15th Mar 2010 14:56
The following announcement replaces RNS announcement 5474I released at 7:00am UK time on 15th March 2010 and correctly states the number of shares that EIIB has agreed to subscribe for in the Placing as 28,600,000 New Ordinary Shares.
NOT FOR DISTRIBUTION IN OR INTO AUSTRALIA, CANADA, JAPAN OR THE UNITED STATES OR ANY OTHER JURISDICTION IF TO DO SO WOULD CONSTITUTE A VIOLATION OF THE LAWS OF SUCH JURISDICTION
DiamondCorp plc
JSE share code: DMC & AIM share code: DCP
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp" or "the Company")
Placing and Subscription to raise up to £7.1 million
HIGHLIGHTS
·; The Company has conditionally placed 100,154,695 new ordinary shares at 7 pence per share to raise approximately £7 million (before expenses)
·; Subscription for 907,843 new ordinary shares at 7 pence to raise £63,459
·; The proceeds of the placing are to be applied to allow the Company to resume underground development at the Lace mine in South Africa, continue with its diamond exploration programmes in Botswana, meet scheduled debt repayments for 2010 and for working capital
·; The Placing is subject to shareholder approval at a general meeting which will be held on 1 April 2010 at 12 noon UK time
Introduction
The Board of DiamondCorp, the South African diamond mining and exploration company, is pleased to announce that it has conditionally placed up to 101,062,538 New Ordinary Shares at 7 pence per share (the "Placing Price") pursuant to the Placing and Subscription to raise, in aggregate, up to £7.1 million gross proceeds for the Company (approximately £6.6 million net of expenses). The Placing Price represents a discount of 26 per cent. to the closing mid-market price of 9.5p on 12 March 2010, being the last practicable date prior to the posting of this announcement.
The managing director and CEO of DiamondCorp plc, Mr Paul Loudon, said: 'I am delighted that a positive market sentiment towards the diamond sector has returned, and that DiamondCorp has been able to take advantage of this to raise the capital we need to resume the underground development of the +25-year Lace diamond mine in South Africa.
'I am particularly pleased that the placing has been strongly supported by most of our existing institutional shareholders as well as a number of new shareholders.'
The Placing and Subscription will fund the ongoing development of the Company and the proceeds of the Placing and the Subscription will be applied as follows:
(i) £4.0 million for implementation of the decline development and completion of sub-level caving plan to resume underground mining of the Lace kimberlites between the -240m and -330m levels. It is planned that the Lace kimberlite at the -240m level will be accessed by the decline in the first half of 2011. At that time, it is expected that a kimberlite mining sample of approximately 30,000 tonnes will be extracted and processed through the Lace plant in order to determine a definitive diamond grade at the mining level. Full scale production of 1.2 million tonnes per annum from the underground mining operation will require additional capital, currently estimated by the Bankable Feasibility Study at £3.5 million not provided for by the Placing and Subscription.
(ii) £0.5 million for further drilling in the Jwaneng South Project. The Company is earning a 77.5% joint venture interest from Geoperspectives (Pty) Limited in three exploration licences in Botswana totalling 109.2km², and containing nine identified kimberlites. The Company can earn its interest by funding exploration activities and completing a definitive feasibility study by 13 May 2014. The current focus of the Company's Botswana exploration activities is the Jwaneng South Project, southeast of De Beers Jwaneng mine, the richest diamond mine in the world measured by value.
The Jwaneng South Project contains five geophysical targets, of which three, J-01, J-05 and J-12, were considered priority targets for geophysical survey and drill testing. In November 2009, DiamondCorp completed two diamond boreholes to depths of 301m and 340m on J-01, a 10 ha geophysical target. Both holes intersected kimberlite from approximately 20m down hole depth to the end of the boreholes, indicating the presence of a 10ha kimberlite body beneath shallow Kalahari sand cover.
Approximately 350kg of samples from the two drill holes were submitted to MSA Analytical Laboratories in Johannesburg for microdiamond analysis. Whilst preliminary results were positive and showed microdiamonds present in the samples, the small size of the samples and the resulting small range of diamond sizes may preclude a definitive statement of potential diamond grade. As a result, a larger diameter diamond drilling programme will be required to recover a larger sample of kimberlite for mini bulk testing and grade estimation.
Ground gravity and magnetic surveys over both J-05 and J-12 have been completed, and initial (raw data) results suggests J-05 to be between 2ha and 4ha in size. The data for J-12 is inconclusive, but shows a possible kimberlite of between 5 and 15 hectares in size. A programme of initial diamond drill holes is currently being planned for these targets, the results of which will allow the Company to plan future larger diameter drilling and mini bulk testing priorities.
(iii) £1.3 million to satisfy loan obligations. The Company currently has a US$5 million loan facility with Africa Opportunity Fund LP secured against the Company's South African assets. Approximately £1.3 million of the proceeds of the Placing and the Subscription will be used to meet principal and interest payments on this loan which falls due in 2010.
(iv) £0.96 million for general working capital purposes.
Details of the Placing and Subscription
The Company is proposing to raise approximately £7.1million (£6.6 million net of expenses), by way of the Placing and Subscription of, in aggregate, 101,062,538 New Ordinary Shares at the Placing Price. This represents a discount of 26 per cent. to the closing mid-market price of 9.5p per Existing Ordinary Share on 12 March 2010 being the latest practicable date prior to the posting of this announcement. Subject to successful completion of the Placing and assuming full subscription under the Subscription, the Subscription will raise approximately £63,459 before expenses (£60,372 net of expenses).
The Placing is conditional on, amongst other things, shareholders passing the Resolutions at the General Meeting and a minimum amount of £7 million (before expenses) being raised pursuant to the Placing and the Subscription and the Subscription is conditional upon the successful completion of the Placing. The Directors intend to vote in favour of the Resolutions in respect of their beneficial holdings in the Company which amount, in aggregate, and if admitted in full, to 2,561,418 Ordinary Shares and represent approximately 5.4 per cent. of the Existing Ordinary Shares.
Conditional on the passing of the Resolutions, application will be made to the LSE and the JSE for the New Ordinary Shares to be admitted to trading on AIM and AltX. It is expected that Admission will become effective and that trading in the New Ordinary Shares will commence on AIM and AltX at 8.00 am on 6 April 2010 (or such later time and date as the Company, Cenkos Securities and Fairfax may agree, but in any event no later than 23 April 2010).
The New Ordinary Shares will, when issued and fully paid, rank equally in all respects with the Existing Ordinary Shares, including the right to receive any dividend or other distribution declared, made or paid after the date of their unconditional allotment.
It is expected that share certificates for the New Ordinary Shares which are to be held in certificated form will be dispatched to placees by 14 April 2010. The New Ordinary Shares will be in registered form and no temporary documents of title will be issued.
If the Resolutions are not passed by the Shareholders, then the Placing and the Subscription will not proceed and the Board expect that the Company would be in significant financial difficulty and be forced to re-evaluate the Group's strategy and consider raising capital by other means, including but not limited to, selling certain assets of the Group. The Board feels strongly that this would therefore be detrimental to the Group in the longer term and would be materially detrimental to existing Shareholders in the short term.
Director and Shareholder Interests
Certain directors of the company, who are considered related parties according to the AIM Rules, are intending to subscribe Placing Shares in the Placing. The interests of the Directors immediately before and after the Placing are set out below:
|
|
As at the date of this document |
Immediately following Admission |
||
|
Director |
Number of Ordinary Shares |
Percentage of Existing Ordinary Shares |
Number of Ordinary Shares |
Percentage of the Enlarged Share Capital |
|
Paul Robert Loudon* |
2,088,052 |
4.4% |
2,588,052 |
1.7% |
|
Euan Arthur Worthington |
190,000 |
0.4% |
190,000 |
0.1% |
|
Jonathan Willis-Richards** |
1,291,666 |
2.7% |
1,796,666 |
1.2% |
|
Richard Nicholas Allen |
83,366 |
0.2% |
83,666 |
0.1% |
|
Robin Leonard Henshall*** |
10,720,555 |
22.6% |
40,749,126 |
27.44% |
|
* All of the Ordinary Shares in which Paul Robert Loudon is beneficially interested are held by Green Dragon Nominees Pty Limited, a company with which he is connected. ** As at the date of this document, of the Ordinary Shares in which Jonathan Willis-Richards is interested 1,166,666 Ordinary Shares are held by Loeb Aron, a company with which he is connected, and 200,000 are held jointly in his name and that of his wife, Maria Esther Galimberti. Immediately following Admission, 1,596,666 will be held by Loeb Aron, a company with which he is connected, and 200,000 will be held jointly in his name and that of his wife, Maria Esther Galimberti. *** As at the date of this document, all of the Ordinary Shares in which Robin Leonard Henshall is interested are held by European Islamic Investment Bank plc, a company with which he is connected. Immediately following Admission, save for 1,428,571 Ordinary Shares which will be held by Robin Leonard Henshall in his own name pursuant to the Placing, all of the Ordinary Shares in which Robin Leonard Henshall is interested are held by European Islamic Investment Bank plc, a company with which he is connected. |
||||
European Islamic Investment Bank Plc ("EIIB") which holds 22.5% of the ordinary share capital of the Company prior to the Placing is considered a related party under the AIM Rules due the size of its holding. Robin Henshall, a director of the Company is also an employee of EIIB which has agreed to subscribe for 28,600,000 New Ordinary Shares at the Placing Price as part of the Placing. The other directors of the Company consider, having consulted with Cenkos Securities plc, the Company's Nominated Adviser, that the terms of this transaction with EIIB are fair and reasonable insofar as the Company's shareholders are concerned.
Application will be made to the LSE, for the Placing Shares to be admitted to trading on AIM and to the JSE, for admission to trading on AltX and it is expected that admission will occur at 8.00 a.m. (UK time) on 6 April 2010.
All definitions in this announcement are the same as those in the circular posted to shareholders today, 15 March 2010.
Circular
A circular has today been posted to shareholders setting out the details of the Placing and Subscription and convening a General Meeting of the Company. A copy will be made available on the Company's website at www.diamondcorp.plc.uk
Advisors
Nominated Advisor: Cenkos Securities plc
AIM Brokers: Cenkos Securities plc, Fairfax I.S. PLC
Investment Bank and Sponsor: Investec Bank Limited
For further information, please contact:
DiamondCorp plc
Paul Loudon, Chief Executive
+44 20 7256 2651
Cenkos Securities plc
Ivonne Cantu / Liz Bowman / Joe Nally
+44 20 7397 8900
Fairfax I.S. PLC
Ewan Leggat
+44 207 598 5368
Investec Bank Limited
Robert Smith
+27 11 286 7326
Russell & Associates
Charmane Russell/Matthew Ross
+27 11 880 3924
Ana Ribeiro/Tim Blythe, Blythe Weigh Communications
+44 20 7138 3204
Related Shares:
DCP.L