and to progress evaluation and development of the Main Pipe, the Company has arranged further finance. On 17 November 2009 the company raised £3.9 million before expenses by the issue of 27.9 million new ordinary shares. Of this amount, £3.15 million is payable over 24 months dependent on the Company's share price compared to a benchmark price of 18.67p per share. On 17 January 2010 the company raised a further £6.0 million before expenses by the issue of 50.3 million new ordinary shares. Of this amount, £3.0 million is payable over 18 months dependent on the Company's share price compared to a benchmark price of 16p per share. The directors believe the Company has sufficient funds to meet its expenditure plans.
The consolidated financial statements do not include any adjustment that would result from the Company or any of its subsidiary undertakings ceasing to operate as a going concern.
2 ACCOUNTING POLICIES
Basis of consolidation
(i) Subsidiaries
Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases.
(ii) Joint ventures
A joint venture is an undertaking over which the Group is in a position to exercise joint control. The results, assets and liabilities of joint ventures are incorporated in these financial statements using the equity method. Under the equity method of accounting the Group's share of the net assets and the profit or loss for the period are recognised in the balance sheet and income statement respectively.
(ii) Transactions eliminated on consolidation
Intra-group balances and any unrealised gains, losses, income or expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.
(iii) Goodwill
All business combinations are accounted for by applying the purchase method. Goodwill arises on the acquisition of subsidiaries, associates and joint ventures. Goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets acquired.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units and is tested annually for impairment. Goodwill arising on acquisition is capitalised and shown within fixed assets. The excess of net assets over consideration paid on an acquisition is recognised directly in profit or loss.
Deferred Exploration and Evaluation Costs
These comprise costs directly incurred in exploration and evaluation as well as the cost of mineral licences. They are capitalised as intangible assets pending the determination of the feasibility of the project. When the existence of economically recoverable reserves is established the related intangible assets are transferred to property, plant and equipment and the exploration and evaluation costs are amortised over the estimated life of the project. Where a project is abandoned or is determined not economically viable, the related costs are written off.
The recoverability of deferred exploration and evaluation costs is dependent upon a number of factors common to the natural resource sector. These include the extent to which a Company can establish economically recoverable reserves on its properties, the ability of the Company to obtain necessary financing to complete the development of such reserves and future profitable production or proceeds from the disposition thereof.
Share-based payment transactions
The share option programme allows Group employees to acquire shares of the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period until the options vest unconditionally to the employee. The fair value of the options granted is measured using the Black-Scholes model, taking into account the terms and
conditions upon which the options were granted. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest, except if the change is due to market based conditions not being satisfied.
Revenue recognition
Revenue represents gross revenue from the sale of rough diamonds before selling costs. Revenue is recognised at the point of acceptance of customers' bids for the rough diamonds.
Interest income is accrued on a time basis, by reference to the principal outstanding and at the rate applicable.
Property, plant and equipment - Depreciation
Depreciation is charged to the income statement at the following rates in order to write off each asset over its estimated useful life.
| • | Mining assets | 20% on straight line basis until 30 June 2014 |
| • | Fixtures and fittings | 25% on reducing balance |
| • | Computer equipment | 25% on reducing balance
|
The residual value, if not insignificant, is reassessed annually. The Company reviewed the remaining useful life of the Mining assets in the year ended 30 June 2009 and extended the write-off period until 30 June 2014.
Financial instruments
(i) Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value through profit or loss, any directly attributable transaction costs, except as described below. Subsequent to initial recognition, non-derivative financial instruments are measured as described below. At 31 December 2009 the fair value equated to the historical cost for all non-derivative instruments.
A financial instrument is recognised if the Group becomes a party to the contractual provisions of the instrument. Financial assets are derecognised if the Group's contractual rights to the cash flows from the financial assets expire or if the Group transfers the financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date, i.e. the date that the Group commits itself to purchase or sell the asset. Financial liabilities are derecognised if the Group's obligations specified in the contract expire or are discharged or cancelled.
Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand are included as a component of cash flows from financing activities, for the purposes of the statement of cash flows.
(ii) Derivative financial instruments
Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are also subsequently carried at fair value. Gains and losses are charged to financial income or costs in the income statement.
Share capital
Incremental costs directly attributable to issue of ordinary shares and share options are recognised as a deduction from equity.
Loss per share
The calculation of basic loss per ordinary share on the net basis is based on the loss on ordinary activities after taxation of £1,157,000 and on 228,760,942 ordinary shares being the weighted average number of ordinary shares in issue and ranking for dividend during the period. The diluted loss per ordinary share is presented on the same basis as the effect of the exercise of share options would be to decrease the loss per share.
Notes:
These interim financial statements were approved by the directors on 12 March 2010. The Group's principal accounting policies are shown above. These policies are equivalent to those stated in the Annual Report for the year ended 30 June 2009.
The financial information for the six months ended 31 December 2009 and 31 December 2008 is unaudited. The comparative figures for the year ended 30 June 2009 were derived from the group's audited financial statements for that period as filed with the Registrar of Companies. It does not constitute the financial statements for that period. Those financial statements received an unqualified audit report which did not contain any statement under sections 498(2) or 498(3) of the Companies Act 2006.
No dividend is being declared or paid for the period.
Copies of this report are being sent to all shareholders. Additional copies are available from the Company's office at Carlyle House 235-237 Vauxhall Bridge Road, London, SW1V 1EJ or the Company's website www.kopanediamonds.com. |
| |
| | You can view the Next News Releases item: Fri Apr 16, 2010, Trading Update
You can view the Previous News Releases item: Wed Feb 10, 2010, Talks regarding possible offer for the Company
You can return to the main News Releases page, or press the Back button on your browser.
|
|
|
