During the year the Company had five sales totalling 215,762 carats for gross proceeds of $54.6 million at an average price of $253 per carat. Included in these results is the sale of a 9.46 carat blue diamond for $4.5 million or $477,272 per carat. Gross revenues reported for the year were $41.8 million, which included post commercial production of 51,737 carats from the September sale and 100,987 carats from the November and December sale.
Cash operating earnings
Cash operating earnings for the year was $23.6 million. This reflects a $274 per carat price received for diamonds sold in September through December net of royalties of 10% and operating expenses of $92 per carat sold.
Cash operating earnings of $23.6 million result in a gross margin of 56% on sales. The average grade for the year was 22.0 carats per hundred tonnes.
Cash operating earnings is a non-GAAP measure and is reconciled in the table above.
The exploration expenditures relate primarily to the on-going trial mining program, which commenced in May 2010 at Mothae, offset in part by the value of diamonds recovered and sold, based on management's best estimate of the value of the diamonds at the time of recovery. The difference between the carrying value and the subsequent proceeds from the sale of diamonds is treated as a gain or loss as it is a change in market conditions during the period.
Exploration expenditures were $12.9 million during the year compared to $6.6 million in 2011. The difference largely relates to decreased diamond recoveries during the year as harder material was processed at a slower rate, costs relating to work on Mothae's preliminary economic assessment and further costs for non-recurring care and maintenance activities.
The expenditures in 2012 have been partially mitigated by the earnings from Mothae's sale of 4,657 carats in September yielding gross proceeds of $1.5 million.
The increase in administration expenses for the year ended December 31, 2012 compared to the prior year is largely due to the payment of performance incentive bonuses to key employees of the Company and other non-recurring costs.
Earnings before interest, tax, depreciation and amortization (EBITDA)
EBITDA for the year was a loss of $0.2 million. EBITDA was impacted by:
-- Exclusion of Karowe's June, July and a portion of the September sale totalling 63,038 carats for proceeds of $12.8 million and related operating expenses and royalty expenses. These sales have not been included in the consolidated statement of operations and therefore gross margin and EBITDA for the year. The gross margin from these sales has been credited against capitalized plant and equipment. As a result, full year 2012 sales of $41.8 million are reported in the Company's accounts with total proceeds of $54.6 million being received.-- Exploration expenditures of $12.9 million at Mothae were due to its trial mining program and costs incurred for its preliminary economic assessment. Mothae has now been placed on temporary care and maintenance with limited operating expenditure going forward as the Company reviews a number of development options for the asset.-- Higher administration costs during the period due to some non-recurring costs.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2012, the Company had cash and cash equivalents of $13.3 million compared to cash and cash equivalents of $48.6 million at December 31, 2011.