| Fri 3 Jul 2009, 10:06 | | BCD - BRC DiamondCore - Amended Announcement - BRC Diamondcore Announces |
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BCD
BCD
BCD - BRC DiamondCore - Amended Announcement - BRC Diamondcore Announces
Agreement To Sell Alluvial Diamond Projects In South Africa And Renewal Of
Cautionary Announcement
BRC DIAMONDCORE LTD.
(Incorporated in Canada)
(Corporation number 627115-4)
Share code: BCD & ISIN Number: CA05565C1095
("BRC DiamondCore" or "the Company")
AMENDED ANNOUNCEMENT
BRC DIAMONDCORE ANNOUNCES AGREEMENT TO SELL ALLUVIAL DIAMOND PROJECTS IN SOUTH
AFRICA AND PROVIDES UPDATE ON LIQUIDATION APPLICATION AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
Toronto, Canada and Johannesburg, South Africa - July 3, 2009 - BRC DiamondCore
Ltd. ("BRC" or the "Company") (TSX - "BCD"; JSE - "BCD") announces that it has
entered into a Heads of Agreement (the "Agreement") with KIG Mining Plc ("KIG")
pursuant to which KIG has agreed to purchase BRC`s alluvial diamond projects in
South Africa, consisting of the Silverstreams, De Kalk, Muishoek, Sanddrift and
Uitdraal projects, together with the processing plant, mining fleet and
equipment which are associated with these projects. These assets (the
"Purchased Assets") are held by BRC through South African subsidiaries of BRC.
The purchase price for the Purchased Assets set out in the Agreement is US$10.7
million, consisting of the following:
(a) US$2.0 million in cash to be paid to BRC (such payment is to be made in two
tranches, with the first tranche of US$500,000 to be made no later than one
month after the hand-over of operations at the Silverstreams project and
the remaining US$1,500,000 to be made no later than two months after the
hand-over);
(b) 18,000,000 ordinary shares of KIG (the "KIG Consideration Shares") to be
issued to BRC at a price of US$0.478 per share (or US$8.6 million in the
aggregate); and
(c) US$100,000 to be paid by KIG directly to existing creditors to facilitate
the resumption of operations at the Silverstreams project
KIG is a publicly-traded gold and diamond exploration company (symbol: 5KM on
the Frankfurt Exchange) with properties in Liberia, West Africa and is not a
related party to BRC. KIG`s head office is in the United Kingdom.
The Agreement provides that (i) BRC will have a put option to sell the KIG
Consideration Shares, which trade on the Frankfurt Exchange, to KIG at a price
of US$0.478 per share, exercisable in stages over a 13 month period commencing
in May 2010, and (ii) KIG will have a call option to purchase the KIG
Consideration Shares from BRC at a price of US$0.75 per share exercisable in
stages over a 13 month period commencing in May 2010. The said put and call
options will remain in place until August 31, 2011, after which BRC may sell any
of the KIG Consideration Shares still held by BRC (i.e. which have not been
previously sold or purchased pursuant to the put and call options).
The transfer of the Purchased Assets to KIG will only be completed upon the
expiry of the said put and call options. For as long as the said put and call
options are still in place, BRC will be entitled to nominate one director to the
board of directors of KIG.
KIG intends to resume operations at the Silverstreams project, utilizing staff
previously employed at this operation, and a plan for the transition of the
project into production will be assisted by BRC over the next two to four weeks.
KIG will be responsible for providing the working capital to resume such
operations.
The Agreement further provides that should KIG default on any of the terms
contained in the Agreement, BRC would be entitled to cancel the Agreement and
that, in the event of cancellation, KIG would be required to vacate the project
sites, the Purchased Assets would be returned to BRC, and any amounts paid to
BRC under the Agreement would be forfeited to BRC as unliquidated damages.
The Agreement contemplates the entering into by BRC and KIG of a further
purchase and sale agreement (which is referred to in the Agreement as the "Main
Agreement") containing such other terms and conditions as are normal and
appropriate for a sale and purchase of assets as envisaged by the Agreement.
Liquidation Application
As reported in the Company`s interim financial statements for the three month
period ending March 31, 2009, an application was made in Kimberley, South Africa
by a former advisor to the Company for the liquidation of the Company`s wholly-
owned subsidiary, Diamond Core Resources (Pty) Ltd. ("DCR"). DCR holds all of
the Company`s South African projects and assets. The claim arises from an
alleged debt for services allegedly provided before the acquisition of DCR by
the Company. The judgment of the Northern Cape High Court (Kimberley) is
expected to be delivered today (Friday, July 3, 2009).
The outcome of the liquidation application may adversely affect the ability to
complete the sale of the Purchased Assets pursuant to the Agreement with KIG.
Although the outcome of the liquidation application is not known at the time of
issuing this press release, the Company intends to use the proceeds from the
sale of the Purchased Assets to settle the South African creditors.
BRC DiamondCore Ltd. is an African-focused diamond explorer active in South
Africa and the Democratic Republic of the Congo. Led by a management team with
extensive experience in diamond exploration and mine development, the Company
has a broad spectrum of projects ranging from advanced stage trial mining
operations through grass-roots exploration. The Company`s projects comprise
both prospective alluvial gravels and primary kimberlite targets. The Company
works in a systematic and responsible manner to discover, assess and develop
diamond resources for the benefit of its shareholders and local stakeholders.
For further information, please visit our website, www.brc-diamondcore.com, or
contact:
In Toronto: Martin D. Jones, Vice President, Corporate Development, (416) 366-
2221 or 1-800-714-7938.
In Johannesburg: Brian P. Scallan, Vice President, Finance +27 11 9582885.
Forward-Looking Information
This press release contains forward-looking information which is not comprised
of historical facts. Forward-looking information involves risks, uncertainties
and other factors that could cause actual events, results, performance and
opportunities to differ materially from those expressed or implied by such
forward-looking information. Forward looking information in this press release
includes, but is not limited to, the expected effect of the sale of the
Purchased Assets (the "Sale") on the Company`s financial position, the expected
terms and conditions of the Sale, the anticipated timing for the Company
receiving from KIG the cash payments completing by the terms of the Sale, the
value of the KIG Consideration Shares and the Company`s put option to sell the
KIG Consideration Shares to KIG. Factors that could cause actual results to
differ materially from those described in such forward-looking information
include, but are not limited to, the Court ordering the liquidation of DCR
pursuant to the liquidation application referred to in this press release,
failure to complete the Sale in accordance with all of the terms contemplated by
the Agreement, adverse general market conditions, adverse changes in diamond
prices, foreign currency fluctuations, inflation, political developments in
South Africa, changes to regulations affecting the Company`s activities, delays
in obtaining or failure to obtain required project approvals and those other
risks set out in the Company`s public documents filed on SEDAR. Although the
Company believes that the assumptions and factors used in preparing the forward-
looking information are reasonable, undue reliance should not be placed on such
information, which only applies as of the date of this press release, and no
assurance can be given that such events will occur. The Company disclaims any
intention or obligation to update or revise any forward-looking information,
whether as a result of new information, future events or otherwise, other than
as required by law.
PRO FORMA FINANCIAL EFFECTS
Pro forma financial effects of the transaction will be announced in due course.
RENEWAL OF CAUTIONARY
Shareholders are advised to continue to exercise caution in dealings in their
securities until a further announcement detailing the pro forma financial
effects of the transaction are announced.
JOHANNESBURG
July 03, 2009
ARCAY MOELA SPONSORS
Date: 03/07/2009 10:06:02 Produced by the JSE SENS Department.
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