18th Apr 2005 09:02
Dwyka Diamonds Limited18 April 2005 Dwyka Diamonds Limited Dwyka to proceed with acquisition of four kimberlite diamond mines in South Africa HIGHLIGHTS •Dwyka to pay R4 million cash and 2.75 million (value R11 million) Dwyka shares to acquire the Blaauwbosch, Newlands, New Elands and West End Mines located in the Northern Cape in South Africa •Further performance related payments possible of R1 million cash and Dwyka shares to maximum transaction value of R40 million •Extensive due diligence completed on assets including trial mining periods at Blaauwbosch and Newlands to confirm mining costs and diamond grades and values •Immediate capex programme of R10.65 million to be applied to expand production at Blaauwbosch and Newlands and to re-commence production at West End •Significant further expansion planned with re-opening of the New Elands Mine •Board strengthened with COO and CFO appointments Acquisition The Directors of Dwyka Diamonds Limited ("Dwyka" or the "Company") todayannounce that the Company has entered into a Heads of Agreement ("HOA") topurchase Bellsbank Number One (Pty) Ltd, Kophia Diamonds (Pty) Ltd and RexExploration (Pty) Ltd. These companies own the four hard rock diamond mines, Blaauwbosch, New Elands,Newlands and West End, which Dwyka has had under Option since August 2004. Dwyka has agreed to initially pay the vendors of the four mines a total of R11million in Dwyka shares (2.75 million shares at a Dwyka share price of 35 pence)and R4 million in cash. In addition the transaction makes provision for thepayment of an additional R1million cash and R24 million in Dwyka shares ifcertain hurdles are met in relation to the operating and financial performanceof the mines. Development opportunity Dwyka believes that production for Blaauwbosch, Newlands and West End can beramped up to in excess of 8,000 carats per month at a value of about US$100 percarat in present day values. At R6.05/USD (exchange rate today R6.29/USD) theCompany expects these three mines to generate a profit of approximately A$4million per annum. Further expansion is planned with the re-opening of the NewElands Mine, for an expected capital expenditure of R8.3 million. The dealstructure provides Dwyka with significant upside on production rates, productionefficiencies, diamond price increases and Rand weakness. Commenting today, Dwyka CEO Melissa Sturgess said "The acquisition of theseproduction assets into the Dwyka portfolio represents a significant valueopportunity for Dwyka shareholders. One of Dwyka's strengths has been inbringing assets up the value curve to optimum production levels and our duediligence indicates to us there are huge opportunities for us here. The acquisition of these mines completes Dwyka's transformation to an operatingdiamond mining company. Along with two further diamond transactions that arenear completion, Dwyka will continue to pursue an aggressive, value creatinggrowth strategy." Evaluation Since August 2004, Dwyka has monitored the performance of the two operatingmines, Blaauwbosch and Newlands. Monitoring included measuring tonnes removedfrom underground mining, the plant's production grade and diamond values.Evaluating real production has allowed Dwyka to build a highly accurate modelregarding on-mine costs and possible production scenarios. The Company has beenable to clearly identify areas where the Dwyka team can enhance production, asthey did at the Nooitgedacht Mine in 2004. Extensive accounting and legal due diligence in relation to the acquisition ofthe four mines has already been undertaken. Dwyka will now complete these duediligence activities and move to finalise sales documentation. Board changes This transaction represents a significant step forward in Dwyka's growth. Toensure the Company manages its increased portfolio effectively, two changes areto be made to the Board. Dr Evan Kirby, currently non-executive Director, willmove to the position of Chief Operating Officer and will be responsible for theoperating performance of Dwyka's assets in conjunction with Cedric Bredenkamp,Dwyka's South African Operations Manager. Mike Langoulant, currently CompanySecretary, will move to the position of Chief Financial Officer. These directorswill be remunerated in line with Dwyka's other directors. The Dwyka board nowcomprises of the following: Mr Ed Nealon Non Executive ChairmanMs Melissa Sturgess Chief Executive OfficerDr Evan Kirby Chief Operations OfficerMr Mike Langoulant Chief Financial Officer For further information please contact: In Australia: In United Kingdom: Melissa Sturgess Joe NallyDwyka Diamonds Limited Williams de Broe Plc(+618) 9324 2955 (+44) 20 7588 7511 Laurence Read/ Leesa Peters Conduit PR (+44) 20 7936 9095 / (+44) 7979 955 923 www.dwykadiamonds.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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