| Tue 7 Dec 2010, 9:00 | | DMC - DiamondCorp Plc - Placing to raise up to GBP2.95million |
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DMC
DMC
DMC - DiamondCorp Plc - Placing to raise up to GBP2.95million
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 to raise up to GBP2.95million
HIGHLIGHTS
* The Company has conditionally placed 34,713,796 new ordinary shares at 8.5
pence per share to raise approximately GBP2.95 million (before expenses);
* The proceeds of the placing are to be applied to complete the decline
development and extraction and processing of a kimberlite mining sample at
the Lace mine in South Africa in order to determine a definitive diamond
grade, expedite mini-bulk testing of diamondiferous kimberlites in
Botswana, meet scheduled debt repayments due in April 2011 and for working
capital purposes;
* The Placing is subject to shareholder approval at a general meeting which
will be held on 22 December 2010 at 12:00 pm UK time.
Introduction
The Board of DiamondCorp, the southern African diamond development and
exploration company, is pleased to announce that it has conditionally placed up
to 34,713,796 New Ordinary Shares at 8.5 pence per share (the "Placing Price")
pursuant to the Placing to raise, in aggregate, up to GBP2.95 million gross
proceeds for the Company (approximately GBP2.77 million net of expenses). The
Placing Price represents a discount of 11.7 per cent. to the closing mid-market
price of 9.625p on 6 December 2010, being the last practicable date prior to the
posting of this announcement.
In April 2010 the Company raised approximately GBP6.6 million net of expenses at
7p per share to implement the decline development to the -240m level of the Lace
kimberlites, undertake drilling of its kimberlite exploration projects in
Botswana, pay down loan obligations and for general working capital purposes.
Since recommencing the decline development in May 2010, progress has been close
to schedule and budget. However, an independent geotechnical review of the
proposed bulk sampling programme has suggested that the -260m level is a better
target to take the bulk sample than the -240m level, as access to most areas of
the pipe at this level will be unrestricted, allowing for easier and safer
sampling methods. This additional 20m of vertical depth requires approximately
140m of additional decline development and adds approximately six weeks to the
programme.
The direct cost impact of the change is approximately GBP450,000. In addition,
cost inflation and the impact of the stronger rand has added approximately
GBP300,000 to the original GBP4 million budget for the decline access, and, in
light of the increased focus on risk assessment, an additional GBP250,000 is now
being budgeted for secondary support which may be required in the kimberlite
during the bulk sampling programme. The additional 140m of decline development
to access the 860 Level adds approximately six weeks to the schedule. On this
basis, it is expected that the Company will access the 860 Level at the end of
February 2011 and that bulk sampling will be completed by the end of April 2011.
The Company has approximately US$1.55 million of loan principal and interest to
pay Africa Opportunity Fund LP in April 2011. The Directors consider it prudent
to raise additional cash now to cover the additional decline development cost
and the April 2011 loan obligations.
The net proceeds of the Placing are expected to be applied as follows:
(i) GBP1.0 million - completion of the decline development and extraction
and processing of a kimberlite mining sample of approximately 30,000
tonnes from the 860 Level in order to determine a definitive diamond
grade at the mining level, as detailed above. 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 and management at GBP5.3 million not provided for by
the Placing.
(ii) GBP0.5 million - expedite bulk sampling in Botswana. DiamondCorp is
earning a 77.5 per cent interest in PL/71 from Botswana company
Geoperspectives (Pty) Limited by funding exploration activities.
Exploration work in PL/71 during 2009 and 2010 has identified two
diamondiferous kimberlite pipes, J-01 (10 ha) and J-05 (1.5 ha). The
number of diamonds recovered from initial microdiamond analysis is
insufficient for meaningful grade determination, however management
are pleased with results and sufficiently encouraged to proceed with
mini-bulk testing. GBP0.5 million of the proceeds will be utilised for
mini-bulk testing in PL/71.
(iii)GBP1.0 million - Loan obligations. The Company currently has a US$3.35
million loan facility with Africa Opportunity Fund LP secured against
the Company`s South African assets. Approximately GBP1.0 million of
the proceeds of the Placing will be used to meet principal and
interest payments on this loan which fall due in April 2011.
(iv)GBP0.45 million - general working capital purposes.
Details of the Placing and Subscription
The Company is proposing to raise approximately GBP2.95 million (GBP2.77 million
net of expenses), by way of the Placing of 34,713,796 New Ordinary Shares at the
Placing Price. This represents a discount of 11.7 per cent. to the closing mid-
market price of 9.625p per Existing Ordinary Share on 6 December 2010, being the
latest practicable date prior to the posting of this announcement.
The Placing Agreement is conditional upon, inter alia, (i) a minimum amount of
GBP2.5 million (before expenses) being raised pursuant to the Placing (ii) the
Resolutions being duly passed at the General Meeting and (iii) admission of the
New Ordinary Shares to AIM and AltX becoming effective on or before 8.00 a.m.
and 10.00 a.m. respectively on 23 December 2010 (or such later time and date as
the Company, Cenkos Securities and Fairfax may agree, but in any event no later
than 18 January 2011). The Placing Agreement contains provisions entitling both
Cenkos Securities and Fairfax to terminate the Placing Agreement at any time
prior to Admission in certain circumstances. If this right is exercised, the
Placing will not proceed. The Placing has not been underwritten.
Conditional on the passing of the Resolutions, application will be made to the
LSE and the 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 UK time on 23
December 2010 (or such later time and date as the Company, Cenkos Securities and
Fairfax may agree, but in any event no later than 18 January 2011).
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 CREST accounts will be credited on the day of AIM Admission
and that share certificates (where applicable) will be despatched within 14 days
of AIM Admission. Application will be made to the London Stock Exchange, for the
New Ordinary Shares to be admitted to trading on AIM and to the JSE, for the New
Ordinary Shares to be admitted to trading on AltX. It is expected that the AIM
Admission will become effective and that dealings in the Placing Shares will
commence at 8.00 a.m. (UK time) on 23 December 2010, and the AltX Admission will
also become effective and that dealings in Placing Shares will commence at 10:00
a.m. (UK time) on 23 December 2010.
If the Resolutions are not passed by the Shareholders, then the Placing will not
proceed and the Company will not have sufficient financial resources to complete
its bulk sampling programme to determine a definitive diamond grade or to meet
its debt obligations.
Related Parties
European Islamic Investment Bank Plc ("EIIB") which holds 26.48% 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. EIIB has subscribed for
9,340,342 shares at the Placing Price as part of the Placing. George Morton is
a non-executive director of EIIB. 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 23 December 2010.
All definitions in this announcement are the same as those in the circular
posted to shareholders today, 7 December 2010.
Circular
A circular has today been posted to shareholders setting out the details of the
Placing and convening a General Meeting of the Company. A copy will be made
available on the Company`s website at www.diamondcorp.plc.uk
Pursuant to Section 571 of the Act, the Directors consider that the Placing and
the Resolutions are in the best interests of the Company and its Shareholders as
a whole, for the reasons set out above, and unanimously recommend that you vote
in favour of the Resolutions, as they have irrevocably undertaken (to the
extent applicable) to do in respect of their own beneficial holdings amounting,
in aggregate, to 2,918,561 Ordinary Shares, which represents approximately 1.96
per cent. of the Company`s Existing Ordinary Shares.
Advisors
Nominated Advisor: Cenkos Securities plc
AIM Brokers: Cenkos Securities plc, Fairfax I.S. PLC
JSE Sponsor: PSG Capital (Pty) Limited
For further information, please contact:
DiamondCorp plc
Paul Loudon, Chief Executive +44 20 3151 0970
Cenkos Securities plc
Ivonne Cantu / Liz Bowman / Will Dymott +44 20 7397 8900
Fairfax I.S. PLC
Ewan Leggat +44 207 598 5368
PSG Capital (Pty) Limited
John-Paul Dicks +27 21 887 9602
Russell & Associates
Charmane Russell/Marion Brower +27 11 880 3924
Date: 07/12/2010 09:00:03 Produced by the JSE SENS Department.
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