RNS Number:2355G West African Diamonds PLC 24 October 2007 West African Diamonds Plc Preliminary Results for Year Ended April 30th 2007 Highlights for period under review and year to date O WAD established as independent entity: January 2007 de-merger, listing and fund raising O Multiple licence portfolio across Sierra Leone and Guinea including imminent production, late stage development, advanced and early stage exploration assets O Considerable operational progress: o Koidu, Sierra Leone, Plant 11 diamonds and gold: commercial production expected November 2007 o Acquisition of Fastrack assets and staff in Sierra Leone expedited progress o Koidu, Sierra Leone Pipe 3 diamonds: significant increase in prospective target resource grade - up to 19 carats per tonne o Bomboko, Guinea, alluvial diamonds: mining 2007/8 expected o Droujba, Guinea: acquisition of highly prospective diamond exploration licences O Financially stable o 1m raised at demerger o Further #846,000 raised September 2007 o Contracts for sale of Plant 11 output agreed - positive cash flow Q1 2008 John Teeling, Chairman of West African Diamonds commented: 'This has been a year of excellent progress. We have not only created a diamond and gold portfolio across highly prospective territory, but within a year of establishment, we will have started production from one project, and will be very close to a second producer. This progress towards production is matched by our development of a wider portfolio. At the development and exploration levels, our projects remain highly attractive. We have been active in our attempts to add value at all levels - our success at Pipe 3 being the most obvious example. With new positive cash flow from Plant 11, and hopefully Bomboko, we look forward to being a mining company that operates production, development and exploration projects.' Enquiries: John Teeling, Chairman + 353 1 833 2833 James Campbell, Deputy Chairman +27 83 457 3724 Blue Oar Securities Plc John Wakefield / Simon Moynagh +44 (0) 117 933 0020 College Hill Paddy Blewer / Nick Elwes +44 (0) 20 7457 2020 Chairman's Statement West African Diamonds (WAD) is a diamond exploration and development company focused on Sierra Leone and Guinea. Established mainly with assets demerged from African Diamonds plc and with cash raised from an AIM listing in January 2007, WAD expects to produce diamonds and gold in the last two months of 2007. The Plant 11 diamond and gold tailings resource at Koidu in Sierra Leone is at wet commissioning stage and is expected to shortly start commercial production. Two further projects, Pipe 3, also at Koidu, and Bomboko in Guinea are at late stage evaluation and have the potential to be producers in 2008. In addition, WAD acquired additional licences in Guinea and acquired Fastrack assets in Sierra Leone in July 2007. These acquisitions have further enhanced the potential of the company. Industry Background A rising tide lifts all ships and so it is with diamonds. Economic growth has increased living standards in many parts of the world. One consequence of improving living standards is a changing pattern of consumption. Chinese females now aspire to diamond rings. Indian ladies are adding diamond encrusted gold jewellery to their dowries, while ladies in the Western world with high disposable income are buying big high quality diamonds for themselves. The result has been a steady increase in demand, a trend expected to increase at least in the near future. Meanwhile diamond production is stagnant or at best slowly increasing. The reason is simple. Diamonds are rare, they are hard to find and found only in a few places and existing mines are running out. Botswana, South Africa, Russia, Canada and Australia are the main producers. Most diamonds are produced from tiny volcanoes called kimberlite pipes. About 7,000 of these pipes have been discovered to date of which 1% contain diamonds and less than 50 have ever become hard rock diamond mines. Despite extensive exploration in recent years few discoveries have been made, apart from the AK6 pipe in Botswana currently being developed by African Diamonds and De Beers. Rising prices and improved technology have reawakened interest in alluvial diamonds. These are diamonds eroded from pipes and contained either in riverbeds, in surrounding river terraces or offshore. Rising prices have also made the reworking of old tailings or waste dumps economic. Quality more than quantity is a critical factor in diamonds. This is the value per carat. A carat is one fifth of a gram or 1/150th of an ounce. Diamond values range from $20 a carat to maybe $10,000 plus a carat for large top quality stones. Sierra Leone and Guinea Before discussing the individual projects, let me comment on the locations where we work. Sierra Leone has emerged from a dark period of civil and political unrest. It is a small country with many resources, in particular beautiful high quality diamonds. For much of the 20th century, Sierra Leone was one of the largest by value diamond producers, all from alluvial production. West African Diamonds directors have extensive experience in the country and they were early movers. When peace returned they bought into licences in the diamond producing area of Koidu. The current political stability, the emerging rule of law, and improving infrastructure makes Sierra Leone an attractive location for mining companies. Most prospective ground is now taken. Guinea is very much unknown in the English speaking world. A former French colony, it embraced socialism after independence in the 1960s until recently. The country is blessed with abundant iron ore and bauxite while the diamond industry is underdeveloped. One producing alluvial mine, Aredor, is struggling, but once again, like Sierra Leone, the diamond quality is superb. West African predecessor companies have been active in Guinea for some years and were able to acquire good ground. In both countries, the commercial and fiscal terms are attractive for investors and as stability has returned, there has been significant demand for licences. West African Diamonds Portfolio WAD has a portfolio of projects from near production to early stage exploration. These projects are: Near Production: Plant 11 diamonds and gold, Koidu, Sierra Leone. Currently being commissioned. Development: Bomboko alluvials, Guinea. Plant to be moved on site Q4 2007. Advanced Exploration: Pipe 3, Sierra Leone, feasibility ongoing. Droujba, Guinea, alluvials and kimberlites. Work expected to commence by year end. Early stage: Further licences in both Sierra Leone and Guinea. Plant 11 (60% WAD): First diamond production from this very large 7m tonne plus undersize tailings resource is due in November. Outstanding progress has been made on this project. In less than 12 months a plant has been designed and constructed in South Africa, transported to Koidu and assembled. The final stages of commissioning are underway. Full throughput of 150 tonnes per hour is expected in early 2008. Output is expected to be 0.4g/t gold worth $9 a tonne and diamonds worth $3 a tonne. The acquisition of Fastrack assets in Sierra Leone in August 2007 greatly facilitated the development of Plant 11. In addition to equipment, WAD was able to acquire the services of Hennie Wessels, an experienced West African hand. He is bringing the project on stream. Bomboko Alluvials (100% WAD): It is hoped to begin small scale mining on the Bomboko River by end 2007 or early 2008. Equipment has been sourced and refurbished in Koidu. It is being transported to Bomboko. Significant earlier work has been done on these licences by WAD personnel. Prior to the AIM listing, adjacent licences were acquired. The area produces beautiful stones. Those already recovered have been recently independently valued at over $220 per carat. There is an estimated resource in excess of 750,000 carats on the licences. The work being done now is the initial stage of what we hope will become a substantial alluvial producer. Pipe 3 (100% WAD): This is the success story of the year. From a resource with very limited economic value, WAD exploration and re-evaluation has increased the grade almost fourfold. A number of exploitation options are now being evaluated ranging from some form of joint venture with the adjacent mine on Pipes 1 and 2, to a small scale stand alone operation. Pipe 3 is very small, less than a quarter of a hectare. Rough calculations suggest a target mineable resource of 100,000 tonnes grading up to 19 carats per hundred tonnes. A development option will be decided on in 2008. Droujba, Guinea (100% WAD): This is an area of Guinea well known for diamonds contained in alluvials, narrow kimberlite dykes and kimberlite pipes. WAD obtained a licence over the area in April 2007 and has reviewed all available data. There is significant short term potential in the alluvials, while the geology and economics of the kimberlite dykes and pipes need to be assessed. Significant exploration resources will be devoted to this area in the coming year. Finance A limited amount of money was raised at listing followed by a #846,000 placing in September 2007. These funds are adequate to bring Plant 11 into production, to upgrade mining at Bomboko, to bring Pipe 3 to a feasibility decision and to conduct our ongoing exploration. Contracts for the sale of diamonds and gold from Plant 11 have been signed. Cash flow should immerge in Q1 2008. Future We believe that WAD has significant potential. The company will be a diamond producer with a portfolio of projects spanning the exploration pipeline. There is an experienced team in place capable of developing the portfolio. We see a flow of projects in diamonds, and in metals, not only in West Africa but elsewhere in Africa. We are well on the way toward realising the potential of our assets. John Teeling Chairman 24th October 2007 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 30 APRIL 2007 Year ended Period from 30/4/2007 14/4/2005 to 30/4/2006 # # TURNOVER - - Cost of sales - - GROSS PROFIT - - Administrative expenses: - Cost of admission to AIM (393,713) - - Other administrative expenses (302,650) - OPERATING LOSS - continuing operations (696,363) - Interest payable and similar charges (821) - Interest receivable and similar income 4,924 - LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (692,260) - Tax on loss on ordinary activities - - LOSS ON ORDINARY ACTIVITIES AFTER TAXATION FOR THE FINANCIAL PERIOD (692,260) - LOSS PER SHARE - basic (4.78p) - LOSS PER SHARE - diluted (4.78p) - There were no gains and losses recognised other than the amounts shown above. All gains and losses arise from continuing activities. CONSOLIDATED BALANCE SHEET AT 30 APRIL 2007 2007 2006 # # FIXED ASSETS Intangible assets 5,061,044 - Tangible assets 638,958 - 5,700,002 - CURRENT ASSETS Debtors 288,450 2 Cash at bank 550,058 - 838,508 2 CREDITORS: (Amounts falling due within one year) (194,589) - NET CURRENT ASSETS 643,919 2 TOTAL ASSETS LESS CURRENT LIABILITIES 6,343,921 2 NET ASSETS 6,343,921 2 CAPITAL AND RESERVES Called-up share capital 335,700 2 Share premium 6,315,581 - Share based remuneration reserves 384,900 - Profit and loss account - deficit (692,260) - EQUITY SHAREHOLDERS' FUNDS 6,343,921 2 CONSOLIDATED CASH FLOW STATEMENT FOR THE YEAR ENDED 30 APRIL 2007 Year ended Period from 30/4/2007 14/4/2005 to 30/4/2006 # # NET CASH OUTFLOW FROM OPERATING ACTIVITIES (412,266) - RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest paid and similar charges (821) - Interest received 4,924 - NET CASH INFLOW FROM RETURNS ON INVESTMENTS AND SERVICING OF FINANCE 4,103 - NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT Payments to acquire intangible assets (1,040,143) - Payment to acquire tangible assets (638,958) - NET CASH OUTFLOW FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT (1,679,101) - NET CASH OUTFLOW BEFORE FINANCING (2,087,264) - FINANCING: Issue of ordinary share capital for cash 2,700,000 - Share issue costs (62,678) - NET CASH INFLOW FROM FINANCING 2,637,322 - INCREASE IN CASH 550,058 - RECONCILIATION OF MOVEMENT IN SHAREHOLDERS' FUNDS FOR THE YEAR ENDED 30 APRIL 2007 Year ended Period from 30/4/2007 14/4/2005 to 30/4/2006 # # Total recognised loss for the year (692,260) - Issue of shares: - at par 335,698 2 - share premium 6,315,581 - Share based remuneration reserves 384,900 - Net change in shareholders' funds 6,343,919 2 Opening shareholders' funds 2 - Closing shareholders' funds 6,343,921 2 Notes: The financial information set out above does not constitute the Company's financial statements for the year ended 30 April 2007. The financial information for 2006 is derived from the financial statements for 2006 which have been delivered to the Registrar of Companies. The auditors have reported on 2006 statements; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. The financial statements for 2007 have been audited and will be delivered to the Registrar of Companies following the Company's Annual General Meeting. The auditors have reported on the 2007 statements; their report was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985. A copy of the Company's annual report and accounts for 2007 will be mailed to all shareholders shortly and will also be available for collection from the Company's registered office, 20-22 Bedford Row, London WC1R 4JS. This information is provided by RNS The company news service from the London Stock Exchange END FR FESFWDSWSELS