25th Mar 2008 17:08
Templar Minerals Limited25 March 2008 25 March 2008 Templar Minerals Plc ("Templar" or the "Company") Agreement to purchase a further interest in River Diamonds Plc Templar Minerals, which holds 26.18% of the issued share capital of RiverDiamonds Plc ("River Diamonds") notes the announcement made by River Diamondsregarding the Proposed acquisition of all the share capital of Viso GeroInternational, Inc. not held by River Diamonds (set out below), and theapplication for re-admission of the enlarged share capital of the Company totrading on AIM and Notice of General Meeting. Templar has entered in to an irrevocable offer to purchase 143,290,000 RiverDiamonds ordinary shares that Viso Gero Global Inc will receive post thesuccessful general meeting of River Diamonds shareholders approving theacquisition of the balance of the Emperor Gold Mine in Fiji that River Diamondsdoes not already own (the "Transaction"). The purchase price is either: - GBP 8,597,400 being 143,290,000 River Diamonds shares at a price of 6 pence per share. - GBP 8,597,400 worth of free trading Templar Mineral Limited shares at an issue price of the average previous 30 days trading prior to the execution of the irrevocable offer letters (20 February 2008) minus a 3 per cent. discount to the closing mid-price on the date of execution of the letter. - A combination of cash and shares, at Templar's election. Payment of the purchase price will be made within 30 days of the successfulgeneral meeting of River Diamonds approving the Fiji transaction. David Lenigas, Chairman of Templar, is to become an executive director of RiverDiamonds and will cease to be a non-executive director of the Company. Inaddition, Ian Stalker and Neil Herbert (respectively non-executive director andfinance director of Templar) will join the board of River Diamonds. Due to thiscommonality of Directors, the Transaction is considered to be Related Partyunder the AIM Rules. Accordingly, the Independent Directors, being GrahamMascall, Paul Courtnage and Gordon Cassidy, having consulted with the Company'sNominated Adviser consider that the terms of the transaction are fair andreasonable insofar as the Company's shareholders are concerned. Templar has agreed with the Company, WH Ireland and Hichens Harrison that (savein certain limited circumstances) they will not for a period of 12 months fromRe-Admission sell or otherwise dispose of any of their respective interests inOrdinary Shares and for a further 12 months only to dispose of such shares withHichens Harrison's consent and on an orderly market basis. Templar currently holds 285,000,000 ordinary shares in River Diamonds andfollowing re-admission of the River Diamonds share capital to trading on AIM andassuming the purchase of the additional shares set out above, will hold428,290,000 ordinary shares in River Diamonds being 25.4% of River Diamonds'enlarged share capital. The unaudited pro forma net assets of River Diamonds on re-admission, as set outin the River Diamonds' Readmission Document, will be £43,729,000. The Board believes that the transaction enables Templar to maintain asignificant interest in a significant gold asset with the potential torecommence production in the short-term. Contacts:Templar MineralsDavid Lenigas, Chairman Tel: +44 (0) 7881 825378Ian Stalker, Non Exec-Director Tel: + 27 11 783 5056 Beaumont Cornish Tel: +44 (0) 20 7628 3396Roland CornishRosalind Hill Abrahams Financial Dynamics Tel + 44 (0) 20 7831 3113Ben BrewertonEd Westropp River Diamonds PLC ("River Diamonds" or "the Company") Proposed acquisition of all the share capital of Viso Gero International, Inc. not held by the Company Application for Re-Admission of the Enlarged Share Capital of the Company to trading on AIM Notice of General Meeting River Diamonds plc announces the publication of the Re-Admission document forthe proposed acquisition of all the share capital of Viso Gero International,Inc. not held by the Company and the resumption of trading of its shares to theAIM Market of the London Stock Exchange. TRANSACTION HIGHLIGHTS • River Diamonds' shares resume trading today on publication of the Re-Admission document • Following completion River Diamonds, will own 100% of the Vatukoula Gold Mine in Fiji • River Diamonds has conditionally placed shares at 6p to raise gross proceeds of £4,669,000 ADMISSION STATISTICS Number of Existing Ordinary Shares 1,104,705,388Number of Placed Shares 77,816,666Number of Consideration Shares 477,633,333Number of Arrangement Fee Shares 25,000,000Number of Retained Consideration Shares 334,343,333Enlarged Share Capital following Re-Admission 1,685,155,387Consideration Shares as a % of Enlarged Share Capital 28.34%New Ordinary Shares as a % of Enlarged Share Capital 34.44% EXPECTED TIMETABLE OF PRINCIPAL EVENTS Publication of Re-Admission document and dealings recommence 13 March 2008in the Existing Ordinary SharesLatest date for receipt of the Forms of Proxy 29 March 2008General Meeting 31 March 2008Completion of the Acquisition, Re-Admissionbecomes effective and dealings commence in the New Ordinary Shares 01 April 2008 Board Changes Shortly before the publication of this document and in anticipation of thechanged composition of the Board following completion of the Acquisition,Anthony Balme and Nicholas Shaw-Hardie resigned as Directors. In addition, DavidLenigas has agreed to provide his services in an executive capacity, andaccordingly will cease to be treated as a non-executive director. Donald Strangwas appointed as a non-executive director on 12 March 2008. In addition, it isintended that John Stalker and Neil Herbert will be appointed as directors ofthe Company with effect from Re-Admission. Donald Ian George Layman Strang, Non-executive Director, age 40 Mr Strang is a qualified chartered accountant with 20 years' experience in thefinancial and resources sectors. He has experience operating in the AIMenvironment. He is currently finance director for Brinkley Mining plc and alsofor Leni Gas and Oil plc. He is also a non-executive director of Lonrho plc. Mr Strang was previously the chief financial officer and company secretary forGlobal Coal Management plc (formerly Asia Energy plc) and BDI Mining Corp. He has previouslyheld senior financial positions with Ernst & Young and several publicly listedAustralian gold mining companies (Macraes Mining Company Limited and PerilyaMining Limited) and has also worked with Deutsche Bank and Credit Suisse Groupin the investment banking sector. Other than as detailed above there is no further information to be disclosedpursuant to paragraph (g) of Schedule Two of the AIM Rules. Colin Orr-Ewing, Chairman of River Diamonds commented, "The acquisition of theVatukuola Mine provides River Diamonds with the opportunity to bring thishistoric gold mine back to profitability at a time of high prevailing goldprices. We believe this will bring benefits not only to River Diamonds'shareholders, but also to the Fijian Government, the employees at the mine andthe people of Fiji." 13 March 2008 Enquiries: Colin Orr-Ewing, Executive ChairmanRiver Diamonds plcTel: 020 7016 5100 Dave PaxtonHichens Harrison & Co. plcTel: 020 7832 7785 Laura Llewelyn/ Beth HarrisParkgreen CommunicationsTel: 020 7851 7480 James Joyce/ David PorterW.H. Ireland LimitedTel: 020 7220 1666 For details of the transaction please see below. For the full Re-Admissiondocument, please visit the Company's website: www.riverdiamonds.co.uk The terms used in this announcement have the same meaning as in the Re-Admissiondocument. PART I LETTER FROM THE CHAIRMAN OF RIVER DIAMONDS plc River Diamonds plc (Incorporated and registered in England and Wales with registered number 5059077) Existing Directors: Registered Office:Ian Colin Orr-Ewing, (Executive Chairman) Carmelite, 50 Victoria Embankment,Kiran Caldas Morzaria, (Finance Director) London EC4Y 0LS David Anthony Lenigas, (Executive Director) Donald Ian George Layman Strang, (Non-Executive Director) Proposed Directors:John Ian Stalker, (Proposed Non-Executive Director)Neil Lindsey Herbert, (Proposed Non-ExecutiveDirector) 13 March 2008 To Shareholders and, for information purposes only, all holders of options inthe Company Dear Shareholder Proposed acquisition of all the share capital of VGI not held by the Company Application for Re-Admission of the Enlarged Share Capital of the Company to trading on AIM Notice of General Meeting 1. Introduction River Diamonds announced on 14 December 2007 that it had signed a conditionalagreement to acquire from the Vendor the 80% of the share capital of VGI notalready held by the Company. Trading in the Ordinary Shares had been suspendedon 27 November 2007 upon the announcement of discussions relating to thetransaction and resumed upon publication of this document. It is a conditionprecedent of the Acquisition Agreement that VGI will have acquired the 6% ofWestech not held by VGI on or before the completion of the Acquisition.Accordingly, subject to completion of the Acquisition in accordance with theterms of the Acquisition Agreement, the Company will own the whole of VGI andwill indirectly, wholly own the Vatukoula Gold Mine in Fiji. The consideration payable under the Acquisition Agreement is to be satisfied bythe issue of the Consideration Shares to the Vendor and the persons nominated bythe Vendor and a cash payment of AUS$2,100,000 to the Vendor. This values the80% interest in VGI at £29,561,000 based on the Placing Price being attributedto the Consideration Shares and the conversion of the cash consideration intoSterling at an exchange rate of AUS$2.14 to the £. The consideration is to besatisfied upon Re-Admission, which if the Acquisition is approved byShareholders, is anticipated to be on 1 April 2008. Under the terms of the Templar Agreement 143,290,000 of the Consideration Shareswill be acquired by Templar and accordingly the Vendor and the Vendor'sAssociates will initially retain 334,343,333 Retained Consideration Shares. The Consideration Shares will represent 28.3% of the Enlarged Share Capital andwill, when issued, rank pari passu in all respects with the other OrdinaryShares then in issue, including all rights to all dividends and otherdistributions declared, made or paid following Re-Admission. The RetainedConsideration Shares will represent 19.8% of the Enlarged Share Capital and beheld by the Vendor and the Vendor's Associates: The Company also announced on 14 December 2007 that it had conditionally placed70,833,833 Placed Shares and on 5 March 2008 that it had conditionally placed afurther 6,983,333 Placed Shares in each case at the Placing Price to raise grossaggregate proceeds of £4,669,000. Such funds will be deployed to fund the cashconsideration for the Acquisition, for further re-commissioning costs, and otherworking capital and operational costs of the Mine. The Placing is conditional oncompletion of the Acquisition and Re-Admission. The Placed Shares will represent4.6% of the Enlarged Share Capital. In addition the Company has secured theWorking Capital Facility (further details of which are set out in paragraph 7.1(h) of Part V of this document) which is conditional on the completion of theAcquisition and Re-Admission. The Acquisition will, if completed, constitute a reverse takeover under the AIMRules for Companies and accordingly requires approval by Shareholders which willbe sought at the forthcoming General Meeting. Re-Admission is conditional,amongst other things, on the passing of the Resolution at the General Meeting.If the Resolution is not passed at the General Meeting, the Acquisition and thePlacing will not proceed, funds will not be available under the Working CapitalFacility, and trading in the Existing Ordinary Shares on AIM will continue. The purpose of this document is to set out the principal terms of, and to seekShareholder approval for, the Acquisition and to explain why the ExistingDirectors believe that the Acquisition is in the best interests of the Companyand its Shareholders as a whole and to recommend that you vote in favour of theResolution. 2. Background to and reasons for the Acquisition The Company was admitted to AIM on 26 August 2004 to pursue a strategy ofbuilding and exploiting a portfolio of mineral exploration and mining projects.Initially the Company focused principally on exploration for alluvial diamonddeposits in Brazil, through the projects at Alto Paraguai and Diamantino. In the following year, after a strategic review, the Company extended itsinvestment in exploration to include kimberlite resources at Paranatinga inBrazil and in Sierra Leone, through its participation in the Panguma dykeproject which it now wholly owns. Through its diamond exploration activities inBrazil, the Company was given the opportunity to apply for gold explorationlicences in the Rio Novo project in central Brazil and to date it has carriedout some preliminary gold exploration over the area. The Company's diamondexploration licences have all lapsed or are being allowed to lapse. In April2007, the Company acquired 0.46% of the ordinary share capital of GDR. GDR is adiamond exploration and development company whose principal asset is the Kaodiamond project in Lesotho. While the Company already has limited exposure to gold in Brazil, in the secondhalf of 2007 it was presented with the opportunity to extend its interests inthe gold sector and to participate in productive or near productive operationsby acquiring in two stages (through subscribing for new shares for cash) 20% ofthe equity of VGI for an aggregate amount of £4,250,000. This investment hasgiven the Company an indirect equity interest in the Vatukoula Gold Mine ofapproximately 19%. The investment in the Vatukoula Gold Mine has provided theCompany with access to a near term producing asset at a time of prevailingstrong gold prices. The Acquisition will provide the Company with 100% ownership of the VatukoulaGold Mine enabling it to have full control over its existing investment in theMine and to expand significantly its interest in the gold sector. 3. Structure of the Enlarged Group On Re-Admission, the Enlarged Group structure will be as shown below: http://www.rns-pdf.londonstockexchange.com/rns/7421q_-2008-3-25.pdf Note: All subsidiaries of the Enlarged Group will be wholly owned by theCompany. 4. Information on the assets of the Enlarged Group Certain information on the assets of the Enlarged Group is given below. Vatukoula Gold Mine in Fiji Introduction The Vatukoula Gold Mine is an underground mine with an operational history ofover 70 years. The Company currently has a 19% indirect equity interest in theVatukoula Gold Mine and on completion of the Acquisition, the Enlarged Groupwill hold a 100% indirect equity interest in the Mine. Areas of operations - Fiji The Mine is located in Fiji, an island group in the South Pacific Ocean. Fijicomprises two main islands, Viti Levu and Vanua Levu, with many smaller islandssurrounding. The Mine is located in the northern part of the island of Viti Levuwithin the Tavua Basin, situated within the Tavua volcano. Fiji became independent in 1970, after nearly a century as a British colony.Democratic rule was interrupted by two military coups in 1987, caused by concernover a government perceived as dominated by the Indian community. The coups anda 1990 constitution that cemented native Melanesian control of Fiji, led toheavy Indian emigration; the population loss resulted in economic difficulties,but ensured that Melanesians became the majority. A new constitution enacted in1997 was more equitable. Free and peaceful elections in 1999 resulted in agovernment led by an Indo-Fijian, but a civilian-led coup in May 2000 ushered ina prolonged period of political turmoil. Parliamentary elections held in August2001 provided Fiji with a democratically elected government led by PrimeMinister Laisenia Qarase. Re-elected in May 2006, Qarase was replaced inDecember 2006 following a military coup led by Commodore Voreqe Bainimarama, whobecame president. He was subsequently replaced as president by Ratu JosephIloilo and in January 2007, Bainimarama was appointed interim prime minister.The Directors believe that there is now a degree of stability in the country. Reserves and Resources The Competent Person's Report assigned mineral reserves and resources to theVatukoula Gold Mine as follows: Gross Net Attributable Category Tonnes Grade Contained Tonnes Grade Contained (millions) Au (oz Metal Au (millions) Au (oz/ Metal Au /t) (millions t) (millions of ozs) of ozs) Operator Mineral WestechReserves Gold PtyProved 1.23 12.30 0.49 0.23 12.30 0.09Probable 1.11 10.50 0.37 0.21 10.50 0.07Depletion (0.08) 12.30 (0.03) (0.02) 12.30 (0.01) Sub-Total 2.26 11.41 0.83 0.43 11.41 0.16 MineralResourcesVatukoulaUndergroundMeasured 3.87 16.99 2.11 0.74 16.99 0.40Indicated 3.24 11.72 1.22 0.62 11.72 0.23Inferred 4.63 10.77 1.61 0.88 10.77 0.30Depletion (0.08) 16.99 (0.04) (0.02) 16.99 (0.01) Sub-Total 11.66 13.06 4.90 2.22 13.06 0.93 VatukoulaTailingsMeasured 4.49 1.50 0.22 0.85 1.50 0.04Indicated 0.69 1.30 0.03 0.13 1.30 0.01Inferred Sub-Total 5.18 1.47 0.25 0.98 1.47 0.05 Total 16.84 9.49 5.15 3.20 9.49 0.98 Source: Competent Person's Report, March 2008, p., 5 Note: Gross are 100% of the reserves and resources which also reflects the reserves and resources of the Enlarged Group Net attributable are the reserves and resources indirectly attributable to theCompany as at the date of this document Net Present Value of the Vatukoula Gold Mine The Competent Person has estimated the Net Present Value in US$m of theVatukoula Gold Mine (on a 100% basis) under a variety of discount rates and goldprices as set out on the following table. The assumptions supporting thesecalculations are set out on pages 91-99 of the Competent Person's Report in PartIV of this document. Gold Price US$ per ounce 750 850 950 Discount Rate 8% US$ 108.5 US$ 169.5 US$ 230.6 Discount Rate 10% US$ 100.1 US$ 157.2 US$ 214.3 Discount Rate 12% US$ 92.6 US$ 146.1 US$ 199.6 Mine geology and Mineralisation The Mine is hosted within basaltic rocks of the Tavua Volcano, except for the R1area which is hosted in the younger Turtle Pool Formation. Mineralisation ishosted within quartz carbonate veins and are typically seen as flatmakes, steepshears and shatter zones. Flatmakes are shallow to moderate dipping mineralisedfractures, steep shears have a dip of greater than 45 degrees and shatter zonesare zones of intersection between one or more flatmakes with two or more majorfaults or faulted dykes. The main ore bodies are the Prince/Dolphin flatmake,Matanagata flatmake, 2000N flatmake and 166N flatmake. In addition to flatmakemineralisation there is the R1 area and Steep Structures that relate to theflatmakes. Exploration As part of the planned restart, substantial near-mine and developmentexploration has been planned. This will initially focus on mineralisation alongstrike and down dip of existing ore bodies; once this has been completedexploration will begin on the Basala target. This target is 200 square metreswith an elevated soil gold grade of 0.25 ppm. There is also exploration potential at two localities around the caldera, theNasomo magnetic target and the Waikatakata area. The Competent Person believes significant further upside with regard topotential additional resources exists. Associated Assets At the Mine site there is a seven hundred thousand tonne per annum processingfacility, which includes crushing, grinding, flotation, roaster, and CIP andtailings dams. Equipment at the Mine also includes several Toro load-haul-dumpvehicles, jumbo rigs, support trucks and other associated equipment.Infrastructure at the Mine also includes a 20.5 Mega-watt power station andfreehold land. Leases and other rights The Mine operates within three mining leases which cover a total area of1,254.91 hectares with the associated Special Site Rights (which respectivelyconfer certain access rights, rights to draw water and the right to maintaintailings) and Special Prospecting Licences (which give rights to explore areasoutside of the mining leases). A summary of these leases, the Special SiteRights and the Special Prospecting Licences is set out at paragraph 8.2 of PartV of this document. The Special Site Rights and Special Prospecting Licenceshave expired (see Risk Factors in Part II of this document) and are at presentunder application for renewal and in the meantime the Mine continues to utilisethe rights conferred. Operating history of the Vatukoula Gold Mine The Mine commenced production in 1933 and has produced some seven million ouncesof gold and over two million ounces of silver from the treatment of around22,500,000 tonnes of ore. The table below shows historic production from the Mine for the period 1996 to2006, as extracted from the Competent Person's Report in Part IV of thisdocument: Year Ore Recovered Recovered Tonnes Grade (g/t) Ounces (oz) Milled 1996 594,919 6.44 123,1971997 675,612 5.61 121,7801998 586,499 5.74 108,3061999 509,242 7.62 124,8112000 568,903 7.82 143,0392001 520,575 6.79 113,5892002 547,702 7.45 131,1752003 529,611 6.73 114,6422004 574,137 6.83 126,0172005 525,221 6.16 104,033*2006 343,612 5.76 63,583 Source: Competent Person's Report March 2008 * Production from all sections of the Mine was shutdown in April 2006, followingwhich Philip Shaft production was gradually re-started in June 2006. As a resultof the shutdown, tonnes treated and grade were both lower for the 12 monthsending 30 June 2006 The aggregated operating losses of the subsidiaries of Westech that are involvedin the ownership and operation of the Vatukoula Gold Mine, for each of the threeyears ended 30 June 2007, have been extracted from the Accountants' Report inPart III(D) of this document and are set out below: 2005 2006 2007 AUS$'000 AUS$'000 AUS$'000 Revenue 65,805 38,039 21,408Cost of sales (58,115) (53,561) (33,093) Gross profit/(loss) 7,690 (15,522) (11,685)Other operating income 1,021 - -Administrative expenses (15,342) (14,613) (10,526)Other operating expenses (24,213) (5,014) (46,904) Operating loss (30,844) (35,149) (69,115) The Directors believe that the operating losses of the last three years can beattributed to a combination of a lower prevailing gold prices compared to thecurrent gold price and high operating and administrative costs. Moreover afterJune 2005, the management of the Mine decreased production without aproportionate decrease in operating and administrative expenses. Therefore, thelosses grew substantially between 2005 and 2007. The Mine was placed on care and maintenance by its previous owners, EmperorMines, in December 2006 following (it is understood), a review of its operatingclimate and on 6 January 2007 members of the military forces of Fiji enteredparts of the Vatukoula Gold Mine. After discussions between Emperor Mines andthe Fijian Government, the government imposed a number of conditions to EmperorMines continuing its operations. These conditions were regarded as untenable byEmperor Mines and therefore on 28 March 2007 it sold all of its Fijian assets,including the Vatukoula Gold Mine, to Westech. 10 August Deed Following the sale to Westech, Westech pursued further discussions with theFijian Government as a result of which a deed was signed by both Westech and theFijian Government on 10 August 2007 which provides, amongst other things,certain tax concessions with respect to the operations of the Mine; inparticular: (i) a reduction from 6% to 3% in tax and royalties on ore extracted for a period of five years; (ii) a two year exemption on import duties on automotive diesel and industrial diesel oil for use at the Mine; (iii) a five year exemption from export tax; (iv) an exemption from fiscal duty on the import of plant equipment machinery and motor vehicles required to operate the mine for a period of three years; and (v) eligibility to seek exemption from payment of without holding tax on overseas payments of interest, consultants fees and dividends. In addition, the 10 August Deed confirmed that the mining leases, Special SiteRights and Special Prospecting Licences remained valid notwithstanding anyprevious breaches of the Fijian Mining Act. Under the terms of the 10 August Deed, Westech agreed to contribute funds to arehabilitation trust fund aimed at the remediation of the environmental andsocial aspects of the local community around the Vatukoula Gold Mine. Thesecontributions comprise the initial contribution of £460,000 and four furtherannual contributions of approximately £350,000 each. The initial contribution iscurrently being held in escrow awaiting the formal establishment of theRehabilitation Trust Fund. Re-commissioning plan Since its acquisition by Westech, efforts have been focused on re-commissioningthe Mine. Key steps which have been taken include: • Re-commissioning of operational shafts and ore and waste passes. • Commencement of mining with ore being hauled to surface. • Re-commissioing of the assay office and the engagement of geologists and samplers. • Re-commissioning of the environmental water laboratory and the establishment of an environmental monitoring plan. • Preparation of the processing plant for commissioning in March 2008. The Competent Person's Report has made a number of operational recommendationsin relation to the Mine. In particular, these covered: • Some Quality Assurance and Quality Control measures in the geological department. • Geotechnical matters. • Staffing at the mineral processing plant. • Environmental matters. The Board is currently considering all of these recommendations and, to theextent to which they have not already been addressed, will consider thenecessary steps for implementation, should this be deemed appropriate. The strategy of the Enlarged Group will be to bring the Mine back to fullproduction by the second half of 2009. Extraction of the underground orereserves commenced in November 2007. The Directors expect that treatment of theore will commence in March 2008 with a throughput of 129,000 tonnes ofunderground ore by the middle of 2008, rising to 524,000 tonnes of undergroundore in the following year, producing an expected 26,000 ounces of gold inrespect of the first period and rising to approximately 110,000 ounces in thefollowing year. The mill feed ore is expected to come from the current ore reserves andresources. Due to the continuity of the mineralised bodies, both along strikeand down dip, the Directors are confident, as confirmed in the CompetentPerson's Report, that the reserve tonnes will increase once additionalexploration is commenced. The mining operations use conventional labour intensive stoping methods togetherwith trackless ground handling and haulage followed by skip hoisting via thevertical shafts. Stoping will be a mixture of Long Wall Breast, Shrinkage andCut and Fill. Further information on the Vatukoula Gold Mine is set out in the CompetentPerson's Report in Part IV of this document. Litigation and Creditors Westech has, since it acquired the Vatukoula Gold Mine, in addition to restoringthe Mine operationally, been seeking to put in order the financial affairs ofits Fijian subsidiaries and, in particular to address, two significantoutstanding issues. 1. FIRCA raised in August 2007 an assessment for approximately F$11.1 million inrespect of withholding taxes on dividend and interest payments in respect of theperiod 1988 to 2005 and the relating late payment penalties. These claims arenot accepted by Westech and are the subject of a legal appeal which in theDirectors' opinion, have taken legal advice, is unlikely to be determined beforethe end of the year. In the meantime in an agreement signed, after Westech had taken legal advice, on21 February 2008 between FIRCA and Westech, without prejudice to the position ofeither Westech or FIRCA in relation to the substantive issues of the claims,FIRCA has agreed to take no further steps in respect of their claims and Westechhas in return agreed to make certain without prejudice payments out of revenue,on account of the tax and penalties. If and to the extent that Westech's appealsucceeds it will able to claim the return of the commensurate amount paid underthis agreement. 2. There are approximately 230 unsecured creditors of Westech who are owedapproximately F$8.8m in trade debts pre-dating the December 2006 Mine closure.These debts are in large part undisputed. In addition, Westech has provided fora further amount of approximately F$3.2m in respect of contingent liabilitiesfor payments for redundancies made prior to the acquisition of the Mine (thefinal amount of which is the subject of appeal proceedings in the Fijiancourts). In respect of the amounts owing to the trade creditors, an application to theHigh Court in Fiji is now being prepared to establish a scheme of arrangementfor the repayment of trade creditors over a court-sanctioned period of time. Panguma Diamond Project, Sierra Leone In June 2005, the Company entered into a joint venture agreement with OlympusDevelopment Company Ltd which allowed it to acquire a participating interest ofup to 51% of the Panguma Diamond Project in Sierra Leone. Between December 2005and December 2006 the Company explored the deposit under the joint ventureagreement. In December 2006 the Company acquired full ownership of the PangumaDiamond Project by the purchase of Panguma Diamond Limited. The Panguma exploration licence expired on 1 March 2008. The licence can berenewed for a further term of one year at the discretion of the Minister ofMineral Resources. The Company has applied for a renewal for a further term ofone year. The following information on the Panguma Diamond Project has been extracted fromthe Competent Person's Report which can be found in full in Part IV of thisdocument. The Panguma area is about 230 km from Freetown and covers approximately 5,400hectares in eastern Sierra Leone. In recent years Sierra Leone appears to havestabilised politically, in the view of the Directors. In the view of theCompetent Person, new bedrock diamond discoveries, as well as the high value ofSierra Leone diamonds combine to make the country a prime target for diamondexploration. Prior to the work undertaken by River Diamonds, the Panguma kimberlites, part ofthe Tongo dyke system, had never been commercially explored. An alluvial diamondrush took place from 1956 that made Panguma one of the main diamond centres inSierra Leone. River Diamonds initiated a detailed exploration programme on the Pangumaconcession in 2006. Field work comprised initial surveying of the concessionarea, geological mapping, collection of mini-bulk samples, core drilling, andgeochemical soil sampling. Exploration by River Diamonds has demonstrated that a number of the kimberlitedyke systems located at Panguma have a strike extent up to 4-5km and themini-bulk sampling programme confirms that most of the Panguma dykes arediamondiferous, with strongly anomalous values within the widest reported(composite) dyke at 0.8m. Some of the other dykes/fissures sampled also containinteresting grades up to 0.77ct/t, although dykes are narrower and may splay andpinch towards the southwest. These results bear comparison with similar workreported by Mano River and partners from the Lion dykes at Kono and the Tongodyke system, although the narrow width of the dykes at Panguma can present achallenge to economic evaluation and development. Given the narrow dyke widththe proposed collection of a bulk sample of up to 1,000 tonnes will requireshaft sinking and underground mining on one or more dykes. Rio Novo Project, Brazil River Diamonds has two licences which give it the right to explore for goldwithin the Tapajos gold province in central Brazil, an area which has undergonevery little modern exploration. The Directors, however, believe that the highnumbers of artisanal miners working the area suggest that significant goldmineralisation may be present. The licensed areas lie in a highly prospectivearea, with other companies actively exploring the surrounding area and theworking Palito mine, owned by Serabi Mineracao, which is adjacent to thelicensed areas. The mineralisation in the area is associated with quartz veining andhydrothermal alteration related to the veins. Rio Tinto undertook a systematic mineral exploration across the province in the1980's and the Brazilian Geological Survey also carried out a regional mappingand geophysical survey in 2000. In November 2006, River Diamonds undertook ageological review of the area focusing on historic and current artisanalworkings of both of alluvial and vein hosted origin. The work included mappingand grab sampling. The Competent Person's Report expresses the opinion that the area hassignificant gold potential and that River Diamonds should carry out a wellplanned exploration programme across the area to identify possible targets forfurther exploration. Further information on the Rio Novo Project is set out in the Competent Person'sReport in Part IV of this document Kao Diamond Project, Lesotho On 26 April 2007, the Company acquired 1,212,121 ordinary shares in GlobalDiamond Resources plc (representing approximately 0.46% of its issued sharecapital as of December 2007) for £400,000. GDR's principal asset is the 93% owned Kao Diamond Project in Lesotho which is akimberlite deposit with an indicated and measured resource of 147 million tonnesof kimberlite at a grade of 6.9 carats per hundred tonnes. The Kao DiamondProject was commissioned on 22 November 2007, and during the first week 30tonnes of alluvial material was processed producing the first diamonds includinga 0.86 carat stone. 5. Strategy of the Enlarged Group The Company's near term strategy is to bring the Vatukoula Gold Mine back tofull production and profitability, and to exploit any exploration potential ator surrounding the Mine. Currently, there is no plan or intention to hedge thegold production from the Mine. The Company's initial focus will be on processing the current ore stockpiles andextracting further ore from the upper areas of the mine. The Directors believe that the combination of stringent cost controls andmanagement expertise with strong gold prices, and operations unburdened byhedging obligations will provide an opportunity to bring the Mine back toprofitability. The Company is currently assessing its strategy with respect to its diamond andgold assets in Sierra Leone and Brazil respectively. Over the next 12 months theCompany will determine which course of action will deliver the greatest value toshareholders. The Company will also consider opportunities for acquisitions in the globalexploration and minerals sector, particularly of undervalued or undercapitalised assets. Conditional upon Re-Admission, the Board will consider changing the corporatename of the Company. 6. Principal Terms of the Acquisition On 14 December 2007, the Company entered into the Acquisition Agreement,completion of which is conditional upon the passing of the Resolution at theGeneral Meeting and Re-Admission, to acquire all of the share capital of VGI notalready held by it from the Vendor. It is a condition precedent of theAcquisition Agreement that VGI will have acquired the remaining 6% of Westech. The aggregate consideration for the Acquisition is £29,561,000 to be satisfiedby the issue of the Consideration Shares and a cash payment of AUS$2,100,000.The terms of the Acquisition Agreement provide that 286,580,000 of theConsideration Shares will be issued to the Vendor and that, upon the Vendor'sdirections, 143,290,000 Consideration Shares will be issued to Fair ChoiceLimited and 15,921,111 Consideration Shares will be issued respectively to eachof Brian Wesson, Amelia Wesson and Clyde Wesson. Under the Templar Agreement,Templar has acquired the right to 143,290,000 of the Vendor's entitlement toConsideration Shares. The Consideration Shares will represent 28.3% of the Enlarged Share Capital andthe Retained Consideration Shares will represent 19.8% of the Enlarged ShareCapital. Templar will hold 25.4% of the Enlarged Share Capital. Templar's relationshipwith the Company from Re-Admission will be governed through the RelationshipDeed, details of which are set out in paragraph 7.1 (m) of Part V of thisdocument. Subject to completion of the Acquisition, the Company will own 100% of VGI andwill indirectly, through Westech and its subsidiaries, own 100% of the VatukoulaGold Mine. 7. Details of the Placing Conditional upon the completion of the Acquisition and Re-Admission, the Companyhas raised £4,669,000 (gross) through the placing of 77,816,666 Placed Shares.The Placed Shares will represent approximately 4.6% of the Enlarged ShareCapital. A summary of the Placing Agreement is contained in paragraph 7.1 (k) ofPart V of this document. 8. Information on the Vendor and the Vendor's Associates The Vendor and Vendor's Associates will at Re-Admission hold the RetainedConsideration Shares. The Vendor is a company incorporated in the British Virgin Islands which isindirectly owned by Red Lion. Red Lion is a private holding company, based inVancouver, Canada and headed by Walter H. Berukoff. For the last 30 years, Mr Berukoff has been a mining entrepreneur and taken anactive role in developing and restructuring business enterprises throughout theAmericas, Europe, Africa and Asia. Mr Berukoff is the founder of several miningcompanies, including American Eagle, Miramar Mining Corporation, Northern OrionResources, La Mancha Resources and X-Tal Resources. Fair Choice Limited, which is incorporated in Hong Kong, is an investmentvehicle of Michael Silver who has a background in mining and was formerlymanaging director of Dome Resources NL. Mr Brian Wesson is the founder of Westech which purchased the Vatukoula GoldMine from Emperor Mines in March 2007. Brian has over 23 years' experience as asenior executive in several mining companies, and prior to founding Westech, heheld an executive position with Emperor Mines. Mr Wesson has also been employedby Durban Roodepoort Deep Limited (South Africa), East Rand Proprietary MinesLimited, and Harmony Gold Mine Virginia. Amelia Wesson and Clyde Wesson are respectively Mr Wesson's wife and son. The Retained Consideration Shares will be held as follows: Name Retained Consideration Shares The Vendor 143,290,000Fair Choice Limited 143,290,000Brian Wesson 15,921,111Amelia Wesson 15,921,111Clyde Wesson 15,921,111 Total 334,343,333 9. Use of Proceeds The net proceeds of the Placing are expected to amount to approximately £4m andwill be used to fund the cash consideration for the Acquisition, for furtherre-commissioning costs, and other working capital and operational costs of theMine. 10. Current Trading and Prospects If the Acquisition is completed, the Company's principal activity will be theoperations at the Vatukoula Gold Mine. In November 2007, the first gold waspoured since the Mine was placed on care and maintenance in December 2006. RiverDiamonds made a loan of £1.45m to VGI between December 2007 and January 2008 forworking capital requirements of the Mine. Ore extraction commenced in December2007 and has been continuing. The Board expects that the results of operations of the Company will beprincipally affected by the volumes of gold which can be extracted from the Mineand subsequently sold, the ability to control costs at the Mine, the prevailinggold price and by general market, political and macroeconomic conditions. Shareholders should be aware that if the Acquisition is not approved or isotherwise not completed the Board anticipates that, in the absence of the fundsarising from the Placing or from the Working Capital Facility (both of which areconditional on completion of the Acquisition) and in view of the irrecoverablecosts associated with the Acquisition and Re-Admission, in the near term therewould be severe constraints placed on the Company's activities until it is ableto effect a further capital raising. 11. Existing Directors and Proposed Directors Shortly before the publication of this document and in anticipation of thechanged composition of the Board following completion of the Acquisition,Anthony Balme and Nicholas Shaw-Hardie resigned as Directors. In addition, DavidLenigas has agreed to provide his services in an executive capacity, andaccordingly will cease to be treated as a non-executive director. Donald Strangwas appointed as a non-executive director on 12 March 2008. It is intended thatJohn Stalker and Neil Herbert will be appointed as directors of the Company witheffect from Re-Admission. Brief biographies of the Directors are set out below: (i) Existing Directors Ian Colin Orr-Ewing, Executive Chairman, age 66 Mr Orr-Ewing is a graduate of Oxford University in Geography and has beeninvolved in the natural resources sector for 35 years. He began his career as aninvestment manager for the Shell Pension Fund in London after completing hiseducation as a Certified Accountant. His experience covers both the oil andmining industries and he has been a director of UK and Canadian oil companiesand Irish and Canadian mining companies. Currently, Mr Orr-Ewing also advises afund management company on its natural resources portfolios. Mr. Orr-Ewing alsohas extensive experience in international financial affairs. He was deeplyinvolved in the oil industry from 1971 through to 1987 with numerous companiesin the North Sea, Libya, Nigeria and Algeria. Kiran Caldas Morzaria, Finance Director, age 34 Mr Morzaria holds a Bachelor of Engineering (Industrial Geology) from theCamborne School of Mines and an MBA (Finance) from CASS Business School. He haseight years of experience in the mineral resource industry covering gold anddiamonds. Mr Morzaria spent his first four years in exploration, mining andcivil engineering working for Highland Gold, Firestone Diamonds and CLassociates. He was appointed Finance Director of River Diamonds plc in 2004 andsince then has been overseeing the development of its mining and explorationprojects in Sierra Leone and Brazil and the expansion of the Company's interestsinto gold mining. In this role, Mr Morzaria has been involved in acquisitions,joint ventures, valuations, independent experts' reports, due diligence andcapital raisings. Mr Morzaria is currently a non-executive director of ImmersionTechnologies International plc, Hot Tuna (International) plc and Brinkley Miningplc. David Anthony Lenigas, Executive Director, age 46 Mr. Lenigas holds a Bachelor of Applied Science Degree in Mining Engineering.Currently the executive chairman of Lonrho plc, he has extensive experienceoperating in the public company environment. Mr. Lenigas is also executivechairman of Leni Gas & Oil plc, Lonrho Mining plc and Lonzim plc and director ofGlobal Coal Management PLC and Templar Minerals Limited. Mr Lenigas was the Managing Director between 1989 and 1991 of the joint venturecompany between Western Mining and Emperor Mines which ran the Vatukoula GoldMine. Donald Ian George Layman Strang, Non-executive Director, age 40 Mr Strang is a qualified chartered accountant with 20 years' experience in thefinancial and resources sectors. He has experience operating in the AIMenvironment. He is currently finance director for Brinkley Mining plc and alsofor Leni Gas and Oil plc. He is also a non-executive director of Lonrho plc. Mr Strang was previously the chief financial officer and company secretary forGlobal Coal Management plc (formerly Asia Energy plc) and BDI Mining Corp. Hehas previously held senior financial positions with Ernst & Young and severalpublicly listed Australian gold mining companies (Macraes Mining Company Limitedand Perilya Mining Limited) and has also worked with Deutsche Bank and CreditSuisse Group in the investment banking sector. (ii) Proposed Directors John Ian Stalker, Proposed Non-executive Director, age 55, Mr Stalker was the Chief Executive Officer of UraMin Inc, a London and Torontolisted Uranium exploration and development company until late 2007 when thecompany was acquired by Areva. Prior to joining UraMin, Mr Stalker was at Gold Fields Ltd., the world's fourthlargest gold producer. At Gold Fields, he managed the company's PGE project inFinland starting in 2001 and eventually became a vice president and responsiblefor all of the company's projects in Australia and Europe in 2004. Prior to Gold Fields, he worked at Lycopodium, an engineering, mining, andmetallurgical consultancy company. Mr Stalker has also been employed by AshantiGoldfields Company Limited, Caledonia Mining Corporation, AGC Ltd. and ZambiaConsolidated Copper Mines Ltd. He holds a BSc. in chemical engineering. Mr Stalker is a non-executive director of Templar Minerals Limited, asubstantial shareholder of the Company. Neil Lindsey Herbert Non-executive Director, age 41 Mr Herbert was the former Finance Director of UraMin Inc , a London and Torontolisted Uranium exploration and development company until late 2007 when thecompany was acquired by Areva. Mr. Herbert was previously Finance Director ofGalahad Gold PLC, International Molybdenum PLC, Kalahari Diamond Resources PLCand HPD Exploration PLC. He was also Chief Financial Officer of Argentinian goldexplorer Brancote Holdings PLC until its acquisition by Meridian Gold Inc andwas Group Financial Controller of Antofagasta PLC when the Los Pelambres and ElTesoro copper mines were brought to production. Before joining the mining sectorhe worked for PricewaterhouseCoopers and he is a fellow of the Association ofChartered Accountants. Mr Herbert is a non-executive director of Templar Minerals Limited, asubstantial shareholder of the Company. (iii) Senior Management Brian Stanley Wesson, Technical Manager, age 49 Mr Wesson was a founder of Westech International Engineering ("WIE") which ownedthe Vatukoula Gold Mine. Mr Wesson was the Executive Manager of WIE and adviserto their board in Fiji. Prior to WIE, Mr Wesson held an executive position with Emperor Mines dealingwith corporate strategic projects and was a director of South PacificInfrastructure Pty Limited. Mr Wesson has also been employed by DurbanRoodepoort Deep Limited (South Africa), East Rand Proprietary Mines Limited, andHarmony Gold Mine Virginia. 12. Corporate Governance The Directors intend that the Company will continue to comply with the mainprovisions of the Combined Code in so far as they are practicable for a companyof its size. It is proposed that each of the Proposed Directors will beappointed to the Board conditional on Re-Admission. Upon Re-Admission, theCompany will therefore have three non-executive directors with relevantexperience to complement the executive directors and to provide an independentview to the Board. The Directors have established an audit committee, a remuneration committee anda nomination committee with formally delegated duties and responsibilities.However, with effect from Re-Admission, the audit committee will comprise DonaldStrang and Neil Herbert with Donald Strang as Chairman. It will continue to beresponsible for ensuring that appropriate financial reporting procedures areproperly maintained and reported on and for meeting with the Group's auditorsand reviewing their reports on the accounts and the Group's internal controls. With effect from Re-Admission, the remuneration committee will comprise NeilHerbert and Donald Strang with Neil Herbert as Chairman. It will continue to beresponsible for reviewing the performance of the executive Directors, settingtheir remuneration, determining the payment of bonuses to the executiveDirectors, and consider the Enlarged Group's bonus and options schemes. The nomination committee will, with effect from Re-Admission, comprise ColinOrr-Ewing, David Lenigas and the non-executive Directors and will be chaired byDavid Lenigas. The nomination committee will meet at least once a year and atsuch other times as the chairman of the committee requires and has theresponsibility for managing the process of making Board appointments andrecommendations to the Board to provide a formal, transparent and rigorousappointments procedure The Combined Code provides that smaller companies should have at least twoindependent non-executive directors. However, John Stalker and Neil Herbert arealso directors of Templar Minerals Limited which is a substantial shareholder ofthe Company and furthermore, John Stalker will also be performing some executivefunctions. Accordingly only Donald Strang fully satisfies the independencecriteria set out in the Combined Code. In the near term, the Board believes thatNeil Herbert notwithstanding his other directorships will be able to exerciseindependent judgement aligned with the interests of Shareholders generally.However, in longer term the Board recognises that it is unsatisfactory to notcomply more strictly with the provisions of the Combined Code in this respectand the Company will be seeking at an early opportunity to ensure that itappoints another director who is clearly independent within the meaning of theCombined Code. The Company has adopted and will continue to operate a share dealing code forDirectors and employees in compliance with the AIM Rules for Companies. 13. Lock-ins and Orderly Market Arrangements Each of the Directors, Brian Wesson, Amelia Wesson, and Templar have agreed withthe Company, WH Ireland and Hichens Harrison that (save in certain limitedcircumstances) they will not for a period of 12 months from Re-Admission sell orotherwise dispose of any of their respective interests in Ordinary Shares andfor a further 12 months only to dispose of such shares with Hichens Harrison'sconsent and on an orderly market basis. In addition, each of the Vendor, Fair Choice Limited and Clyde Wesson haveagreed with the Company, WH Ireland and Hichens Harrison that for the period of12 months from Re-Admission they will only dispose of their respective interestsin Ordinary Shares with Hichens Harrison's consent and on an orderly marketbasis. 14. Dividend Policy The Directors do not envisage declaring a dividend in the short to medium term.However, if or when sufficient distributable reserves are available theDirectors intend to pursue a progressive dividend policy. 15. Employees The table below highlights the geographic distribution and the average number ofemployees of the Enlarged Group over the last three years (as if the EnlargedGroup was in existence over that period): Year 2005 2006 2007LocationLondon 6 6 6Fiji* 1983 1837 124Brazil 27 10 10Sierra Leone 0 6 3 * as employed at the Vatukoula Gold Mine which is not currently wholly owned bythe Company. As at 24 January 2008 the Fiji employees numbered 533. 16. Warrants Under the terms of the Placing Agreement, the Company has agreed conditionalupon Re-Admission to issue warrants over 1.5% of the Enlarged Share Capital toWH Ireland. The warrants are exercisable at the Placing Price pursuant to and onthe terms of the WH Ireland Warrant Instrument. The Company has also agreed conditional upon Re-Admission to issue warrants over1% of the Enlarged Share Capital to Hichens Harrison. The warrants areexercisable at the Placing Price pursuant to and on the terms of the HichensHarrison Warrant Instrument. 17. Enlarged Share Capital Application will be made for the Enlarged Share Capital to be admitted totrading on AIM. It is expected that trading in the Enlarged Share Capital willcommence on 1 April 2008. 18. CREST CREST is a paperless settlement procedure enabling securities to be evidencedotherwise than by a certificate and transferred otherwise than by writteninstrument. The Existing Ordinary Shares are currently enabled for settlementthrough CREST. Accordingly, settlement of transactions in the Ordinary Sharesfollowing Re-Admission may take place within the CREST system if relevantShareholders so wish. CREST is a voluntary system and holders of Ordinary Shareswho wish to receive and retain share certificates will be able to do so. 19. General Meeting You will find set out at the end of this document a notice convening the GeneralMeeting of the Company to be held at 10.00 a.m. on 31 March 2008 at Carmelite,50 Victoria Embankment, Blackfriars, London EC4Y 0LS to consider the Resolution. 20. Action to be Taken A Form of Proxy is enclosed for use at the General Meeting. Whether or not youintend to attend the General Meeting, you are requested to complete, sign andreturn the Form of Proxy to the Company's registrars, Capita IRG Plc, ProxiesDepartment, PO Box 25, Beckenham, Kent BR3 4BR by no later than 10 a.m. on 29March 2008. The completion and return of a Form of Proxy will not preclude youfrom attending the General Meeting and voting in person should you subsequentlywish to do so. 21. Taxation A summary of the taxation treatment for UK taxpayers of the Ordinary Shares isset out in paragraph 13 of Part V of this document. 22. Further information Your attention is drawn to Parts II to V of this document, which provideadditional information on the Existing Group and the Enlarged Group. 23. Recommendation The Existing Directors consider the Acquisition to be fair and reasonable and inthe best interests of the Company and the Shareholders as a whole. The proceeds of River Diamonds' original subscription for shares in VGI, whichamounted to £4,250,000, were applied to support the Vatukoula Gold Mine and theefforts to restore it to production. Since the Acquisition Agreement was enteredinto the Company has provided further loans to Westech in the amount of£1,450,000 which would become repayable upon demand if the Acquisition does notproceed but which VGI would be unlikely to be in a position to repay within anacceptable time frame. Consequently, if the Acquisition does not proceed and accordingly the funds fromthe Placing and under the Working Capital Facility do not become available tothe Company, the Company will need as a matter of urgency to seek urgent fundingto enable it to continue with its present activities. Accordingly, the Existing Directors unanimously recommend Shareholders to votein favour of the Resolution as they intend to do themselves in respect of theirown beneficial holdings of Ordinary Shares. Yours faithfully, Colin Orr-EwingChairman This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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