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DMR
DMR
Diamond Core - Details of proposed capital raise and updated pro forma financial
effects
Diamond Core Resources Limited
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
Share code: DMR ISIN Number: ZAE000045688
("Diamond Core" or "the company")
Details of the proposed issue of shares and options for cash to raise capital
("the capital raise") and updated financial effects of the merger of Diamond
Core and Samadi Resources (SA) Pty Limited ("Samadi") ("the merger") and the
capital raise
1. Introduction
Shareholders are referred to the announcements relating to the merger and the
capital raise published on 18 July 2005, 28 September 2005, 9 November 2005 and
6 January 2006.
Shareholders are reminded that, as set out in the announcement of 18 July 2005,
in terms of the merger and subject to shareholder approval, Diamond Core will be
acquiring all of the issued shares in and shareholders claims against Samadi
("the Samadi shares and claims") in exchange for:
- R101.00 in cash (comprising R100.00 for the shares and R1.00 for the
claims, which claims amount to GBP 617 603.14);
- the issue of 273 422 357 Diamond Core shares of par value 1 cent each
("Diamond Core shares");
- the issue of 50 000 000 options, each of which is convertible into one
Diamond Core share and each of which can be exercised at any time between
the date of its issue and 30 September 2007 at a strike price of 20 cents
per option ("options"); and
- the issue of a further tranche of 273 422 357 Diamond Core shares upon the
achievement by Samadi of a defined operating profit target of R35 million.
(Should Samadi achieve an operating profit target, as defined, of between
R20 million and R45 million, the number of Diamond Core shares to be issued
will be adjusted on a proportional basis.)
Shareholders are also reminded that:
a) Samadi has four subsidiaries:
- Sandstraat Eksplorasie (Edms) Bpk, which holds a mining right over the
farm Hospitaal 365, portions 10 and RE - "the Silverstreams project";
- Prieska Diamond Mining (Pty) Limited, which holds a prospecting right
over the farm Uitdraai 33, the remainder of portion 1 - "the Uitdraai
project";
- Samadi (Douglas) Exploration (Pty) Limited, which holds a prospecting
right over the farm De Kalk 37 - "the De Kalk project"; and
- Samadi Exploration (Pty) Limited, which has applied for prospecting
rights over a number of unexplored "blue sky" projects including the
Koa River Valley area
(collectively "the Samadi subsidiaries"); and
b) in terms of the agreement between Samadi and a broad based BEE consortium,
Sefalana Mineral Resources (Pty) Limited ("Sefalana"), ("the BEE
agreement"), Sefalana is entitled to 50% equity interests in each of the
Samadi subsidiaries and Samadi will be providing funding to Sefalana by way
of a structured loan finance arrangement the terms of which provide that,
after repayment of the loan, Samadi will be entitled to 70% of the
dividends received by Sefalana from the Samadi subsidiaries.
The company has now finalised the amount of capital to be raised and the
associated pro forma financial effects of the merger and the capital raise,
details of which are presented below.
2. The capital raise
The company has decided, subject to shareholder approval, to raise R200 million
in order to continue with its exploration and mining activities on the Diamond
Core projects and to commence exploring and mining the Samadi projects. As set
out in the announcement of 18 July 2005, Diamond Core intends to raise the
capital required through the issue of shares and options to selected local and
off-shore institutions. The options will have the same terms and conditions as
those issued to Samadi and one option is to be issued for every ten Diamond Core
shares issued. Application will be made to the JSE Limited ("JSE") for a
listing of the options.
The company intends to invest the capital raised as follows:
- approximately R120 million for the Samadi projects;
- approximately R65 million for the existing Diamond Core projects, namely
the Paardeberg East and Skeyfontein projects; and
- approximately R15 million to cover costs and for financial, IT and
administrative capital requirements.
A minimum subscription of R50 million has been set.
Subject to the approval of the JSE and in terms of the JSE Listings
Requirements, price stabilisation mechanisms may be put in place upon completion
of the capital raise.
3. Amendments to the company"s share capital
Shareholders are also reminded that the company is proposing:
- to increase its authorised share capital from 1 000 000 000 shares to 5 000
000 000 shares;
- to reduce the par value of its shares; and
- to undertake a consolidation of its shares on a one-for-10 basis ("the
consolidation").
4. Pro forma financial effects
The pro forma financial effects presented below are the responsibility of the
board of directors of the company and are presented for illustrative purposes
only to provide information on how the consolidation, the merger and the capital
raise might have impacted on the reported financial information of Diamond Core
if they had been implemented in the year ended 30 June 2005. Because of their
nature, the pro forma financial effects may not give a fair reflection of
Diamond Core"s financial position at 30 June 2005.
cents per Before the After the After the After the %
share consolidation consolidati consolidation consolidatio change
and the merger on and and the n and the (7)
and the capital before the merger and merger and
raise (1) merger and prior to the the capital
the capital capital raise raise (4,5,6
raise (2) (3) )
Loss per
share for
the year
ended 30 (1.8) (18.2) (15.2) (0.8) 95.6
June 2005
Headline
loss per
share for
the year
ended 30 (1.3) (13.0) (11.6) (0.5) 96.2
June 2005
Diluted
loss per
share for
the year
ended 30 (1.7) (17.1) (10.8) (0.6) 96.5
June 2005
Net asset
value per
share at 30
June 2005 3.1 31.3 115.6 114.9 267.1
Net
tangible
asset value
per share
at 30 June
2005 1.1 10.5 7.7 76.6 629.5
Weighted
average
Diamond
Core shares
in issue
for the
year 623,123,235 62,312,324 89,654,559 256,321,226 311.3
Diamond
Core shares
in issue at
the end of
the year 647,939,287 64,793,929 92,136,164 258,802,831 299.4
Assumptions:
- The figures in this column are extracted from the audited consolidated
annual results of Diamond Core for the year ended 30 June 2005.
- The figures in this column are based on the audited consolidated annual
results of Diamond Core for the year ended 30 June 2005 assuming the
consolidation had been implemented.
- The figures in this column are based on the audited consolidated annual
results of Diamond Core and Samadi for the year ended 30 June 2005, based
on a net asset value of Samadi at 30 June 2005 of R(4 901 564) and assuming
that:
* the consolidation had been implemented;
* 27 342 236 Diamond Core shares (on a consolidated basis) had been
issued in respect of the merger;
* the 27 342 236 Diamond Core (consolidated) shares which will be issued
upon the achievement of the operating profit target referred to in
paragraph 1 have not been taken into account for earnings per share or
net asset value per share purposes on the basis that, although the
conditions for issue are likely to be met, they will only be met in
the future.
- The figures in this column are based on the same assumptions as those set
out in Note 3 above and, in addition, the assumption that a total amount of
R200 million was raised in terms of the capital raise. It was assumed that
the issue price for ten Diamond Core shares and one option (on a
consolidated basis) was R12.00 and, accordingly, that 166 666 667 Diamond
Core shares and 16 666 667 options (on a consolidated basis) were issued.
This represents an 18% discount to the 30 day trade weighted average price
of Diamond Core shares on the JSE at the close of business on Friday 20
January 2006.
- For earnings purposes, it was assumed that the merger and the capital raise
were implemented with effect from 1 July 2004 and the capital raised (net
of costs) was received on 1 July 2004 and earned interest for the year at a
pre tax rate of 6% per annum.
- For asset value purposes, it was assumed that the merger and the capital
raise were implemented and the capital raised (net of costs) was received
on 30 June 2005.
- The figures reflected in this column show the change between the figures
reflected in column 2 (after the implementation of the consolidation) and
the figures in column 4 (after the implementation of the consolidation, the
merger and the capital raise).
5. Opinions and recommendation
The board of Diamond Core remains unanimously of the opinion that the merger is
fair and reasonable to Diamond Core shareholders and recommends that
shareholders vote in favour of the merger. Mr Louw, the chairman, does not hold
any shares in Diamond Core and will therefore not be voting. As Mr Nachom, Mr
Botoulas and Mr Levithan are directors of both Diamond Core and Samadi, their
votes will not be taken into account in respect of any resolution relating to
the merger.
Venmyn Rand, the independent expert, remains of the opinion that the terms of
the merger are fair and reasonable to Diamond Core shareholders. The full text
of its opinion will be included in the circular.
EY Corporate Finance (Pty) Limited has been appointed to provide an independent
professional opinion to the board of Diamond Core and to shareholders, upon
completion of the capital raise, as to whether the terms of the capital raise
are fair and reasonable.
6. Important dates
Shareholders should take careful note of the following anticipated important
dates and times relating to the consolidation, the merger and the capital raise.
These dates and times may be changed. Where required, any such change will be
released on SENS and published in the press.
Activity Date
2006
Circular posted to shareholders on Friday 3 February
Last day for receipt of forms of proxy in
respect of the general meeting of Diamond Thursday 23 February
Core shareholders by 10:30 on
General meeting of Diamond Core Monday 27 February
shareholders to be held at 10:30 on
Announcement regarding results of general
meeting released on SENS on Monday 27 February
and published in the press on Tuesday 28 February
Last day to trade in Diamond Core Thursday 16 March
(unconsolidated) shares
Diamond Core consolidated shares listed
on the JSE and shareholders entitled to Friday 17 March
trade Diamond Core consolidated shares
Pricing of capital raise finalised and
commitments from investors secured by Friday 24 March
Record date for the consolidation Friday 24 March
Shareholders" accounts with their CSDPs
or brokers amended to reflect the Monday 27 March
consolidation on
New share certificates reflecting the
consolidation posted if received on or
before Friday 24 March on Monday 27 March
(or if received thereafter within five
business days of receipt by the transfer
secretaries of existing share
certificates)
Consolidated shares issued in respect of
the merger listed on the JSE on Monday 27 March
Announcement regarding the completion of
the capital raise together with the
relevant fair and reasonable opinion and
confirmation as to whether or not price
stabilisation has been permitted by the Monday 27 March
JSE released on SENS on Tuesday 28 March
and published in the press on
Funds transferred by investors in terms Monday 27 March
of the capital raise
If the JSE has approved price
stabilisation, price stabilising period Tuesday 28 March
commences on
Consolidated shares and consolidated
options issued in terms of the capital
raise and consolidated options issued in Wednesday 29 March
terms of the merger listed on the JSE on
If the JSE has approved price Tuesday 2 May
stabilisation, price stabilising period
ends on
If the JSE has approved price
stabilisation, announcement of the extent
to which any green shoe might have been
exercised released on SENS on Tuesday 2 May
and published in the press on Wednesday 3 May
Note:
1. Share certificates reflecting shareholdings before the consolidation may not
be dematerialised or rematerialised after Thursday 16 March 2006.
7. Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcements dated 28 September
2005, 9 November 2005 and 6 January 2006. Given the information presented
above, shareholders are advised that the cautionary announcement has now been
withdrawn.
25 January 2006
Hyde Park
Corporate advisor and sponsor to Diamond Core
QuestCo (Pty) Limited
Joint corporate advisor and capital raise manager for Diamond Core
James Allan & Associates (Pty) Limited
Lead sponsor
Sasfin Capital
(A division of Sasfin Bank Limited)
Competent person and independent expert for the merger
Venmyn Rand (Pty) Limited
Independent professional expert for the capital raise
EY Corporate Finance (Pty) Limited
Auditors for Diamond Core and Samadi
Charles Orbach & Company
Legal advisor to Diamond Core
Werksmans
Corporate advisor to Samadi
River Group
Date: 25/01/2006 02:00:17 PM Produced by the JSE SENS Department
