Tahera Diamond Corporation: Second Quarter Report

    TORONTO, Aug. 7 /CNW/ -

    Jericho Diamond Mine:

    -   The operational review continued through the second quarter, with
        excellent progress in a number of areas, including improved grades.
        The total number of dry tonnes processed was 95,500 tonnes for the
        second quarter of 2007, at an average grade of 0.78 carats per tonne,
        resulting in carat production of 74,000 carats. However, if the
        re-processing of the coarse processed kimberlite ("PK") stockpile
        material is excluded, the total number of dry tonnes processed was
        77,000 tonnes, at an average grade of 0.90 carats per tonne. Overall,
        total tonnes processed decreased by 42% compared to the first
        quarter, mainly due to the plant testing completed during the
        quarter. The grade increased by 73% quarter-over-quarter, as a result
        of improvements made to the plant and an improved mix of material.

    -   The value of production for the second quarter of 2007, based on
        Government Diamond Valuation ("GDV") values, was US$6.4 million. When
        applying exchange rates in effect at the GDV valuation dates, the
        equivalent Canadian dollar value of production was $6.9 million. The
        total cash operating cost related to the production of these goods
        was $16.0 million.

    -   Mining efforts focused on waste stripping, resulting in the exposure
        of the 430-metre bench level, with the exception of the south lobe.
        The Company expects that it will now be able to either maintain
        exposure to a number of the various ore types or develop sufficient
        stockpiles to enable continued blending of ore feed to the processing

    -   Screen panels were reduced from 1.25mm aperture screens to 1.00mm
        aperture screen panels. In order to test the impact of the smaller
        screen panels, the Company conducted audits on the PK stockpile. In
        total, 13,455 tonnes of PK material was reprocessed, yielding
        3,170 carats, for a grade of 0.236 carats per tonne. These results
        help to explain the difference in the grade achieved during 2006 when
        compared to the bulk sample results.

    -   The batching program began with the processing of the central lobe
        F6 ("F6") material. In total, 14,303 dry tonnes of F6 material was
        processed over a 14-day period, yielding 22,294 carats, for an
        average grade of 1.56 carats per tonne. These goods were valued by
        the government valuators separately from the normal run-of-mine
        production and were assigned a value of US$101 per carat.

    -   Other improvements during the second quarter include the introduction
        of a more rigorous system of tracking, collecting and disseminating
        information related to plant performance, the establishment of
        regular maintenance procedures, the addition of production geologists
        and mine engineers, the repositioning of the pit ramps and the
        purchase, mobilization and installation of a jaw crusher.

    -   During the second quarter, the Company appointed Mr. Michael Johnson
        as the Interim Director of Operations at the Jericho Mine site.
        Mr. Johnson has been involved with the exploration and data analysis
        of the Jericho kimberlite for the past nine years, including
        contributing to the development of the feasibility study, and was
        recently the exploration manager for the Company from 2002 to early
        2007. Mr. Johnson brings an extensive understanding of kimberlite
        evaluation and diamond processing to the project.

    -   During the month of July, the Company processed 40,000 tonnes of
        kimberlite at an average grade of 0.88 carats per tonne, resulting in
        approximately 35,000 carats.


    -   The Company has been making excellent progress with its improvement
        plan; however, as the plant is not running at full capacity due to
        the various tests being performed, additional financial losses have
        been incurred, leading to the need for a comprehensive financing plan
        involving all of the Company's major stakeholders.

    -   During the quarter, the Company completed the sale of 22,500,000
        units from treasury at a price of $1.00 per unit for gross proceeds
        of $22,500,000. Each unit is comprised of one common share and
        one-half of one common share purchase warrant.

    -   Also during the quarter, the Company drew funds totalling $2,500,000
        under the working capital facility with Tiffany & Co.


    -   The 500-tonne bulk sample taken from the JD-3 kimberlite in the first
        quarter was processed during the second quarter and the resulting
        heavy concentrate has been shipped to the Kennecott Canada Inc.
        laboratory in Thunder Bay, where the recovery of diamonds will take
        place. This process is expected to take approximately one month, at
        which point a diamond grade for the bulk sample will be available.

    -   Drilling and ground geophysics programs were completed on the
        Rockinghorse property during the quarter.

    Please refer to Tahera's website (www.tahera.com) or www.SEDAR.com to
view the complete second quarter report including the management discussion
and analysis, financial statement and the notes thereto.

    Mr. Dale Mah, P. Geol., is Tahera's qualified person, as defined in
National Policy 43-101, and has supervised the preparation of the technical
information included in this press release. Mr. Mah is an employee of Tahera
and is not considered independent of Tahera.

    Tahera has scheduled a conference call at 11:00 a.m. Eastern Daylight
Time on Wednesday, August 8, 2007. Interested parties are invited to
participate in the call by dialing 416-644-3426 or toll-free 1-800-587-1893.
To access a conference replay (available at 1:00 p.m. EDT), dial 416-640-1917
or toll-free 1-877-289-8525 and enter pass code 21242752, followed by the
number sign.

    2007 Second Quarter Results

    At June 30, 2007, Tahera's cash and cash equivalents balance is
$12,813,000, a decrease of $14,744,000 from the balance at December 31, 2006.
The decrease is due primarily to negative cash flows from operations and the
significant expenditures made in early 2007 to mobilize fuel, explosives and
other supplies on the winter ice road. The Company realized revenues of
$15,299,000 and an operating loss of $30,641,000 during the period. The
Company recorded a net loss for the first six months of 2007 of $31,676,000
($0.16 per share), as compared to income of $2,553,000 ($0.02 per share) for
the comparable period of 2006.

    Financial Statement Highlights (in thousands of Canadian dollars,
    except for per share data):

                                                        As at          As at
                                                Jun. 30, 2007  Dec. 31, 2006

    Current Assets                                  $  36,753      $  44,885
    Capital and Other Assets                          206,935        203,069
                                                -------------- --------------

                                                    $ 243,688      $ 247,954
                                                -------------- --------------
                                                -------------- --------------

    Current Liabilities                             $  46,878      $  31,469
    Long-Term Liabilities                              37,126         43,624
    Share Capital - Common Shares                     205,432        189,509
    Common Share Purchase Warrants                     11,631          9,212
    Contributed Surplus                                 5,121          5,049
    Deficit                                           (62,585)       (30,909)
    Accumulated Other Comprehensive Income                 85              -
                                                -------------- --------------

                                                    $ 243,688      $ 247,954
                                                -------------- --------------
                                                -------------- --------------

                                                   Six Months     Six Months
                                                        Ended          Ended
                                                Jun. 30, 2007  Jun. 30, 2006
                                                   (unaudited)    (unaudited)

    Revenues                                        $  15,299      $       -
    Cost of Goods Sold                                 45,940              -
                                                -------------- --------------

    Operating Loss                                    (30,641)             -

    Corporate, General and Administrative
     Expenses                                          (1,968)        (2,530)
    Amortization of Non-Operating Assets                 (210)          (145)
    Other Items                                        (1,877)           291
                                                -------------- --------------

    Loss for the Period before Income Taxes           (34,696)        (2,384)

    Recovery of Income Taxes - Current                      -             82
    Recovery of Income Taxes - Future                   3,020          4,855
                                                -------------- --------------

    Net (Loss) Income for the Period                $ (31,676)     $   2,553
                                                -------------- --------------
                                                -------------- --------------

    (Loss) Earnings per Share - Basic and
     Diluted                                        $   (0.16)     $    0.02
                                                -------------- --------------
                                                -------------- --------------

    Cash Flows From (Used In):
      Operating Activities                          $ (24,200)     $     466
      Investing Activities                            (13,424)       (36,169)
      Financing Activities                             22,880         31,399
                                                -------------- --------------

    Net Decrease in Cash and Cash Equivalents         (14,744)        (4,304)
    Cash and Cash Equivalents - Beginning of
     Period                                            27,557         15,445
                                                -------------- --------------

    Cash and Cash Equivalents - End of Period       $  12,813      $  11,141
                                                -------------- --------------
                                                -------------- --------------

    Cautionary Statement Regarding Forward-Looking Information

    This press release contains "forward-looking information" that reflects
Tahera Diamond Corporation's current beliefs, plans, objectives, estimates,
intentions, expectations and projections about its future results. When used
in this press release, words such as "estimate", "intend", "expect",
"anticipate" and similar expressions are intended to identify forward-looking
information, which is based on the opinions and estimates of management at the
date the statements are made. By its very nature, forward-looking information
is subject to risks and uncertainties and other factors that could cause
Tahera Diamond Corporation's actual results, performance, prospects or
opportunities to differ materially from those expressed in, or implied by,
forward-looking information. These risks, uncertainties and factors may
include, but are not limited to exposure to interest rate fluctuations,
foreign currency risks, changes in federal, provincial and territorial laws,
rules and regulations relating to the Company's business and environmental
matters, changes in tax regulations and accounting pronouncements, the
inherent risks involved in the exploration, development, and mining of mineral
properties, the uncertainties involved in interpreting drilling results and
other data, fluctuating commodity prices, unforeseeable adverse climate
conditions, the possibility of cost overruns or unanticipated costs and
expenses, uncertainties relating to the availability and costs of financing
needed in the future, other factors and the accuracy of management's
    Specifically, in making statements concerning future estimated grades
the, Company has assumed that mining operations will proceed in the normal
course according to schedule and that the statistical computations and the
assumptions used and judgments made in interpreting engineering and geological
information will prove to be correct. There is significant uncertainty in any
mineral resource estimate and the actual deposits encountered may differ
materially from the Company's estimates. With respect to statements concerning
diamond prices, Tahera has assumed that current world economic conditions and
current rough diamond supply and demand fundamentals will not materially
change. Operating cost estimates have been based on the Company's experience
to date; however increases in labour and fuel costs and any unforeseen mining
issues could materially impact these forecasts. While the Company considers
these assumptions to be reasonable based on information currently available to
it, they may prove to be incorrect.
    Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this press
release or as of the date otherwise specifically indicated herein. Due to
risks and uncertainties, including the risks and uncertainties identified
above and elsewhere in this press release, actual events may differ materially
from current expectations. Tahera Diamond Corporation disclaims any intention
or obligation to update or revise any forward-looking information, whether as
a result of new information, future events or otherwise.
    The above press release makes reference to certain non-GAAP financial
measures such as cash operating costs and value of production, to assist the
reader in assessing the Company's financial performance. Non-GAAP financial
measures do not have any standard meaning prescribed by GAAP and are therefore
unlikely to be comparable to similar measures presented by other issuers. See
"Non-GAAP Financial Measures" in the Management's Discussion & Analysis.

    On Behalf of the Board,

    R. Peter Gillin
    Chairman and CEO
    Tahera Diamond Corporation

    %SEDAR: 00003313E

For further information:

For further information: Investor Relations, Tel: (416) 777-1998, Fax:
(416) 777-1898, Toll free: (877) 777-2004, Email:

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