| Thu 5 Jul 2007, 11:38 | | DMR - Diamond Core - Press Release: BRC Diamond An |
|
DMR
DMR
DMR - Diamond Core - Press Release: BRC Diamond And Diamond Core To Merge,
Creating A Growth-Focused, African Diamond Explorer And Developer
DIAMOND CORE RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
Share code: DMR & ISIN Number: ZAE000076956
("Diamond Core" or "the company")
PRESS RELEASE: BRC DIAMOND AND DIAMOND CORE TO MERGE, CREATING A GROWTH-
FOCUSED, AFRICAN DIAMOND EXPLORER AND DEVELOPER
Johannesburg, South Africa and Toronto, Canada - July 5, 2007 - BRC Diamond
Corporation ("BRC") (TSX-V: BRC) and Diamond Core Resources Limited
("Diamond Core") (JSE: DMR) announce that they have entered into an
agreement (the "Pre-Merger Agreement") to merge the two companies to create
a new growth-focused African diamond exploration and development company
(the "Merger"). The combined entity will be named BRC DiamondCore Ltd.
("BRC DiamondCore") and will have listings on both Canadian and South
African stock exchanges, with current BRC and Diamond Core shareholders
holding approximately 53% and 47%, respectively, at closing.
The Merger will create a growth-focused African diamond explorer, with
significant production potential, that will benefit from:
- key landholdings and infrastructure in proven diamond producing regions
of South Africa and in prospective diamond districts of the Democratic
Republic of Congo (the "DRC");
- a pipeline of advanced alluvial exploration projects with recently
commissioned bulk sampling plants as well as early stage exploration
opportunities on prolific alluvial terraces;
- a spread of kimberlite projects including well defined bodies moving
into bulk sampling programs and numerous drill targets across extensive
prospective areas;
- management depth with an aggregate of more than 100 years of diamond
industry experience; and
- access to global capital markets given listings on two key resource
stock exchanges and share registers with strong institutional
compositions.
Dr. Michiel `Mike` de Wit, President and CEO of BRC, said "The Merger is
unique in bringing together complementary assets, management teams and
shareholders. By combining our two companies we will accelerate growth and
capitalize on the strengths of each business in exploration and development
of both kimberlite and alluvial deposits. We believe we will be positioned
as a leading growth-focused diamond explorer in Africa with an outstanding
endowment of mineral licences and the managerial and technical skills to
bring these to production as well as access to a broad pool of capital for
growth. I look forward to what we can achieve in the short and long term."
Theo Botoulas, CEO of Diamond Core, added "We have spent a considerable time
in assessing all of the various parties active in diamond exploration in
Africa in order to source a partner with whom to grow our business, and BRC
easily stood apart from the rest in terms of a complementary management team
and overall fit. We are confident that Diamond Core`s early stage ground
can benefit from the strength of the BRC geological team and similarly, from
an operational standpoint, we are enthusiastically looking forward to
applying our production expertise to designing, constructing and operating
bespoke recovery plants on BRC`s properties in the DRC. This really is a
merger based on strong fundamentals and I am grateful of the strong support
shown to us by our large shareholders."
Exploration and Development Assets
Upon completion of the Merger, the combined entity will have a broad suite
of landholdings in South Africa and the DRC with an excellent spread of near
production projects and early stage exploration ground across both
kimberlite and alluvial areas. BRC DiamondCore`s near term objectives will
be to focus on generating cash flow and maximizing value from its various
alluvial projects, including the following:
Silverstreams (South Africa) - With the recent commissioning of a 670
tonnes per hour ("tph") bulk sampling plant, Silverstreams is one of
Diamond Core`s most advanced exploration projects. Located on the
northern bank of the Orange River in the Northern Cape Province,
Silverstreams had been subject to previous test mining with good
quality alluvial diamonds recovered from both the Primary and
Rooikoppie gravels. Diamond Core has undertaken an extensive drilling
program, including 426 percussion drillholes, to determine the extent
and volume of both Primary and Rooikoppie gravel horizons. Two bulk
sample trenches were recently excavated to more precisely determine the
gravel structure, grade and diamond value. The results of the
historical drilling and current bulk sampling are currently being
reviewed with a view to producing a mineral resource estimate.
Kwango River (DRC) - This project of BRC consists of eight exploration
permits on approximately 160 kilometres of the Kwango River covering an
area of 2,150 square kilometres. This drains the Chitamba-Lulo
kimberlite cluster in Angola and diamonds are known to occur within the
active river channel as well as on flats and terraces within the
river`s flood plain. In 2006, a total of 642 manual and 35 excavator
pits were completed by BRC along with 125 auger drillholes. These have
generated a preliminary understanding of the extent, thickness and
depth of the gravel horizons in anticipation of a bulk sampling program
currently being designed as a priority by the two companies.
Uitdraai (South Africa) - Located contiguous and to the south west of
the Silverstreams project, the focus at Uitdraai is on an ancient
alluvial gravel terrace on the southern bank of the Orange River. Five
bulk sampling trenches are planned in conjunction with the construction
of a 670 tph exploration plant to be initiated in late 2007.
De Kalk (South Africa) - The first ever diamond discovered in South
Africa, the 21.25 ct brownish yellow "Eureka", was found in 1866 at De
Kalk. The De Kalk terrace has been drilled and a geological model
created for the alluvial gravel paleochannel. Management is planning
surface infrastructure, including the construction of a 670 tph
exploration plant to be undertaken in parallel with the Uitdraai
project.
The combined kimberlite projects of BRC DiamondCore, which represent the
longer term potential for the business, include the following:
Paardeberg East (South Africa) - A number of kimberlite bodies are
known to exist on the Paardeberg East property with Diamond Core`s
current focus being on PK1 and PK3. Various historical bulk sampling
and trial mining activities have been undertaken on PK1 by prior owners
with variable results. As such, Diamond Core is currently undertaking
a best practices bulk sampling program to determine diamond grade, size
distribution and diamond values in the various zones of PK1. By April
2007, Diamond Core had dewatered and stabilised the pit slopes in the
existing PK1 pit for bulk sampling operations to commence.
The 50 tph trial mining/bulk sampling facility at Paardeberg East,
which was commissioned in April 2007, is intended to also be applied as
a regional bulk sampling/trial mining facility for company operations
in the Free State and Northern Cape.
Lubao (DRC) - BRC`s Lubao project consists of 14 exploration permits
over an area of 5,025 square kilometres in the Kasai-Oriental province,
historically the largest diamond producing region of the DRC. The
geology of the region represents an extension of the Kasai Craton and
the area has never been explored using modern techniques. Management
believes the region is highly prospective and has undertaken stream
sediment sampling and 11,000 line kilometres of airborne magnetic
surveys. 21 priority targets have been identified by BRC for first
pass drilling.
Tshikapa (DRC) - Totalling 9,210 square kilometres in the Kasai-
Occidental province, BRC`s Tshikapa project is located within the
prospective Kimberlite Emplacement Corridor which extends northeastward
from Angola. Historically, significant volumes of good quality
diamonds have been produced from alluvial deposits in the Tshikapa
area. However, exploration for primary kimberlite sources has been
limited and was never conducted using modern technology. Ground work
undertaken by BRC in the 2006 field season identified 53 drill ready
targets and the assessment of the alluvial potential over these
properties is also ongoing.
Skeyfontein (South Africa) - Prospecting by De Beers in the late 1990s
located at least four kimberlite fissures on the property. Diamond
Core has undertaken an exploration program including soil sampling and
geophysics which is being supplemented by reverse-circulation and
diamond drilling to locate further kimberlite bodies. Diamond Core has
additional prospecting permits in the immediate area.
Additional alluvial opportunities include the Sanddrift, Muishoek and Koa
Valley projects in South Africa along the existing or historical courses of
the Orange River. Sanddrift and Muishoek are immediately adjacent to the
Silverstreams project, with the Koa Valley project in proximity to the town
of Pofadder in the Northern Cape. In the DRC, additional exploration permit
applications have recently resulted in several permits being awarded. These
are located in the north of the country and cover some 3,890 square
kilometres where alluvial diamonds are being produced by artisanal miners
and the geology represents an extension of the Mboumou Craton from the
Central African Republic.
Other South African kimberlite opportunities include the Strydpan and
Kuiltjiespan projects, as well as the kimberlite potential on Sanddrift,
Silverstreams and Uitdraai. Generally, these project areas have seen less
historical kimberlite exploration and Diamond Core intends to undertake a
methodical exploration program of stream and soil sampling and geophysics
for target generation to be followed by trenching and drilling, as
warranted.
BRC`s projects in the DRC include both wholly-owned permits and those held
under option agreements with local partners. After taking into account a
required 5% government interest upon conversion to exploitation permits, BRC
expects to retain an economic interest of between 80% and 95% for the
significant majority of its permit holdings.
Diamond Core holds the majority of its alluvial projects in partnership with
two Black Economic Empowerment consortia, the Sefalana and Selang Consortia,
with legal ownership split equally with each holding a 50% interest. As
financing is being undertaken by Diamond Core, ultimately 85% of cash flows,
once capital has been repaid, will accrue to the benefit of Diamond Core.
Similar ownership and financing arrangements are being put in place for the
kimberlite projects.
Importantly, both BRC and Diamond Core benefit from existing in-country
operations providing for good relationships with local communities, various
government departments and all necessary service providers. Additionally,
BRC DiamondCore will be able to utilize its strong logistical capabilities
throughout south and central Africa. Management believes these
relationships and expertise will allow for compressed planning and
development times relative to competitors.
Management and Board
The complementary nature of the current BRC and Diamond Core management
teams will provide for a combined organization with broad strengths
including both exploration and geological skills to identify and delineate
deposits and development and production capabilities to deliver maximum
value from these projects. Senior management of BRC DiamondCore is expected
to include the following:
Mike de Wit (President) - Mike recently joined BRC from DeBeers, where
he spent 29 years in various roles, including recently as exploration
manager for Africa and general manager within the DRC. Mike has a PhD
from the University of Cape Town with a specialization in the alluvial
diamond distribution of western South Africa.
Theo Botoulas (CEO) - Theo has guided Diamond Core through its
relisting and restructuring, including the merger with Samadi in 2006.
He has a total of 18 years of mining, asset management and financial
industry expertise, following from an MSc in Mining Engineering from
the University of the Witwatersrand.
Craig Campbell (CFO) - A chartered accountant, Craig brings more than
10 years financial experience with both private and JSE listed
companies.
Danie van der Merwe (Engineering and Operations) - Danie has extensive
experience in the diamond mining sector in the areas of metallurgy,
engineering and mining production. He previously managed Saxendrift on
the Middle Orange River for Trans Hex and the Koidu Kimberlite Project
in Sierra Leone. Danie holds a National Technical Diploma in
Mechanical Engineering, and has completed numerous supplementary
courses including courses in metallurgy, diamond recovery systems, as
well as safety and management.
Fabrice Matheys (Geology, kimberlite) - Fabrice holds an MSc in
exploration geology from Rhodes University in Grahamstown and has 16
years of field experience most of which was with De Beers. He has an
intimate knowledge of the DRC and has been working there for the last
three years.
Edmond Thorose (Geology, alluvial) - Edmond graduated from the
University of Toronto with a BSc.(Hons) degree and also holds an MBA
from York University. Edmond has nine years of exploration experience
in gold and diamonds and has been working in the DRC for the last two
years.
Hano Hamman (Geology, South Africa) - Hano is a registered member of
the South African Council of Natural Scientific Professions and holds
an honours degree in Economic Sedimentology from the University of
Stellenbosch. He has worked as a consultant to numerous local and
international companies before joining AIM and ASX listed Dwyka
Diamonds as Exploration Manager South African Operations in 2005. In
2003, he was employed as a Senior Exploration Geologist at the Fucuama
project of Trans Hex in Angola.
BRC DiamondCore expects to maintain a rapid development trajectory by
focusing its senior management at or near the operations including having
Mike de Wit based in Kinshasa, DRC and Theo Botoulas in Johannesburg, South
Africa.
The board of directors of BRC DiamondCore will be reconstituted on the
Merger with four representatives from each of BRC and Diamond Core being
appointed. The appointees are expected to be Simon Village (as interim
Chairman), Mike de Wit, Theo Botoulas, Roger Davids, Greg Hunter, Arnold
Kondrat, Richard Lachcik and Mike Prinsloo. These individuals provide a
broad range of expertise, including broad resource sector and diamond
industry experience, project management, financing, commercial and corporate
governance skills.
Growth and Value Strategies
The growth and value strategy of the merged entity will be articulated and
more clearly defined by the President and CEO of BRC DiamondCore taking the
following into account:
* structuring the merged entity into clearly defined kimberlite and
alluvial exploration divisions, each with its own clearly defined
objectives, business plan and budget;
* analysing the exploration portfolio of the merged entity to
optimally focus and prioritise the projects;
* identifying and acquiring additional exploration rights in
prospective areas in close proximity to the current portfolios
both in South Africa and in the DRC;
* aligning and optimising the administration structures and systems
of both companies; and
* identifying and analysing potential acquisition targets which
would supplement the current portfolio of alluvial and kimberlite
assets and where the technical and managerial skills of the merged
entity would add value.
In order to accelerate the expected synergistic benefits of the combination,
as well as demonstrate the commitment to this venture, BRC and Diamond Core
are entering into an engineering services agreement with immediate effect
whereby Diamond Core will assist in the scoping, design and construction of
a bulk sampling diamond plant for BRC`s use on its Kwango River project and
elsewhere in the DRC. By constructing and commissioning this modular plant
in South Africa and providing operator training before air freighting it to
the DRC, the companies expect to significantly shorten the lead time to
commissioning an operation in central Africa.This will fast track
development of the DRC projects ahead of the planned Merger.
Details of the Transaction
The Merger is to be implemented by way of a court-sanctioned scheme of
arrangement under the provisions of Section 311 of the Companies Act, 1973
(South Africa), pursuant to which BRC will acquire all of the outstanding
shares of Diamond Core in exchange for BRC shares. At closing, all Diamond
Core shareholders will receive 1 BRC common share for every 24.5 Diamond
Core ordinary shares held. BRC shareholders will continue to hold their
existing BRC common shares. This exchange ratio is reflective of the trading
values of the two companies prior to Diamond Core`s cautionary announcement
on June 4, 2007.The combined company will be renamed BRC DiamondCore Ltd.
BRC currently has outstanding approximately 13.6 million common shares.
Diamond Core currently has outstanding approximately 296.2 million ordinary
shares, which will be exchanged pursuant to the terms of the Merger for
approximately 12.1 million BRC common shares, thereby resulting in a pro-
forma BRC basic shares outstanding balance of approximately 25.7 million
common shares. Therefore, based on the number of BRC and Diamond Core
shares currently outstanding, current BRC and Diamond Core shareholders will
own approximately 53% and 47%, respectively, of the combined entity.
Diamond Core also has outstanding approximately 24.9 million listed options
with a strike price of R2.00 that expire on September 30, 2007, prior to the
expected closing of the Merger. These options may result (depending on
whether they are exercised prior to their expiry) in the further issuance by
BRC of up to approximately 1 million BRC common shares.
The terms of the Merger contemplate the exchange of Diamond Core`s
outstanding employee options for stock options of BRC which, assuming all
such Diamond Core options are still outstanding at closing, will result in
the issuance by BRC of stock options to purchase a total of approximately
0.67 million BRC common shares. Diamond Core also has a deferred
consideration agreement which may result in the issuance of up to
approximately 35.2 million ordinary shares of Diamond Core contingent on the
profitability of certain acquired assets in the first full year of their
commercial production. An additional approximately 1.44 million common
shares of BRC will therefore be reserved on closing of the Merger for
potential issuance pursuant to this deferred consideration agreement.
Each of BRC and Diamond Core has agreed to not solicit a competing offer to
the Merger and to use their best efforts to obtain all necessary consents
and approvals to effect the Merger. Each company has also agreed to pay a
break fee to the other party under certain circumstances. In addition, each
company has granted the other party a right to match any competing offer
that may arise.
BRC and Diamond Core have received support in favour of the Merger from
Diamond Core`s large institutional shareholders.
The Pre-Merger Agreement between Diamond Core and BRC will not constitute a
firm obligation to complete the Merger or a firm intention on the part of
BRC to make any offer to the shareholders of Diamond Core, until the
Exchange Control Department of the South African Reserve Bank shall have
given all approvals required to be given by it in connection with the Merger
and the transactions contemplated therein, and if the approvals are subject
to conditions, the conditions are acceptable to BRC and Diamond Core, acting
reasonably.
The closing of the Merger will also be subject to typical conditions,
including the approval of Diamond Core shareholders at a meeting expected to
be held in the fourth calendar quarter. The board of directors of Diamond
Core has agreed to recommend the transaction to its shareholders, subject to
its fiduciary obligations and the receipt of a favourable fair and
reasonable opinion for which Venmyn Rand (Pty) Ltd. has been appointed.
BRC`s board of directors has approved the transaction. Other transaction
approvals include competition authorities, the TSX Venture Exchange, and the
JSE for which applications are in the process of being prepared and filed.
Advisors
BRC`s financial advisor is RBC Capital Markets. Diamond Core`s financial
advisor is River Group.
Qualified Persons
Mike de Wit, President and Chief Executive Officer of BRC, is the "qualified
person" (as such term is defined in National Instrument 43-101) who
supervised the preparation of and is responsible for the technical
information in this release relating to BRC`s projects (being the DRC
projects referred to in this release). Hano Hamman, Group Geologist of
Diamond Core, is the "qualified person" (as such term is defined in National
Instrument 43-101) who supervised the preparation of and is responsible for
the technical information in this release relating to Diamond Core`s
projects (being the South African projects referred to in this release).
About BRC
BRC is a Canadian-based diamond exploration company active principally in
the DRC. Led by a management team with extensive experience in the DRC, BRC
was one of the first companies to identify emerging diamond opportunities in
the DRC and today has a commanding land position, directly controlling
approximately 8,458 square kilometres and retaining a further 10,922 square
kilometres through option agreements on three separate exploration
properties. These properties are located in some of the most prospective
diamond regions of the country. Banro Corporation, BRC`s largest shareholder
with a 27.5% interest in BRC, is a mineral exploration company focused on
the DRC. BRC is listed on the TSX Venture Exchange under the ticker "BRC".
About Diamond Core
The objectives of the South African-based Diamond Core group of companies
are to conduct systematic greenfields diamond exploration programs and to
bring to account economically viable diamond discoveries, which result from
the exploration programmes, as well as through the acquisition of assets
considered uneconomic or marginal by others and which are value-accretive to
shareholders. Diamond Core believes these assets can successfully be
brought to account using its technical skills, entrepreneurial spirit and
low cost operating structure. Diamond Core is focused on, and currently
active in, the Northern Cape Province of South Africa. Diamond Core 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., Diamond Core has a suite of three
alluvial projects: Silverstreams, Uitdraai and the De Kalk Project. Diamond
Core also has a suite of five applications with the Department of Minerals
and Energy Affairs for additional prospecting rights in the Northern Cape
Province. Diamond Core is listed on the JSE Securities Exchange in South
Africa under the ticker "DMR".
For further information, please contact:
In Johannesburg: James Duncan, Russell & Associates, 27 11 880-3924
In Toronto: Arnold T. Kondrat, Executive Vice President, or Martin D. Jones,
Vice President, Corporate Development, BRC Diamond Corporation, at (416) 366-
2221 or 1-800-714-7938.
Cautionary Note Concerning Forward-Looking Statements
This release contains forward-looking statements. All statements, other
than statements of historical fact, that address activities, events or
developments that BRC and Diamond Core believe, expect or anticipate will or
may occur in the future (including, without limitation, statements regarding
mineral resources, future diamond production, future revenue, exploration
results, potential mineralization and future plans and objectives of BRC and
Diamond Core) are forward-looking statements. These forward-looking
statements reflect the current expectations or beliefs of BRC and Diamond
Core based on information currently available to them. Forward-looking
statements are subject to a number of risks and uncertainties that may cause
the actual results of BRC and Diamond Core to differ materially from those
discussed in the forward-looking statements, and even if such actual results
are realized or substantially realized, there can be no assurance that they
will have the expected consequences to, or effects on such companies.
Factors that could cause actual results or events to differ materially from
current expectations include, among other things, failure to complete the
Merger as a result of one or more of the closing conditions not being
fulfilled (including failure to obtain all required approvals), the
possibility that future exploration results will not be consistent with the
expectations of BRC and Diamond Core, changes in equity markets, changes in
diamond markets, foreign currency fluctuations, political developments in
the DRC or South Africa, changes to regulations affecting BRC`s or Diamond
Core`s activities, uncertainties relating to the availability and costs of
financing needed in the future, delays in obtaining or failure to obtain
required project approvals, the uncertainties involved in interpreting
exploration results and other geological data and the other risks involved
in the diamond exploration and development industry. Any forward-looking
statement speaks only as of the date on which it is made and, except as may
be required by applicable securities laws, BRC disclaims any intent or
obligation to update any forward-looking statement, whether as a result of
new information, future events or results or otherwise. Although BRC and
Diamond Core believe that the assumptions inherent in the forward-looking
statements are reasonable, forward-looking statements are not guarantees of
future performance and accordingly undue reliance should not be put on such
statements due to the inherent uncertainty therein.
The TSX Venture Exchange does not accept responsibility for the adequacy or
accuracy of this press release.
5 July 2007
Epsom Downs
Sandton
Sponsor
River Group
Date: 05/07/2007 11:38:42 Produced by the JSE SENS Department.
