| Thu 5 Jul 2007, 8:28 | | DMR - Diamond Core Resources Limited - Further Det |
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DMR
DMR
DMR - Diamond Core Resources Limited - Further Detailed Cautionary Announcement
Diamond Core Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
Share code: DMR & ISIN: ZAE000076956
FURTHER DETAILED CAUTIONARY ANNOUNCEMENT
1. Introduction
Further to the cautionary announcement dated 4 June 2007, shareholders are
advised that Diamond Core Resources Limited ("DC") and BRC Diamond Corporation
("BRC") have signed a Pre-Merger Agreement which provides that, subject to
certain conditions being fulfilled, BRC will make an offer to the shareholders
of DC in order to effect a merger of the two companies ("Merger"). This
announcement summarises the relevant terms of the Pre-Merger Agreement. These
terms are also set out in a joint press release of BRC on the same date.
Neither the Pre-Merger Agreement itself, this announcement nor the press release
is a firm intention to make an offer to shareholders of DC for the purposes of
the Securities Regulation Code on Take-overs and Mergers.
2. Nature and terms of the transaction
The Merger will be effected by way of a Court-sanctioned scheme of arrangement
("Scheme") under the provisions of section 311 of the Companies Act, 1973 (South
Africa), in terms of which DC shareholders will receive 1 new BRC common share
for every 24,5 DC ordinary shares held. BRC will apply for a secondary listing
of its common shares on the JSE Limited ("JSE"). The combined entity, which is
to be named BRC DiamondCore Ltd ("BRC DiamondCore") will therefore be dual
listed on the JSE and on the Toronto Stock Exchange ("TSX") Venture Exchange,
with current BRC shareholders and DC shareholders holding 53% and 47%,
respectively, on closing.
The combined entity will create a new growth focused diamond exploration and
development company. The board of BRC DiamondCore will comprise four appointees
of each of BRC and DC. The appointees are Simon Village (Interim Chairman), Mike
de Wit (President), Theo Botoulas (CEO), Roger Davids, Greg Hunter, Arnold
Kondrat, Richard Lachcik and Mike Prinsloo. These individuals will provide a
broad range of industry expertise, including resource sector and diamond
specific knowledge, project management, financing, commercial and corporate
governance skills.
3. Nature of business of BRC and DC
BRC is a Canadian-based diamond exploration company focused in the Democratic
Republic of the Congo ("DRC"). As one of the first companies to identify
emerging diamond opportunities in the DRC, BRC has acquired a commanding land
position in the DRC, directly controlling 8 458 square kilometres and retaining
a further 10 922 square kilometres through option agreements. This ground covers
some of the most prospective diamond regions of the country.
DC is focused on, and currently active in, the Northern Cape Province of South
Africa. DC is actively involved in two kimberlite exploration projects, the
Paardeberg East Project, situated 40 km west of Kimberley, and the Skeyfontein
JV, located some 20 km south east of the town of Postmasburg.
Through its acquisition of Samadi (SA) Pty Ltd, DC has a suite of three alluvial
projects, Uitdraai and Silverstreams and the De Kalk Project. DC also has a
suite of five applications with the Department of Minerals and Energy Affairs
("DME") for additional prospecting rights in the Northern Cape Province.
4. Financial effects of the transaction
Shareholders are advised that, due to the nature of the proposed Merger, the
boards of both DC and BRC are of the opinion that it would not be prudent to
attempt to publish the financial effects thereof until the finalisation of the
financial results of each of DC and BRC for the last six months as well as the
consolidation and review thereof by the relevant auditors.
5. Conditions precedent
5.1 Conditions to submitting a firm intention to make an offer
The submission of a firm intention to make an offer that may arise from the Pre-
Merger agreement is subject, inter alia, to the following conditions precedent:
- the Exchange Control Department of the South African Reserve Bank giving
all approvals required by it in connection with the Pre-Merger Agreement and the
transactions contemplated therein, and if the approvals are subject to any
conditions, the conditions being acceptable to BRC and DC, acting reasonably;
and
- each of BRC and DC being satisfied that its detailed financial, technical
and legal due diligence investigation of the other did not reveal material
adverse information respecting the other party that has not been generally
disclosed in the other party`s public disclosure documents.
5.2 Conditions to the Merger
It is expected that, if the firm intention is made, the closing of the Merger
will be subject to the satisfaction of the following mutual conditions
precedent:
- approval of the Scheme by the requisite majority of DC shareholders;
- the Court Order sanctioning the Scheme being granted and registered by
- the South African Registrar of Companies;
- approval of the JSE to dual list the BRC common shares on the JSE;
- all South African and Canadian Governmental, regulatory and statutory
- approvals including but not limited to JSE, TSX, DME and Securities
- Regulation Panel approvals being obtained;
- approval of the Merger by the South African Competition Authorities; and
- such other conditions as are normal for a transaction of this nature.
5.3 Waiver
Certain of the conditions precedent in paragraphs 5.1 and 5.2 above may be
waived by agreement between DC and BRC.
6. Non-solicitation and break fee
Each of BRC and DC has agreed not to solicit competing offers to the Merger and
to give the other party the right to match any unsolicited competing offer.
Furthermore, they have each agreed to the payment of a break fee of 1% of the
market cap of DC.
7. Recommendations
The board of DC has appointed Venmyn Rand to advise it on whether the Merger is
fair and reasonable to shareholders of DC. Subject to the receipt of an opinion
from Venmyn Rand advising that the Merger is fair and reasonable to DC
shareholders, the board of DC has undertaken to support the Merger and to
recommend that DC shareholders vote in favour of the Scheme.
8. Renewal of cautionary announcement
Shareholders of DC are advised to continue exercising caution when dealing in
the DC`s securities until a further announcement is made. For further
information or enquiries, please contact Theo Botoulas on +(27) 82 852 2150 or
on +(27) 11 706 4888.
5 July 2007
Corporate adviser and sponsor to Diamond Core
RIVER GROUP
Attorneys to Diamond Core
WERKSMANS ATTORNEYS
Financial adviser to BRC
RBC
Legal counsel to BRC
McLeod Dixen
Legal counsel to financial adviser
FASKEN MARTINEAU
Independent professional adviser to Diamond Core
VENMYN
Independence you can trust
Date: 05/07/2007 08:28:46 Produced by the JSE SENS Department.
