29th Jun 2006 09:06
Dwyka Diamonds Limited29 June 2006 Dwyka Diamonds Limited ("Dwyka" or "the Company") Update on Bosele exploration project Dwyka, the AIM- and ASX-quoted diamond developer and producer, today announcedthat it will fast-track its prospective Bosele exploration project, via theissue of a series of unsecured convertible loan notes to the value of GBP1million, rather than waiting to fund the programme from future operating cashflows. Previous work at Bosele recovered more than 40 diamonds from two mini bulksamples taken from the property and processed by De Beers in Kimberley, SouthAfrica. Following further assessment of the property the Board has taken thedecision to pursue a geophysics and diamond drilling programme to obtain samplesof the source rock and test it for indicator minerals and diamonds. Previous drilling by Dwyka revealed that the volcanoclastic sediments exceed avertical thickness of 200m; however, none of the holes drilled penetrated thebase of the sedimentary sequence. The sandy sediments in the upper part of thatsequence were proved diamondiferous by means of a 270 tonne bulk sample. Thesesandy sediments look similar to the sandy tuffs of Western Australia'slamproites, in particular those at Argyle. Further, eight of the diamonds foundin the bulk sample have similarities to the producing lamproite bodies inWestern Australia, in that the diamonds are highly resorbed (unlike most SouthAfrican diamonds, apart from those recovered from the Premier Mine). Dwyka has successfully identified diamondiferous sediments, which fill a largecrater structure at Bosele. The sediments, which are of volcanoclastic origin,contain various kimberlitic indicator minerals (ilmenite, Cr-spinel, garnet,Cr-diopside and diamond). Future exploration at Bosele will focus on thesediamondiferous sediments and attempt to locate the magmatic source of thevolcanic activity. The purpose of this next phase of exploration is toestablish, beyond doubt, that a kimberlite/lamproite extrusive event was thecause of the crater. Following a positive result, further testing of the kimberlite/lamproite sourcewill be undertaken. Bulk testing of the crater lake sediments is also planned asthese still have the potential to host commercial quantities of diamonds. The funds may also be applied to further underground development work at boththe Newlands and Blaauwboch Diamond Mines and for general working capital. The convertible loan notes are unsecured and attract a yield of 8%, payablequarterly in arrears, from the deemed issue date of 22 June 2006 to the maturitydate of 22 June 2010. Each of the loan notes can be converted to fully paid ordinary shares of Dwyka,at any time until 22 June 2010, at a conversion price of GBP0.36. The number ofshares issued upon conversion of the convertible loan notes is subject toproportionate adjustment for bonus issues, share splits etc. Upon the change ofcontrol involving the acquisition of over 50% of the Company's ordinary sharesthe holders of the notes can require the Company to repurchase their notes at aprice equal to 101% of the principal amount plus interest. From 12 months after the deemed issue date the Company can call the Loan Notesfor conversion if the 20 day average price of the Company's ordinary shares isat least GBP0.55. Today, Adrian Griffin, Dwyka's CEO, commented that: "Funding via thisconvertible loan note provides the cash resources to fast track our work atBosele whilst minimizing the dilution effect for existing shareholders. It meanswe can deliver to our shareholders the cash flow generated from our operatingassets, combined with strong exploration upside. The unsecured nature of theloan note demonstrates the lenders expectations that the Company's assets willprovide a strong increase in income streams over the next few years." For further information please contact: In Australia: In United Kingdom: Adrian Griffin Laurence Read/Leesa PetersDwyka Diamonds Limited Conduit PR+61 (0) 8 9324 2955 +44 (0) 20 7429 6605/ +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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