17th Jan 2007 09:38
Dwyka Diamonds Limited17 January 2007 DWYKA ANNOUNCES DIVERSIFIED GROWTH STRATEGY; ACQUIRES BURUNDIAN NICKEL PROJECT - Muremera nickel project acquired (located within 2km of the world-classKabanga deposit) for an upfront payment of US$2M worth of Dwyka shares. - Maximum remaining consideration of US$3M (Dwyka shares) subject to projectmilestones. - Intention to raise up to A$5M by way of a shareholder share purchase plan ("SPP") and a further placement. The SPP (which is conditionally underwrittenby Montagu Stockbrokers Pty Ltd) will enable all Dwyka shareholders to subscribefor up to A$5,000 worth of Dwyka shares at A$0.31 per share, being a 20%discount to market price. Dwyka Diamonds Limited ("Dwyka" or "the Company") (London AIM & ASX) todayannounces its intention to seek new growth opportunities as part of its ongoingstrategy of growth and diversification. Dwyka's core strength is the rapid and low cost development and operation ofmining projects. As Dwyka seeks new growth platforms, it is a natural next stepfor the Company to apply this core skill to a wider range of commodities inorder to deliver value for shareholders. ACQUISITION As part of this diversified growth strategy, Dwyka is also pleased to announcethat it has today signed a share sale and purchase agreement ("Agreement")pursuant to which it will acquire the Muremera nickel project in Burundi. TheMuremera licence is located within 2km of the Kabanga project, the world'slargest undeveloped nickel sulphide deposit. The Kabanga deposit, which is located immediately across the border in Tanzania,was discovered by geophysical prospecting, by the United Nations DevelopmentProgramme ("UNDP"), in 1976. Further UNDP surveys in 1978 resulted in thediscovery of the prospective Muremera deposits on the Burundi side of the borderin 1978. The anomalies have identical characteristics and follow-up work by theUNDP has confirmed that massive sulphide bodies, with nickel mineralisation, arethe source of the anomalies. Extensive geophysics and geochemical surveys havedelineated numerous targets, however there has been insufficient drilling to date to establish aJORC compliant resource. The total consideration payable by Dwyka in respect of this acquisition isUS$2,000,000 (to be satisfied by the issue of Dwyka shares), followed by afurther US$3,000,000 (also payable in Dwyka shares) subject to the achievementof certain project milestones. Further details about the Company's diversified growth strategy are set outbelow. DIAMONDS Over the past two years Dwyka has built a strong portfolio of producing diamondassets, notably its Kimberley tailings re-treatment project and the Blaauwboschand Newlands underground kimberlite mines. These are supplemented by a numberof prospective exploration projects in Southern Africa. The current portfolioof producing assets is demonstrating its potential and it is therefore desirableto retain exposure to the cashflow generation and potential upside from theseassets in executing the new corporate strategy. The Board believes that the most effective way to achieve growth in the diamondsector is through corporate activity because further organic growthopportunities will be limited and are unlikely to realise value in the shortterm. The Company is currently considering a number of corporate transactions at asubsidiary level, including a merger with a third party. In such a scenario theCompany would retain its exposure to an enlarged diamond group by way of equityin the merged company, whilst at the same time being free to pursue othermineral opportunities. Various high level discussions are underway to thiseffect. In effecting any proposed change, Dwyka would seek to ensure that its localSouth African management team and corporate structure would remain intact,enabling the local subsidiaries to continue to realise their operationalobjectives without effecting any change of control of projects or assets. NEW MINERAL PROJECTS Global demand and prices for minerals continues to be extremely strong. With anexploration, development and operations team established at Dwyka, the Companyis well positioned to apply its experience and infrastructure to new projects inAfrica, commencing with the Muremera nickel project in Burundi. In addition, Dwyka is currently engaged in discussions with third partiesconcerning various other opportunities in a number of minerals sectors. The involvement by the Company in projects across a wider range of commoditieswill allow the Company to drive shareholder value faster than may be possiblewith exposure to diamonds alone. To reflect this strategy, Dwyka also intends(subject to shareholder approval) to change its name to Dwyka Resources Limited. FUNDRAISING In order to aggressively develop the Muremera project and to continue thedevelopment of its diamond assets, Dwyka intends to raise up to A$5,000,000 byway of an SPP and a further placement. The SPP will permit all Dwykashareholders to subscribe for up to A$5,000 worth of Dwyka shares at A$0.31 pershare, being a 20% discount to market price (calculated by reference to theaverage price for Dwyka shares on ASX over the 5 active trading days immediatelypreceding the date of this announcement). Montagu Stockbrokers Pty Ltd hasconditionally agreed to underwrite the SPP. The further placement will be madeto sophisticated investors and other exempt offerees at the same subscriptionprice as the SPP. Documentation setting out the terms and conditions of the SPPwill be released to the market and sent to Dwyka shareholders shortly. Commenting on the new broader development strategy and the signing of theAgreement, Melissa Sturgess, Executive Chairman of Dwyka said: "What Dwyka excels at is moving resources projects quickly up the value curve toproduction and working hard to ensure costs are contained. We have achievedsuccess both on our own and through partnering with global industry majors. Itis only appropriate that as we look aggressively to grow, we apply ourexperience outside of diamonds and build a portfolio of assets across a range ofminerals. The acquisition of the Muremera nickel project is an important step in ourongoing diversification strategy and provides our shareholders with exposure toan exciting and highly prospective nickel opportunity. Further, the lowacquisition cost and the fact that the majority of payments under the Agreementare linked to project performance means that excellent opportunities exist forDwyka to derive value from this project". For further information please contact: Melissa Sturgess (Chairman, Dwyka Diamonds): +61 (0)8 9324 2955Adrian Griffin (CEO, Dwyka Diamonds): +61 (0)8 9324 2955Richard Brown (Ambrian Partners): +44 (0)207 776 6417Richard Chase (Ambrian Partners): +44 (0)207 776 6461Laurence Read/Leesa Peters (Conduit PR): +44 (0)207 429 6605 or +44 (0)7979 955 923 Or visit http://www.dwykadiamonds.com This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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