Vaaldiam Resources Ltd.

Vaaldiam Resources Ltd.

May 16, 2008 09:26 ET

Vaaldiam Reports First Quarter Results

TORONTO, ONTARIO--(Marketwire - May 16, 2008) - Vaaldiam Resources Ltd. (TSX:VAA) has announced its financial and operating results for the first quarter ended March 31, 2008.

2008 First Quarter Highlights

- 20,728 carats sold for gross proceeds of US$3,892,194 or US$188 per carat;

- Cash used in operating activities was $2,950,455;

- Acquired 100% of Great Western Diamonds Corp.;

- Completed integration of Elkedra Diamonds NL and Great Western Diamonds into Vaaldiam's operations; and

- Advanced Brauna kimberlite project towards feasibility study.

During the first quarter diamond production at the Duas Barras mine was reduced, as expected, due to the advanced stripping of a new mining block which resulted in the processing of the lower grade upper gravel sequence overlying the higher grade basal gravel in the new mining block. Despite this the Duas Barras mine recorded operating income of $183,451 which was after deducting non-cash amortization of $510,784. On a non-GAAP basis, after adding back the non-cash amortization expense, the adjusted cash based mine operating income for the quarter was $694,235. No gold was sold during the first quarter, however, gold sales will commence in the second quarter.

At the Chapada mine, Vaaldiam implemented a number of initiatives to lower operating costs, improve recoveries and expand resources and production. To allow for the implementation of these changes, the mine operated at 50% of capacity resulting in lower production rates during the quarter. By the end of the quarter production had increased to 75% of capacity, and full production is expected to be achieved during the second quarter of 2008. The full impact of these initiatives is expected to be realized in the third quarter of 2008. As a result of the lower production, an operating loss of $919,929 was recorded at the Chapada mine for the first quarter which was after deducting $177,274 of non-cash amortization costs. On a non-GAAP basis, after adding back the non-cash amortization expense, the adjusted cash based mine operating loss was $742,655. Since acquiring the mine in late November 2007, Vaaldiam has repaid $7.2 million of high cost debt associated with the Chapada mine as a result of which Vaaldiam is debt free.

Ken Johnson, President and C.E.O, of Vaaldiam commented that "our operating results for the two mines during the first quarter were in line with our expectations. The lower production for the quarter was reflective of operations during the rainy season in Brazil, and the scheduled reduction in plant throughput to allow for the implementation of operational improvements. We expect that these improvements will result in better long term performance at these mines."

At the Brauna kimberlite project extraction of a 5,000 tonne bulk sample is underway as well as construction of a 10 tonne per hour dense media plant to process the bulk sample. The results of processing this bulk sample, coupled with recently completed delineation drilling, will form the basis for a feasibility study to be completed by the end of 2008.

Over the remainder of the year a significant improvement in operating earnings and cash flow is expected for both the Duas Barras and Chapada mines in addition to which the Company looks forward to a positive result from the Brauna kimberlite feasibility study. Over the balance of the year Vaaldiam will also pursue strategic and restructuring initiatives on an opportunistic basis.

This press release contains certain forward-looking statements. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to international operations; risks related to joint venture operations; actual results of current exploration activities; changes in project parameters as plans continue to be refined, future prices of resources; possible variations in reserves, grade or recovery rates, accidents, labour disputes and other risks of the mining industry; and delays in obtaining governmental approvals or financing or in the completion of development or construction activities. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

Contact Information

  • Vaaldiam Resources Ltd.
    Ken Johnson
    President and Chief Executive Officer
    (416) 363-6927
    Vaaldiam Resources Ltd.
    Janet Reid
    Manager, Investor Relations
    (416) 363-6927