| Mon 15 Mar 2010, 11:15 | | DMC - DiamondCorp - Placing And Subscription To Raise Up To GBP7.1 Million |
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DMC
DMC
DMC - DiamondCorp - Placing And Subscription To Raise Up To GBP7.1 Million
DiamondCorp plc
JSE share code: DMC & AIM share code: DCP
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp" or "the Company")
Placing and Subscription to raise up to GBP7.1 million
HIGHLIGHTS
- The Company has conditionally placed 100,154,695 new ordinary shares at 7
pence per share to raise approximately GBP7 million (before expenses)
- Subscription for 907,843 new ordinary shares at 7 pence to raise GBP63,459
- The proceeds of the placing are to be applied to allow the Company to
resume underground development at the Lace mine in South Africa, continue
with its diamond exploration programmes in Botswana, meet scheduled debt
repayments for 2010 and for working capital
- The Placing is subject to shareholder approval at a general meeting which
will be held on 1 April 2010 at 12 noon UK time
Introduction
The Board of DiamondCorp, the South African diamond mining and exploration
company, is pleased to announce that it has conditionally placed up to
101,062,538 New Ordinary Shares at 7 pence per share (the "Placing Price")
pursuant to the Placing and Subscription to raise, in aggregate, up to GBP7.1
million gross proceeds for the Company (approximately GBP6.6 million net of
expenses). The Placing Price represents a discount of 26 per cent. to the
closing mid-market price of 9.5p on 12 March 2010, being the last practicable
date prior to the posting of this announcement.
The managing director and CEO of DiamondCorp plc, Mr Paul Loudon, said: `I am
delighted that a positive market sentiment towards the diamond sector has
returned, and that DiamondCorp has been able to take advantage of this to raise
the capital we need to resume the underground development of the +25-year Lace
diamond mine in South Africa.
`I am particularly pleased that the placing has been strongly supported by most
of our existing institutional shareholders as well as a number of new
shareholders.`
The Placing and Subscription will fund the ongoing development of the Company
and the proceeds of the Placing and the Subscription will be applied as follows:
(i) GBP4.0 million for implementation of the decline development and completion
of sub-level caving plan to resume underground mining of the Lace
kimberlites between the -240m and -330m levels. It is planned that the Lace
kimberlite at the -240m level will be accessed by the decline in the first
half of 2011. At that time, it is expected that a kimberlite mining sample
of approximately 30,000 tonnes will be extracted and processed through the
Lace plant in order to determine a definitive diamond grade at the mining
level. Full scale production of 1.2 million tonnes per annum from the
underground mining operation will require additional capital, currently
estimated by the Bankable Feasibility Study at GBP3.5 million not provided
for by the Placing and Subscription.
(ii) GBP0.5 million for further drilling in the Jwaneng South Project. The
Company is earning a 77.5% joint venture interest from Geoperspectives
(Pty) Limited in three exploration licences in Botswana totalling 109.2km2,
and containing nine identified kimberlites. The Company can earn its
interest by funding exploration activities and completing a definitive
feasibility study by 13 May 2014. The current focus of the Company`s
Botswana exploration activities is the Jwaneng South Project, southeast of
De Beers Jwaneng mine, the richest diamond mine in the world measured by
value.
The Jwaneng South Project contains five geophysical targets, of which
three, J-01, J-05 and J-12, were considered priority targets for
geophysical survey and drill testing. In November 2009, DiamondCorp
completed two diamond boreholes to depths of 301m and 340m on J-01, a 10 ha
geophysical target. Both holes intersected kimberlite from approximately
20m down hole depth to the end of the boreholes, indicating the presence of
a 10ha kimberlite body beneath shallow Kalahari sand cover.
Approximately 350kg of samples from the two drill holes were submitted to
MSA Analytical Laboratories in Johannesburg for microdiamond analysis.
Whilst preliminary results were positive and showed microdiamonds present
in the samples, the small size of the samples and the resulting small range
of diamond sizes may preclude a definitive statement of potential diamond
grade. As a result, a larger diameter diamond drilling programme will be
required to recover a larger sample of kimberlite for mini bulk testing and
grade estimation.
Ground gravity and magnetic surveys over both J-05 and J-12 have been
completed, and initial (raw data) results suggests J-05 to be between 2ha
and 4ha in size. The data for J-12 is inconclusive, but shows a possible
kimberlite of between 5 and 15 hectares in size. A programme of initial
diamond drill holes is currently being planned for these targets, the
results of which will allow the Company to plan future larger diameter
drilling and mini bulk testing priorities.
(iii) GBP1.3 million to satisfy loan obligations. The Company currently has
a US$5 million loan facility with Africa Opportunity Fund LP secured
against the Company`s South African assets. Approximately GBP1.3
million of the proceeds of the Placing and the Subscription will be
used to meet principal and interest payments on this loan which falls
due in 2010.
(iv) GBP0.96 million for general working capital purposes.
Details of the Placing and Subscription
The Company is proposing to raise approximately GBP7.1million (GBP6.6 million
net of expenses), by way of the Placing and Subscription of, in aggregate,
101,062,538 New Ordinary Shares at the Placing Price. This represents a
discount of 26 per cent. to the closing mid-market price of 9.5p per Existing
Ordinary Share on 12 March 2010 being the latest practicable date prior to the
posting of this announcement. Subject to successful completion of the Placing
and assuming full subscription under the Subscription, the Subscription will
raise approximately GBP63,459 before expenses (GBP60,372 net of expenses).
The Placing is conditional on, amongst other things, shareholders passing the
Resolutions at the General Meeting and a minimum amount of GBP7 million (before
expenses) being raised pursuant to the Placing and the Subscription and the
Subscription is conditional upon the successful completion of the Placing. The
Directors intend to vote in favour of the Resolutions in respect of their
beneficial holdings in the Company which amount, in aggregate, and if admitted
in full, to 2,561,418 Ordinary Shares and represent approximately 5.4 per cent.
of the Existing Ordinary Shares.
Conditional on the passing of the Resolutions, application will be made to the
LSE and JSE for the New Ordinary Shares to be admitted to trading on AIM and
AltX. It is expected that Admission will become effective and that trading in
the New Ordinary Shares will commence on AIM and AltX at 8.00 am on 6 April 2010
(or such later time and date as the Company, Cenkos Securities and Fairfax may
agree, but in any event no later than 23 April 2010).
The New Ordinary Shares will, when issued and fully paid, rank equally in all
respects with the Existing Ordinary Shares, including the right to receive any
dividend or other distribution declared, made or paid after the date of their
unconditional allotment.
It is expected that share certificates for the New Ordinary Shares which are to
be held in certificated form will be dispatched to placees by 14 April 2010.
The New Ordinary Shares will be in registered form and no temporary documents of
title will be issued.
If the Resolutions are not passed by the Shareholders, then the Placing and the
Subscription will not proceed and the Board expect that the Company would be in
significant financial difficulty and be forced to re-evaluate the Group`s
strategy and consider raising capital by other means, including but not limited
to, selling certain assets of the Group. The Board feels strongly that this
would therefore be detrimental to the Group in the longer term and would be
materially detrimental to existing Shareholders in the short term.
Director and Shareholder Interests
Certain directors of the company, who are considered related parties according
to the AIM Rules, are intending to subscribe Placing Shares in the Placing. The
interests of the Directors immediately before and after the Placing are set out
below:
As at the date of this Immediately following
document Admission
Director Number of Percentage Number of Percentage
Ordinary of Existing Ordinary of the
Shares Ordinary Shares Enlarged
Shares Share
Capital
Paul Robert 2,088,052 4.4% 2,588,052 1.7%
Loudon*
Euan Arthur 190,000 0.4% 190,000 0.1%
Worthington
Jonathan Willis- 1,291,666 2.7% 1,796,666 1.2%
Richards**
Richard Nicholas 83,366 0.2% 83,666 0.1%
Allen
Robin Leonard 10,720,555 22.6% 40,749,126 27.44%
Henshall***
* All of the Ordinary Shares in which Paul Robert Loudon is beneficially
interested are held by Green Dragon Nominees Pty Limited, a company with which
he is connected.
** As at the date of this document, of the Ordinary Shares in which Jonathan
Willis-Richards is interested 1,166,666 Ordinary Shares are held by Loeb Aron, a
company with which he is connected, and 200,000 are held jointly in his name and
that of his wife, Maria Esther Galimberti. Immediately following Admission,
1,596,666 will be held by Loeb Aron, a company with which he is connected, and
200,000 will be held jointly in his name and that of his wife, Maria Esther
Galimberti.
*** As at the date of this document, all of the Ordinary Shares in which Robin
Leonard Henshall is interested are held by European Islamic Investment Bank plc,
a company with which he is connected. Immediately following Admission, save for
1,428,571 Ordinary Shares which will be held by Robin Leonard Henshall in his
own name pursuant to the Placing, all of the Ordinary Shares in which Robin
Leonard Henshall is interested are held by European Islamic Investment Bank plc,
a company with which he is connected.
European Islamic Investment Bank Plc ("EIIB") which holds 22.5% of the ordinary
share capital of the Company prior to the Placing is considered a related party
under the AIM Rules due the size of its holding. Robin Henshall, a director of
the Company is also an employee of EIIB which has agreed to subscribe for
1,428,571 New Ordinary Shares at the Placing Price as part of the Placing. The
other directors of the Company consider, having consulted with Cenkos Securities
plc, the Company`s Nominated Adviser, that the terms of this transaction with
EIIB are fair and reasonable insofar as the Company`s shareholders are
concerned.
Application will be made to the LSE, for the Placing Shares to be admitted to
trading on AIM and to the JSE, for admission to trading on AltX and it is
expected that admission will occur at 8.00 a.m. (UK time) on 6 April 2010.
All definitions in this announcement are the same as those in the circular
posted to shareholders today, 15 March 2010.
Circular
A circular has today been posted to shareholders setting out the details of the
Placing and Subscription and convening a General Meeting of the Company. A copy
will be made available on the Company`s website at www.diamondcorp.plc.uk
Advisors
Nominated Advisor: Cenkos Securities plc
AIM Brokers: Cenkos Securities plc, Fairfax I.S. PLC
Investment Bank and Sponsor: Investec Bank Limited
For further information, please contact:
DiamondCorp plc
Paul Loudon, Chief Executive
+44 20 7256 2651
Cenkos Securities plc
Ivonne Cantu / Liz Bowman / Joe Nally
+44 20 7397 8900
Fairfax I.S. PLC
Ewan Leggat
+44 207 598 5368
Date: 15/03/2010 11:15:03 Produced by the JSE SENS Department.
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