Charlotte Mathews
26 May 2008
Johannesburg — KIMBERLEY Consolidated Mining (KCM) is likely to start trading at about 100c a share when it makes its debut on the JSE's AltX board tomorrow , says CEO Hein le Riche.
KCM will be the only diamond miner on AltX but the third diamond miner to list on the JSE within seven months after the secondary listings of Rockwell Diamonds in November and DiamondCorp in March. KCM will not raise any capital when it lists.
Le Riche said on Friday that KCM, unlike some other diamond exploration companies, owned mines that could generate revenue of about R150m a year from sales of about 10000 carats, so it had no need to raise cash to fund exploration.
Before the company was listed it issued shares to founding members and to make acquisitions. Those shares were issued at 50c-75c a share, he said.
Reasons for listing were to broaden its shareholder base, increase its exposure and enable it to raise funds for acquisitions if necessary, he said.
KCM was interested in opportunities in alluvial and kimberlite diamonds, and could look at joint ventures, especially in kimberlites, to bring in new expertise, as its main expertise was in alluvial mining.
KCM focuses on four areas. It owns the Bo-Karoo mine on the Middle Orange River in Northern Cape, on which mining began in July 2005 and from which 8030 carats of diamonds were recovered up to the end of February. The mine expects to produce 4840 carats in the current financial year and 6000 carats next year.
KCM said the Bo-Karoo diamonds were large and of excellent quality. So far, one exceptional stone of 123 carats and another of 98,36 carats had been recovered.
The company is also prospecting for alluvials and kimberlites in an area called the Carter block, adjacent to De Beers' Finsch mine, on which it was originally a joint venture partner with Tawana Resources.
Le Riche said it was now in a joint venture with Trans Hex on the property. Also in Northern Cape, KCM was prospecting at Batloung for kimberlites and alluvials in a joint venture.
In North West, KCM was testing diamonds recovered on the joint-venture Taung property, from which 3657 carats had been recovered so far, of which 90% were of gem quality, it said. Last year it recovered a 42-carat diamond on the property.
According to KCM's prelisting statement published last week, it generated revenue of R49,8m in the 11 months to February, and had a net loss of R18,7m. It forecast revenue would rise to R91,6m next year and R127,9m in the year to February 2010, when a net profit of R30,5m was expected. The forecasts assume a full year of income next year and the year after from Bo-Karoo and that production will start from the Carter block later this year.
KCM said it intended to pay regular dividends, but only after management had considered the need to retain funds for operations, loan repayments and capital programmes.
KCM's directors hold just less than 20% of the shares, a key consideration for shareholders wanting management to be involved in the fortunes of the company.
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