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DMR
DMR
Diamond Core- BEE transaction with Morwakoma and granting of a prospecting right
DIAMOND CORE RESOURCES LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/013468/06)
Share code: DMR & ISIN Number: ZAE000076956
("Diamond Core" or "the company")
BEE TRANSACTION WITH MORWAKOMA RESOURCES (PTY) LTD AND GRANTING OF A PROSPECTING
RIGHT
Diamond Core Resources Limited ("the Company") is pleased to announce the
conclusion of a BEE transaction in its subsidiary Company Diamond Core
Kimberlite Projects (Pty) Limited ("the exploration venture"), as well as the
grant of a prospecting right over the farm Kuiltjespan 37 to the exploration
venture.
Diamond Core Kimberlite Projects (Pty) Limited is the vehicle in which the
Company and its BEE partner shall conduct future greenfields exploration for
economically viable kimberlite deposits, and is focussed primarily in the
Northern Cape Province of South Africa and areas in close proximity.
The Company has entered into a 50:50 Joint Venture in Diamond Core Kimberlite
Projects (Pty) Limited with Morwakoma Resources (Pty) Limited ("Morwakoma"), a
broad-based BEE Consortium headed by Mr Mashego Maleka.
The prospecting right to Kuiltjespan (FS 30/5/1/1/2/58) was issued by the
Department of Minerals and Energy: Welkom, on Monday 3rd July 2006. Both the
Company and Morwakoma were represented, with Mr Mashego Maleka representing
Morwakoma. The remaining applications which have been made in the exploration
venture, focussed on farms surrounding Skeyfontein, are pending.
The BEE transaction
In terms of an agreement between the Company and Morwakoma ("the Morwakoma
Agreement"), Morwakoma shall be afforded an opportunity of raising up to 50% of
the capital which the exploration venture my require. If Morwakoma is not able
to raise 50% of the capital requirement the Company will provide loan finance to
Morwakoma by way of a preference share structure. The Company will thus
underwrite the exploration risk in the exploration venture. After repayment of
such loan finance from any future cashflows which may be generated by the
exploration venture, the Company will be entitled to an effective economic
interest equal to 70% of any future dividends that may be received by Morwakoma,
but only in the event that none of the capital requirements are raised by
Morwakoma for the exploration venture. Under this scenario this would mean that,
after repayment of the loan finance from the exploration venture, and after the
Company has accepted the exploration risk, Morwakoma will be entitled to 15% and
the Company to 85% of any future dividends generated.
In the event of Morwakoma raising part of this capital required (subject to a
30% minimum of the capital requirement) the Company"s effective economic
interest shall be reduced pro rata to the amount of exploration risk capital
raised by Morwakoma.
If Morwakoma has raised none or only part of the capital required such that its
effective economic interest is less than 24% then Morwakoma shall have the
option to redeem up to 11% of the Company"s effective economic interest over
nine year period entitling Morwakoma to acquire up to a 26% economic interest in
future dividends declared by the exploration venture, at a 15% discount to the
value of such economic interest, as established by a competent person.
It should be noted that in terms of the Morwakoma Agreement, the Company has
been given the right to match the terms of any funding that Morwakoma might
secure.
Kuiltjespan 37
The kimberlite prospecting area over which the prospecting right has been
granted is located on the farm Kuiltjespan 37 situated approximately 25 km north
north-west of Koffiefontein, and approximately 58 km south south-east of
Kimberley in the Koffiefontein District of the Free State Province. A photo
geological study, carried out by Robert Cooke Mineral Consultants ("RCMC"), has
shown the presence of a number of linear and circular structures that could
represent the presence of kimberlite bodies. No other work has been done by the
Company previously on the property as no prospecting right had been issued. The
targets mentioned in the preceding sentence will be investigated by geochemical
and geophysical surveys. It is also planned that percussion drilling will be
undertaken on localities that may return positive results.
19 July 2006
Epsom Downs
Sandton
Sponsor and Corporate Advisor
River Group
Website: www.diamondcore.co.za
Date: 19/07/2006 08:41:05 AM Produced by the JSE SENS Department
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