Half Yearly Report

 

TIDMTNZ 
 
RNS Number : 2933T 
Tanzanite One Limited 
27 September 2010 
 

 
     Tanzanite One Interim Results for the 
 Half Year Ended 30 June 2010 
 
Tanzanite One Limited ("TanzaniteOne" or the "Company") (AIM:TNZ) today 
announces its interim results for the half year ended 30 June 2010. 
 
Highlights 
 
Financial 
-      EBIDTA, profit of $1.8 million. 
o  $2.0 million improvement from the H1 2009 EBIDTA loss of $0.2 million 
-      Profit after income tax of $0.7 million up from loss after income tax of 
$0.6 million in H1 2009 
-      Revenues increased by 74% to $8.6 million 
o  TTE achieved  revenue of $651,000 (H1 2009: $440,000) 
-      Gross margin of 66%, up from 40% in H1 2009 due to continuation of cost 
containment and gradual increases in selling prices 
-      Operating costs increased 26% from $6.2 million in H1 2009 to $7.8 
million in 1H2010, reflecting increased production 
-      Net current assets at 30 June 2010 of $11.1 million, including: 
o  Cash and cash equivalents of $1.76 million 
o  Inventories of $3.94 million 
o  Trade and other receivables (mainly proceeds of June 2010 sight) of $5.05 
million 
o  Income tax receivable of $1.9 million 
 
Operations 
-      Tanzanite production of 1.0 million carats, 21% up on 1H2009 
-      5% increase in tonnes processed to 18,911 tonnes when compared to 1H2009 
-      Average grade of 55 carats per tonne 
o  Grade increase of 15% compared with 48 carats per tonne in 1H2009 
-      Drilling and sampling of the Tsavorite project completed 
 
Strategic 
-      Ongoing negotiation with the Government of the United Republic of 
Tanzania to research and initiate development of economically sustainable 
domestic cutting operations and agreements, pursuant to ban on the export of 
rough tanzanite larger than 5 carats (1 gram) 
-      Interpretation of Tsavorite drilling data and commencement of bulk 
sampling programme 
-      Ongoing focus on innovative ways to market and sell tanzanite 
 
 
Key statistics 
+----------------------------+------------+----------+-----------+ 
|                            |  1H 2010   |1H 2009   | Movement  | 
+----------------------------+------------+----------+-----------+ 
| EBIDTA                     |  $1.8 m    | ($0.2m)  |  $2.0m    | 
+----------------------------+------------+----------+-----------+ 
| Net profit/(loss)          |  $0.7 m    |($0.5m)   |  $1.2m    | 
+----------------------------+------------+----------+-----------+ 
| Revenue                    |   $8.6m    |  $4.9m   |    76%    | 
+----------------------------+------------+----------+-----------+ 
| Gross margin               |    66%     |   40%    |    65%    | 
+----------------------------+------------+----------+-----------+ 
| Tonnes processed           |  18,911    |  18,087  |    5%     | 
+----------------------------+------------+----------+-----------+ 
| Carats recovered           |1,049,012   |867,381   |    21%    | 
+----------------------------+------------+----------+-----------+ 
| Grade (carats per tonne)   |    55      |    48    |    15%    | 
+----------------------------+------------+----------+-----------+ 
| On mine cash cost per      |   $3.75    |$3.99 ct  |    6%     | 
| carat                      |    ct      |          |           | 
+----------------------------+------------+----------+-----------+ 
 
 
 
 
 
Commenting on the results, Chief Executive Officer, Bernard Olivier said: ÒA 
gradual recovery in the tanzanite price combined with a sustained margin 
enhancement programme sees TanzaniteOne today return to profit.  We have worked 
hard to maximize value from our coloured gemstone operations and I am 
particularly pleased to see the efficiencies from our extraction operations in 
terms of grade.   Our task now is to maximize sales of our lighter stones into 
new markets through the cutting and marketing joint ventures and to build high 
margin business from cut high grade tanzanite. The CompanyÕs strategy is to 
combine highly efficient coloured gemstone extraction processing with sales 
channels that secure immediate revenues from a wide range of established 
customers. I look forward to announcing further results from forthcoming sight 
sales of rough tanzanite and progress from our cut stone operations. 
 
For more information please contact: 
 
Willi Boehm 
Company Secretary 
[phone] 
 
Bernard Olivier 
Chief Executive Officer 
[phone] 
 
Nominated Advisor & Broker (AIM) 
Ambrian Partners Limited 
Richard Greenfield/ Richard Chase 
[phone] 
 
Threadneedle Communications 
Laurence Read/Beth Harris 
[phone] 
[phone] 
 
 
Financial Performance 
 
TanzaniteOne recorded a significant improvement on the previous corresponding 
period and has achieved a consolidated profit after income tax for the half year 
ended 30 June 2010 of $0.71 million ($0.68 cents per share). This represents a 
significant turnaround compared to the previous corresponding period during 
which a loss of $0.58 million (US 0.58 cents per share) was recorded. Earnings 
before interest, taxes, depreciation and amortisation (EBITDA) improved from a 
loss of $0.2million in H1 2009 to a profit of $1.8 million. 
 
Revenues from ordinary activities for the period increased by 74% to $8.6 
million from $4.9 million in 1H 2009. The revenue of $8.6 million achieved 
during the period is comprised of $6.91 million through the sale of 855,847 
carats of rough tanzanite, at an average price of $8.07 per carat, as well as 
$1.69 million from the sales of cut material and specimens. The results were 
heavily influenced by the combination of two very successful sales in Dubai in 
May and June and the growing revenue stream from the CompanyÕs own cutting, 
polishing and sales division. Revenues in the second quarter of $5.4 million 
represented the best quarterly sales figure achieved by the Company over the 
last two years prior to the onset of the Global Financial Crisis. 
 
The Group achieved a gross margin for the year of 66% compared to 40% in 1H2009. 
The increased gross margin was a reflection of higher tanzanite prices and an 
increase in the quality and quantity of tanzanite production from the mine. 
 
Inventory levels of rough and polished tanzanite gemstones and consumable have 
decreased by 16% from the previous period, reflecting an increase in sales and 
trade debtors. Capital expenditure for the year of $0.7 million included 
expenditure of $0.4 million on the purchase of mining equipment and development 
and exploration expenditure of $0.3 million. 
 
The cash and cash equivalents balance of $1.76 million (excluding overdraft 
facility of $0.99 million) and debtors of $5.1 million have benefited 
significantly from May and June sight sales. DebtorsÕ collection period is less 
than one month. 
 
On mine cash costs for the period decreased by 6% to $3.75 per carat from $3.99 
in H1 2009. The decrease reflects the impact of 21% increase in carats recovered 
to 1,049,012 and as a result of strict cash and cost management efforts during 
the first half of 2010. On mine cash costs include operating costs, mine 
administration costs and royalty charges incurred at the Merelani mine. 
 
The Tanzanite Experience (TTE), a ÒmuseumÓ and retail outlets in Arusha that 
showcases the history of tanzanite through a series of visual and interactive 
exhibitions, has achieved net revenue of $651,000 from cut tanzanite sales for 
the period, representing an increase of 32% compared to 1H 2009. TTE continues 
to grow its market share in the tourism market and is planning to open further 
outlets to compliment its current presence in Arusha. 
 
The directors have not declared an interim dividend.   The Board has a strong 
history of rewarding shareholders with dividends but feels it prudent to defer 
further dividends until market conditions strengthen and stabilise. 
 
 
Operational Overview 
 
In the first half of 2010, the Company achieved production totalling 1,049,012 
carats from the processing of 18,911 tonnes of material at an average recovery 
grade of 55 carats per tonne.  This strong performance represents a 21% increase 
in the carats produced, a 5% increase in the tonnes processed and a 15% increase 
in the grade compared with H1 2009. 
 
Tsavorite 
 
A total of 83 Rotary Air Blast drill holes totalling 1,626m were completed 
during the first half of 2010. The initial drilling programme was expanded to 
adequately cover and investigate the deposit. Each hole was geologically logged 
and sampled at 1.5m intervals. Line section compilation, data digitisation and 
volume data calculations were also undertaken by an independent consultant 
during drilling. A detailed hard rock geological mapping programme was also 
undertaken on three prospecting licences. 
 
The tsavorite drilling, sampling and data interpretation has been completed 
(after the reporting period) and bulk sampling commenced in mid-September 2010. 
The bulk sampling is scheduled to continue until the end of October 2010 and the 
final processing and data interpretation will be concluded in November 2010. The 
final independent JORC compliant report is expected in December 2010. 
 
Strategic 
 
The Company is in ongoing discussions with the Government of the United Republic 
of Tanzania to research and initiate development of economically sustainable 
domestic cutting operations and agreements, pursuant to ban on the export of 
rough tanzanite larger than 5 carats (1 gram). The Company is currently 
expanding its in-house cutting and polishing operations while also investigating 
potential cutting and polishing agreements with external beneficiation companies 
in Tanzania. The Company continues to focus on innovative ways to market and 
sell tanzanite. 
 
 
Condensed Consolidated Statement of Comprehensive Income 
Half Year ended 30 June 2010 
($'000) 
 
+----------------------------+----+---------+---------+---------+ 
|                            |    |   1H    |   1H    |         | 
|                            |    |  2010   |  2009   |   FY    | 
|                            |    |         |         |  2009   | 
|                            |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
|                            |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| Revenue                    |    |  8,553  |  4,913  | 12,459  | 
+----------------------------+----+---------+---------+---------+ 
| Cost of sales              |    |(2,950)  |(2,962)  |(6,471)  | 
+----------------------------+----+---------+---------+---------+ 
| Gross profit               |    |  5,603  |  1,951  |  5,988  | 
+----------------------------+----+---------+---------+---------+ 
| Gross margin %             |    |  66%    |  40%    |  48%    | 
+----------------------------+----+---------+---------+---------+ 
|                            |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| Corporate administration   |    |(1,575)  |(1,185)  |(2,742)  | 
| and other operating costs  |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| Mine administration        |    |(1,191)  |  (896)  |(2,449)  | 
+----------------------------+----+---------+---------+---------+ 
| Selling and distribution   |    |  (663)  |  (808)  |(1,700)  | 
| costs                      |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| Royalties                  |    |  (197)  |  (104)  |  (337)  | 
+----------------------------+----+---------+---------+---------+ 
| Finance income             |    |    1    |    2    |   17    | 
+----------------------------+----+---------+---------+---------+ 
| Foreign                    |    |  (115)  |  906    |  1,126  | 
| exchange(losses)/gains     |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| Finance cost               |    |  (47)   |  (66)   |  (138)  | 
+----------------------------+----+---------+---------+---------+ 
| Profit/(loss) before       |    |  1,816  |  (200)  |  (235)  | 
| depreciation and           |    |         |         |         | 
| amortisation               |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| Missing inventory          |    |    -    |    -    |  (963)  | 
+----------------------------+----+---------+---------+---------+ 
| Depreciation and           |    |(1,077)  |(1,132)  |(2,853)  | 
| amortisation               |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| Profit/(loss) before tax   |    |  739    |(1,332)  |(4,051)  | 
+----------------------------+----+---------+---------+---------+ 
| Income tax                 |    |  (34)   |  752    |  1,629  | 
| (expenses)/credit          |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| Profit/(loss)  after tax   |    |  705    |  (580)  |(2,422)  | 
+----------------------------+----+---------+---------+---------+ 
| Non-controlling interest   |    |   23    |   34    |   46    | 
+----------------------------+----+---------+---------+---------+ 
| Profit/(loss) attributable |    |  728    |  (546)  |(2,376)  | 
| to equity holders of       |    |         |         |         | 
| parent                     |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
|                            |    |         |         |         | 
+----------------------------+----+---------+---------+---------+ 
| EPS (basic Ð cents)        |    |  0.64   | (0.58)  | (2.54)  | 
+----------------------------+----+---------+---------+---------+ 
 
 
Condensed Consolidated Statement of Financial Position 
As at 30 June 2010 
 $'000 
 
+------------------------------+-----+----------+----------+---------+ 
|                              |     | 1H 2010  |    1H    | FY2009  | 
|                              |     |          |  2009    |         | 
+------------------------------+-----+----------+----------+---------+ 
| Non-current assets           |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Property, plant and          |     |  30,227  |  25,134  | 30,619  | 
| equipment                    |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Inventories                  |     |   129    |   508    |  129    | 
+------------------------------+-----+----------+----------+---------+ 
| Deferred tax assets          |     |  1,731   |    -     |  1,748  | 
+------------------------------+-----+----------+----------+---------+ 
| Total non-current assets     |     |  32,087  |  25,642  | 32,496  | 
+------------------------------+-----+----------+----------+---------+ 
| Current assets               |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Inventories                  |     |  3,941   |  4,681   |  3,979  | 
+------------------------------+-----+----------+----------+---------+ 
| Income tax receivable        |     |  1,923   |  2,151   |  1,980  | 
+------------------------------+-----+----------+----------+---------+ 
| Trade and other receivables  |     |  5,055   |  1,722   |  3,184  | 
+------------------------------+-----+----------+----------+---------+ 
| Cash and cash equivalents    |     |  1,762   |  5,006   |  2,193  | 
+------------------------------+-----+----------+----------+---------+ 
| Total current assets         |     |  12,681  |  13,559  | 11,336  | 
+------------------------------+-----+----------+----------+---------+ 
| Total assets                 |     |  44,768  |  39,201  | 43,832  | 
+------------------------------+-----+----------+----------+---------+ 
| Equity                       |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Share capital                |     |    32    |    32    |   32    | 
+------------------------------+-----+----------+----------+---------+ 
| Share premium                |     |  46,020  |  45,721  | 46,020  | 
+------------------------------+-----+----------+----------+---------+ 
| Share options outstanding    |     |   706    |   706    |  706    | 
+------------------------------+-----+----------+----------+---------+ 
| Foreign currency translation |     |  (510)   |  (530)   |  (684)  | 
| reserve                      |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Retained earnings            |     | (8,832)  |(11,401)  |(9,560)  | 
+------------------------------+-----+----------+----------+---------+ 
| Total equity attributable to |     |  37,416  |  34,528  | 36,514  | 
| parent equity holders        |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Non-controlling interest     |     |  (64)    |  (30)    |  (42)   | 
+------------------------------+-----+----------+----------+---------+ 
| Total equity                 |     |  37,352  |  34,498  | 36,472  | 
+------------------------------+-----+----------+----------+---------+ 
| Non-current liabilities      |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Interest-bearing borrowings  |     |   701    |   850    |  804    | 
+------------------------------+-----+----------+----------+---------+ 
| Provisions                   |     |   107    |   100    |  107    | 
+------------------------------+-----+----------+----------+---------+ 
| Deferred tax liabilities     |     |  5,055   |  2,453   |  5,038  | 
+------------------------------+-----+----------+----------+---------+ 
| Total non-current            |     |  5,863   |  3,403   |  5,949  | 
| liabilities                  |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Current liabilities          |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
| Interest-bearing borrowings  |     |   299    |    3     |  196    | 
+------------------------------+-----+----------+----------+---------+ 
| Overdraft                    |     |   986    |    -     |  570    | 
+------------------------------+-----+----------+----------+---------+ 
| Income tax payable           |     |    -     |    33    |    -    | 
+------------------------------+-----+----------+----------+---------+ 
| Trade and other payables     |     |   268    |  1,264   |  645    | 
+------------------------------+-----+----------+----------+---------+ 
| Total current liabilities    |     |  1,553   |  1,300   |  1,411  | 
+------------------------------+-----+----------+----------+---------+ 
| Total liabilities            |     |  7,416   |  4,704   |  7,360  | 
+------------------------------+-----+----------+----------+---------+ 
| Total equity and liabilities |     |  44,768  |  39,201  | 43,832  | 
+------------------------------+-----+----------+----------+---------+ 
|                              |     |          |          |         | 
+------------------------------+-----+----------+----------+---------+ 
 
 
 
 Condensed Consolidated Statement of Cash Flows 
 For the Half Year Ended 
30 June 2010 
 $'000 
 
+------------------------------------+----+-------+-------+---------+ 
|                                    |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
|                                    |    |  1H   |  1H   |   FY    | 
|                                    |    | 2010  | 2009  |  2009   | 
+------------------------------------+----+-------+-------+---------+ 
| Cash flows from operating          |    |       |       |         | 
| activities                         |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Cash utilised in operations        |    |(172)  |(686)  |(2,513)  | 
+------------------------------------+----+-------+-------+---------+ 
| Finance income                     |    |  1    |  2    |   17    | 
+------------------------------------+----+-------+-------+---------+ 
| Financing cost                     |    | (47)  | (66)  |  (131)  | 
+------------------------------------+----+-------+-------+---------+ 
| Income tax refunded/(paid)         |    |  56   | (27)  |  251    | 
+------------------------------------+----+-------+-------+---------+ 
| Net cash used in operating         |    |(162)  |(777)  |(2,376)  | 
| activities                         |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Cash flows from investing          |    |       |       |         | 
| activities                         |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Purchase of property, plant and    |    |(685)  |(822)  |(2,752)  | 
| equipment                          |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Net cash used in investing         |    |(685)  |(822)  |(2,752)  | 
| activities                         |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
|                                    |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Cash flows from financing          |    |       |       |         | 
| activities                         |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Proceeds from issue of share       |    |  -    |5,341  |  5,341  | 
| capital                            |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Proceeds from interest-bearing     |    |  -    |  470  |  616    | 
| borrowings                         |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Net cash generated from financing  |    |  -    |5,811  |  5,957  | 
| activities                         |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Net (decrease)/increase in cash    |    |(847)  |4,212  |  829    | 
| and cash equivalents               |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Cash and cash equivalents at the   |    |1,623  |  794  |  794    | 
| beginning of the period/year       |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
| Cash and cash equivalents at the   |    |  776  |5,006  |  1,623  | 
| end of the period/year             |    |       |       |         | 
+------------------------------------+----+-------+-------+---------+ 
 
 
 
 
Glossary 
 
ct                                                carat 
dollar or $                                 United States Dollar 
g/t                                               Grammes per tonne, measurement 
unit of grade (1g/t = 1 part per m) 
JORC                                         Australasian code for reporting of 
Mineral Resources and Ore Reserves 
On-mine cash costs              On-mine cash costs include mine operating costs, 
mine administration costs and royalty charges incurred at Merelani mine. 
tonne                                         1 Metric tonne (1,000kg). 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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