| Thu 20 Mar 2008, 12:00 | | DMC - DiamondCorp plc - Abridged pre-listing statement |
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DMC
DMC - DiamondCorp plc - Abridged pre-listing statement
DiamondCorp plc
Registration Number: 05400982
(Incorporated in England and Wales)
(SA Company Registration Number: 2007/031444/10)
ISIN: GB00B183ZC46
AIM share code: DCP
JSE share code: DMC
("DiamondCorp" or "the Company")
ABRIDGED PRE-LISTING STATEMENT
Prepared and issued in terms of the Listings Requirements of the JSE Limited
("JSE") relating to a listing of DiamondCorp on the JSE.
This is not an invitation to the public to subscribe for shares, but is issued
in compliance with the Listings Requirements of the JSE for the purposes of
giving the public information about DiamondCorp.
This announcement contains the salient information in respect of DiamondCorp,
which is more fully described in the Pre-listing Statement. For a full
appreciation of the proposed listing of DiamondCorp shares on the JSE, the Pre-
listing Statement, which is available on request as set out in paragraph 8
below, should be read in its entirety.
INTRODUCTION
DiamondCorp is currently listed on the Alternative Investment Market ("AIM") in
London. The JSE has approved the application for an inward listing of all the
issued shares of DiamondCorp on the JSE with effect from the commencement of
business on Monday, 31 March 2008. The JSE will be the primary Regulator. The
issued share capital comprises 34,787,074 ordinary shares with par value of 3
pence. DiamondCorp will be listed in the "Basic Materials - Diamonds &
Gemstones" sector of the JSE under the abbreviated name "DIAMONDCP", share code
DMC. DiamondCorp is incorporated in England and Wales and has been registered as
an African Company in compliance with South African Exchange Control
Regulations.
DiamondCorp believes a listing of its shares on the JSE is likely to provide
various strategic benefits. The intention is to enhance South African investors`
awareness of DiamondCorp and facilitate direct investment in the Company. The
JSE listing is anticipated to diversify the current investor base and increase
trade in DiamondCorp shares.
INTRODUCTION TO DIAMONDCORP
DiamondCorp was formed in March 2005 to acquire and develop diamond assets in
Southern Africa. Following a successful listing on AIM in February 2007,
DiamondCorp currently trades on AIM under the share code DCP, in the "Mining"
sub-sector. On the last practicable date being Friday, 14 March 2008,
DiamondCorp`s market capitalisation was GBP32.2 million based on the closing
price of 92.5 pence per share which translates to a market capitalisation of
R517.9 million at the prevailing exchange rate at that date. DiamondCorp has
approximately 70% of its issued share capital held by the public.
NATURE OF BUSINESS
DiamondCorp was formed to acquire and develop diamond assets in Southern Africa.
Since incorporation and prior to listing on AIM, the Company raised
approximately GBP9.3 million through the private placements of shares and
convertible loan notes. To date, DiamondCorp has acquired the surface rights and
sub-surface prospecting rights to the area named Lace ("Lace Property") in South
Africa and constructed a tailings retreatment plant. The Lace Property is
situated approximately 200km southwest of Johannesburg, and approximately 20km
from Kroonstad. The Lace Property consists of approximately 1,180.61ha covering
the farm Ruby 691 and includes diamondiferous tailings from previous mining
operations, as well as diamondiferous kimberlites. In addition, New Order
Prospecting Rights have been granted over two further properties, namely the
Silverbank and Moregroet Properties, both of which adjoin the Lace Property
("the Exploration properties").
DIAMONDCORP STRATEGY
The aim of the directors is to build DiamondCorp into a sustainable diamond
mining and exploration business. To achieve this goal, the initial strategy is
to exploit the Lace Property and its surrounding areas according to a two-phase
approach.
Phase One commenced with the commissioning of a 1.6 million tonne per annum
Dense Media Separation plant in 2007. DiamondCorp`s intention is to complete the
treatment of 3.6 million tonnes of tailings within three years. It was initially
estimated that this activity would generate cash flow of approximately
GBP2.30/tonne. During the commissioning process and the three months following
commissioning, 320,045 tonnes of tailings were treated for the recovery of
25,266 carats of diamonds, representing 7.8 cpht. The diamonds recovered include
a 17.72 carat stone and a 13.81 carat stone. In the period to 31 December 2007,
13,744 diamonds were tendered, of which 8,574 were of gem quality and were
tendered for GBP268,770 ($548,291), an average of $64/carat. The other 5,170
carats were of industrial grade and were tendered for GBP10,604 ($21,633), an
average of $4/carat. The diamonds recovered from the tailings retreatment
operation are above world average in terms of colour and quality. As a result,
management has formulated an accelerated development plan for Phase Two which
aims to introduce kimberlite pipe material into the mine plan by the third
quarter of 2008, approximately 12 months ahead of the originally envisaged
schedule.
The accelerated Phase Two plan involves sinking a decline shaft into the unmined
portion of the Lace satellite pipe which historically was only mined to a depth
of 50 metres. Bulk testing followed by trial underground mining of the satellite
pipe kimberlite via the decline shaft will be undertaken simultaneously with the
refurbishment of the existing 360-metre-deep 6 x 2.7 metre vertical shaft which
accesses the main Lace pipe.
In addition to the Lace Property, the directors will seek to acquire (on a stand
alone basis or through a joint venture) other diamond properties which meet the
stringent criteria DiamondCorp uses during assessment of projects. Generation
and evaluation of other diamond properties will be an on-going part of
DiamondCorp`s business.
OVERVIEW OF ASSETS
Independent mining consultant, MPH Consulting Ltd ("MPH"), completed a Competent
Person`s Report ("CPR") on the Lace Property for DiamondCorp, a full copy of
which is included in the Pre-Listing Statement dated Wednesday, 18 March 2008
which is available as described in paragraph 8 below.
The Lace Property
In terms of the report, it is estimated that the tailings contain a measured and
indicated resource of 370,315 carats at a grade of 10.3 cpht. MPH also estimates
that the unmined portion of the Lace Kimberlites contains an Inferred Resource
of 11.91 million carats between depths of 345 metres and 855 metres at a global
inferred grade of 42.2 cpht, and that a further approximately 6.57 million
tonnes of kimberlite is estimated to exist above a depth of 345 metres at an
estimated grade of 27 cpht.
MPH carried out an extensive due-diligence bulk-sampling programme on the
tailings in 1997-98 which led to a positive feasibility study and a detailed
cost estimate. That work established a grade of 10.3 cpht for the measured
and indicated portions of the tailings on the Lace Property, meaning that the
run-of-mine ore from the kimberlite on the Lace mine can be estimated at
approximately 25 cpht, as the mine historically produced approximately 725,000
carats at a recovered grade of approximately 15 cpht in mining operations
between 1902 and 1931. The CPR also draws on work carried out concurrently by
MPH in 1997-98 to delineate the kimberlites below the past workings at a depth
of 330 metres, and to evaluate the potential for re-opening the underground
diamond mine on the Lace Property, and to address both the economic viability
and mining methods of doing so. This work was successful in that much higher
grading hypabyssal kimberlite, with an inferred grade of at least 60 cpht (based
on microdiamond recoveries), was discovered to be volumetrically dominant at
depth, which immediately prompted commissioning of scoping studies on a deeper
mine on the Lace Property.
The bulk of the mining that has taken place on the Lace Property comprised open
pitting down to a depth of approximately 100 metres with partial chambering
carried out beneath the pit to a depth of 240 metres. Development of deeper
levels down to a depth of 330 metres had commenced before the mine was shut down
in 1931 due to a collapse in diamond prices. The Lace Property was acquired by
De Beers Consolidated Mines Ltd in 1939, and no further mining activities took
place until it was sold to the Christiaan Potgieter Trust ("CPT") in 1996. CPT
bought the property primarily to re-process the tailings resource, and undertook
limited prospecting activities before granting an option over the property to a
number of operators who undertook exploration activities on the unmined portion
of the Lace Kimberlites, including successful delineation of diamondiferous
kimberlite below a level of 350 metres.
Kimberlite volumes, tonnage and grade
MPH has identified two pipes on the Lace Property - a larger pipe which has
historically been mined (which is referred to in this document as the `main
pipe`) and a smaller pipe (which is referred to in this document as the
`satellite pipe`).
The CPR gives a full explanation of the methods used to infer the geology of the
Lace Kimberlites and the information in this section should be read in
conjunction with the full report. Specifically, MPH has identified varying
grades of kimberlite in the Lace Property and the summary presented below is an
aggregate of these results. For the purposes of MPH`s exercise, country rock
xenoliths have been assigned no diamond grade although, in practice, these have
been found to be brecciated and kimberlite-impregnated and may be found to be
diamondiferous when mined.
Given the available geological and diamond recovery data, and based on the value
of the tailings diamonds, MPH believes that Lace will be a high-quality diamond
source, which will justify recovering diamonds down to a size of 1 millimetre.
In reaching this conclusion, MPH analysed information from over 30 years of
production history and the recoveries from approximately 90,000 tonnes of
historical tailings. In addition, in 1998 MPH appointed two consultants in the
field of microdiamond-macrodiamond grade predictions to aid in interpreting the
database of previous activity on the Lace Property.
MPH has predicted that the grade of the main pipe will vary between 20 cpht and
65 cpht, although it considers that its range prediction may be conservative.
Insufficient sampling of the satellite pipe has taken place for MPH to predict
the grade of the satellite pipe, although MPH believes that the weight of
evidence indicates that the satellite pipe will not be of nearly as high grade
as the main pipe and may not prove economically viable to mine.
Given the main geological units, and the predicted diluted mineable grades, the
estimated volume, tonnage and carat resource of the main and satellite pipes
have been estimated as follows:
Tonnage (Mt) Grade Carats (Mct)
(cpht)
Depth Main Satell Total Main Satell Main Satell Tota
(m) pipe ite pipe ite pipe ite l
pipe pipe pipe
Potential 0-240 5.00 1.75 6.75 * * * * -
Diamondifer to to
ous 7.00 8.75
Kimberlite1
240- 6.57 0.63 7.20 27.7 * 1.82 * 1.82
345
Inferred 345-60 14.26 1.06 15.32 38.0 * 5.42 * 5.42
Resources2 0
600- 12.88 - 12.88 50.3 * 6.49 * 6.49
855
Total 345- 28.243 1.094 29.20 42.2 - 11.9 - 11.9
Inferred 855 1 1
Resources
Notes
Estimated by MPH based on inferred kimberlite volumes, historical diamond
recoveries and the drilling of resources below this level, but requiring
additional testing before it could be classified as an ``Inferred Resource``
under any reporting code
In accordance with the SAMREC Code for reporting mineral resources and reserves
Includes approximately 1.1Mt of country rock xenoliths between depths of 345
metres and 855 metres assigned zero grade
Includes approximately 0.3Mt of country rock xenoliths between depths of 345
metres and 600 metres assigned zero grade
The geological modelling based on the 1997-98 drilling has allowed MPH to
establish a global Inferred Resource of 28.2 million tonnes, between depths of
345 and 855 metres, implying a global inferred grade of 42.2 cpht. At present,
it is not possible to state, to scoping-study levels of confidence, the tonnages
below or above this interval. The table above, however, shows that MPH has
estimated an additional 6.57 million tonnes containing approximately 1.82
million carats (27.7 cpht) above a depth of 345 metres. This tonnage and grade
estimate requires confirmation before it can be considered in subsequent, higher
confidence-level, evaluations. Tonnages and grades from depths of 240 metres to
surface are likely to be similar to this figure based on all historical data,
but similarly need confirmation which will be effected as the pit is dewatered.
No value has yet been established for the diamonds in the Lace Kimberlites and
consequently the global tonnage of 28.2 million tonnes between depths of 345 and
855 metres at 42.2 cpht is regarded as an Inferred Resource under all
international mining codes, although the tailings bulk-sampling programme has
established a benchmark net average price of $63/ct for the historical tailings
stones, as of June 2005. The directors believe that this constitutes the bottom
of a range of potential values for the in-situ diamond resource of the Lace
Property.
A rough industry ``rule-of-thumb`` is to double tailings stones` values
($126/ct, rounded to $125/ct) to arrive at production values for the substrata
from which the stone values were removed. MPH considers that this value is
conservative but, until a modern bulk-sample has extracted a representative
carat parcel from further sections of the main pipe and the satellite pipe, the
$125/ct base case value is considered prudent for a prefeasibility study and
evaluation.
Silverbank and Moregroet projects
The Exploration Properties contain several kimberlite dykes known as Silverbank,
Normandien and Besterkraal. De Beers reportedly discovered several pipes and
blows along these dykes during very preliminary evaluations and the directors
consider that the proposed exploration programmes on these properties is
warranted. Further detail is contained in the CPR.
The CPR gives a full explanation of the methods used to infer the geology of
various properties and the information in this section should be read in
conjunction with the full report which is contained in the Pre-Listing
Statement.
DIRECTORS AND MANAGEMENT OF DIAMONDCORP
The following tables sets out the various details of the directors and senior
management of DiamondCorp:
Name Business address
Board of directors of
DiamondCorp
Euan Arthur Worthington Six Yards House
Stoke Charity
Winchester
SO21 3PF, UK
Paul Robert Loudon Georgian House
63 Coleman Street
London EC2R 5BB, UK
Dr Jonathan Willis- Georgian House
Richards 63 Coleman Street
London EC2R 5BB, UK
Nicholas Richard Allen 35 Milton Close
Henley-on-Thames
Oxfordshire RG9 1UJ, UK
Other
John Charles Forrest Georgian House
63 Coleman Street
London EC2R 5BB, UK
Alistair Gordon Dean PO Box 2013
Holmes Kroonstad 9500
South Africa
Ms Pulane Kingston AON House
28 Fricker Road
Illovo 2196
Johannesburg
South Africa
Gert Johannes (Gerry) Block B
Robbertze Homestead Office Park
65 Homestead Avenue
Cramerview 2060
South Africa
Eric Paul Sharples c/o Lace Mine
PO Box 6016
Kroonheuwel 9501
South Africa
FUTURE PROSPECTS
The directors of DiamondCorp aim to build a diamond production company with
Southern African-based production properties. The Lace Property has the
potential to provide a profitable diamond production platform from which the
Company can implement its growth strategy. Looking forward, the directors
foresee growth based on acquisition and expansion of existing operations.
COPIES OF THE PRE-LISTING STATEMENT
Copies of the Pre-Listing Statement (in English only) can be obtained during
normal business hours from Thursday, 20 March 2008, for a period of fourteen
days, from the advisor and sponsor, Investec Bank Limited at 100 Grayston Drive,
Sandown, 2196.
20 March 2008
Johannesburg
Investment Bank and Sponsor:
Investec Bank Limited
Corporate law advisors in South Africa:
Werksmans Attorneys
Auditors:
Deloitte & Touche LLP
Technical advisor:
MPH Consulting Limited
Nominated Adviser and Broker on AIM:
Cenkos Securities plc
For further information please contact:
DiamondCorp
Paul Loudon (CEO)
+44 7879 478 301 (UK mobile)
+27 82 824 6897 (SA mobile)
ploudon@diamondcorp.plc.uk
Russell and Associates
Charmane Russell
+27 11 880 3924
charmane@rair.co.za
Cenkos Securities plc
Elizabeth Bowman
Ivonne Cantu
+44 207 397 8924
Date: 20/03/2008 12:00:01 Produced by the JSE SENS Department.
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