20th Mar 2008 10:00
Diamondcorp Plc20 March 2008 DiamondCorp plc Registration Number: 05400982 (Incorporated in England and Wales) (SA Company Registration Number: 2007/031444/10) ISIN: GB00B183ZC46 AIM share code: DCP JSE share code: DMC ("DiamondCorp" or "the Company") ABRIDGED PRE-LISTING STATEMENT Prepared and issued in terms of the Listings Requirements of the JSE Limited("JSE") relating to a listing of DiamondCorp on the JSE. This is not an invitation to the public to subscribe for shares, but is issuedin compliance with the Listings Requirements of the JSE for the purposes ofgiving the public information about DiamondCorp. This announcement contains the salient information in respect of DiamondCorp,which is more fully described in the Pre-listing Statement. For a fullappreciation of the proposed listing of DiamondCorp shares on the JSE, the Pre-listing Statement, which is available on request as set out in paragraph 8below, should be read in its entirety. 1. INTRODUCTION DiamondCorp is currently listed on the Alternative Investment Market ("AIM") inLondon. The JSE has approved the application for an inward listing of all theissued shares of DiamondCorp on the JSE with effect from the commencement ofbusiness on Monday, 31 March 2008. The JSE will be the primary Regulator. Theissued share capital comprises 34,787,074 ordinary shares with par value of 3pence. DiamondCorp will be listed in the "Basic Materials - Diamonds &Gemstones" sector of the JSE under the abbreviated name "DIAMONDCP", share codeDMC. DiamondCorp is incorporated in England and Wales and has been registered asan African Company in compliance with South African Exchange ControlRegulations. DiamondCorp believes a listing of its shares on the JSE is likely to providevarious strategic benefits. The intention is to enhance South African investors'awareness of DiamondCorp and facilitate direct investment in the Company. TheJSE listing is anticipated to diversify the current investor base and increasetrade in DiamondCorp shares. 2. INTRODUCTION TO DIAMONDCORP DiamondCorp was formed in March 2005 to acquire and develop diamond assets inSouthern Africa. Following a successful listing on AIM in February 2007,DiamondCorp currently trades on AIM under the share code DCP, in the "Mining"sub-sector. On the last practicable date being Friday, 14 March 2008,DiamondCorp's market capitalisation was £32.2 million based on the closing priceof 92.5 pence per share which translates to a market capitalisation of R517.9million at the prevailing exchange rate at that date. DiamondCorp hasapproximately 70% of its issued share capital held by the public. 3. NATURE OF BUSINESS DiamondCorp was formed to acquire and develop diamond assets in Southern Africa.Since incorporation and prior to listing on AIM, the Company raisedapproximately £9.3 million through the private placements of shares andconvertible loan notes. To date, DiamondCorp has acquired the surface rights andsub-surface prospecting rights to the area named Lace ("Lace Property") in SouthAfrica and constructed a tailings retreatment plant. The Lace Property issituated approximately 200km southwest of Johannesburg, and approximately 20kmfrom Kroonstad. The Lace Property consists of approximately 1,180.61ha coveringthe farm Ruby 691 and includes diamondiferous tailings from previous miningoperations, as well as diamondiferous kimberlites. In addition, New OrderProspecting Rights have been granted over two further properties, namely theSilverbank and Moregroet Properties, both of which adjoin the Lace Property ("the Exploration properties"). 4. DIAMONDCORP STRATEGY The aim of the directors is to build DiamondCorp into a sustainable diamondmining and exploration business. To achieve this goal, the initial strategy isto exploit the Lace Property and its surrounding areas according to a two-phaseapproach. Phase One commenced with the commissioning of a 1.6 million tonne per annumDense Media Separation plant in 2007. DiamondCorp's intention is to complete thetreatment of 3.6 million tonnes of tailings within three years. It was initiallyestimated that this activity would generate cash flow of approximately £2.30/tonne. During the commissioning process and the three months followingcommissioning, 320,045 tonnes of tailings were treated for the recovery of25,266 carats of diamonds, representing 7.8 cpht. The diamonds recovered includea 17.72 carat stone and a 13.81 carat stone. In the period to 31 December 2007,13,744 diamonds were tendered, of which 8,574 were of gem quality and weretendered for £268,770 ($548,291), an average of $64/carat. The other 5,170carats were of industrial grade and were tendered for £10,604 ($21,633), anaverage of $4/carat. The diamonds recovered from the tailings retreatmentoperation are above world average in terms of colour and quality. As a result,management has formulated an accelerated development plan for Phase Two whichaims to introduce kimberlite pipe material into the mine plan by the thirdquarter of 2008, approximately 12 months ahead of the originally envisagedschedule. The accelerated Phase Two plan involves sinking a decline shaft into the unminedportion of the Lace satellite pipe which historically was only mined to a depthof 50 metres. Bulk testing followed by trial underground mining of the satellitepipe kimberlite via the decline shaft will be undertaken simultaneously with therefurbishment of the existing 360-metre-deep 6 x 2.7 meter vertical shaft whichaccesses the main Lace pipe. In addition to the Lace Property, the directors will seek to acquire (on a standalone basis or through a joint venture) other diamond properties which meet thestringent criteria DiamondCorp uses during assessment of projects. Generationand evaluation of other diamond properties will be an on-going part ofDiamondCorp's business. 5. OVERVIEW OF ASSETS Independent mining consultant, MPH Consulting Ltd ("MPH"), completed a CompetentPerson's Report ("CPR") on the Lace Property for DiamondCorp, a full copy ofwhich is included in the Pre-Listing Statement dated Wednesday, 18 March 2008which is available as described in paragraph 8 below. The Lace Property In terms of the report, it is estimated that the tailings contain a measured andindicated resource of 370,315 carats at a grade of 10.3 cpht. MPH also estimatesthat the unmined portion of the Lace Kimberlites contains an Inferred Resourceof 11.91 million carats between depths of 345 metres and 855 metres at a globalinferred grade of 42.2 cpht, and that a further approximately 6.57 milliontonnes of kimberlite is estimated to exist above a depth of 345 metres at anestimated grade of 27 cpht. MPH carried out an extensive due-diligence bulk-sampling program on the tailingsin 1997-98 which led to a positive feasibility study and a detailed costestimate. That work established a grade of 10.3 cpht for the measured andindicated portions of the tailings on the Lace Property, meaning that therun-of-mine ore from the kimberlite on the Lace mine can be estimated atapproximately 25 cpht, as the mine historically produced approximately 725,000carats at a recovered grade of approximately 15 cpht in mining operationsbetween 1902 and 1931. The CPR also draws on work carried out concurrently byMPH in 1997-98 to delineate the kimberlites below the past workings at a depthof 330 metres, and to evaluate the potential for re-opening the undergrounddiamond mine on the Lace Property, and to address both the economic viabilityand mining methods of doing so. This work was successful in that much highergrading hypabyssal kimberlite, with an inferred grade of at least 60 cpht (basedon microdiamond recoveries), was discovered to be volumetrically dominant atdepth, which immediately prompted commissioning of scoping studies on a deepermine on the Lace Property. The bulk of the mining that has taken place on the Lace Property comprised openpitting down to a depth of approximately 100 metres with partial chamberingcarried out beneath the pit to a depth of 240 metres. Development of deeperlevels down to a depth of 330 metres had commenced before the mine was shut downin 1931 due to a collapse in diamond prices. The Lace Property was acquired byDe Beers Consolidated Mines Ltd in 1939, and no further mining activities tookplace until it was sold to the Christiaan Potgieter Trust ("CPT") in 1996. CPTbought the property primarily to re-process the tailings resource, and undertooklimited prospecting activities before granting an option over the property to anumber of operators who undertook exploration activities on the unmined portionof the Lace Kimberlites, including successful delineation of diamondiferouskimberlite below a level of 350 metres. Kimberlite volumes, tonnage and grade MPH has identified two pipes on the Lace Property - a larger pipe which hashistorically been mined (which is referred to in this document as the 'mainpipe') and a smaller pipe (which is referred to in this document as the 'satellite pipe'). The CPR gives a full explanation of the methods used to infer the geology of theLace Kimberlites and the information in this section should be read inconjunction with the full report. Specifically, MPH has identified varyinggrades of kimberlite in the Lace Property and the summary presented below is anaggregate of these results. For the purposes of MPH's exercise, country rockxenoliths have been assigned no diamond grade although, in practice, these havebeen found to be brecciated and kimberlite-impregnated and may be found to bediamondiferous when mined. Given the available geological and diamond recovery data, and based on the valueof the tailings diamonds, MPH believes that Lace will be a high-quality diamondsource, which will justify recovering diamonds down to a size of 1 millimeter.In reaching this conclusion, MPH analysed information from over 30 years ofproduction history and the recoveries from approximately 90,000 tonnes ofhistorical tailings. In addition, in 1998 MPH appointed two consultants in thefield of microdiamond-macrodiamond grade predictions to aid in interpreting thedatabase of previous activity on the Lace Property. MPH has predicted that the grade of the main pipe will vary between 20 cpht and65 cpht, although it considers that its range prediction may be conservative.Insufficient sampling of the satellite pipe has taken place for MPH to predictthe grade of the satellite pipe, although MPH believes that the weight ofevidence indicates that the satellite pipe will not be of nearly as high gradeas the main pipe and may not prove economically viable to mine. Given the main geological units, and the predicted diluted mineable grades, theestimated volume, tonnage and carat resource of the main and satellite pipeshave been estimated as follows: Tonnage (Mt) Grade (cpht) Carats (Mct) Depth (m) Main Satellite Total Main Satellite Main Satellite Total pipe pipe pipe pipe pipe pipe Potential 0-240 5.00 to 1.75 6.75 to * * * * - 7.00 8.75Diamondiferous 240-345 6.57 0.63 7.20 27.7 * 1.82 * 1.82Kimberlite1Inferred 345-600 14.26 1.06 15.32 38.0 * 5.42 * 5.42Resources2 600-855 12.88 - 12.88 50.3 * 6.49 * 6.49Total Inferred 345-855 28.243 1.094 29.20 42.2 - 11.91 - 11.91 Resources Notes 1. Estimated by MPH based on inferred kimberlite volumes, historical diamondrecoveries and the drilling of resources below this level, but requiringadditional testing before it could be classified as an ''Inferred Resource''under any reporting code 2. In accordance with the SAMREC Code for reporting mineral resources andreserves 3. Includes approximately 1.1Mt of country rock xenoliths between depths of345 metres and 855 metres assigned zero grade 4. Includes approximately 0.3Mt of country rock xenoliths between depths of345 metres and 600 metres assigned zero grade The geological modeling based on the 1997-98 drilling has allowed MPH toestablish a global Inferred Resource of 28.2 million tonnes, between depths of345 and 855 metres, implying a global inferred grade of 42.2 cpht. At present,it is not possible to state, to scoping-study levels of confidence, the tonnagesbelow or above this interval. The table above, however, shows that MPH hasestimated an additional 6.57 million tonnes containing approximately 1.82million carats (27.7 cpht) above a depth of 345 metres. This tonnage and gradeestimate requires confirmation before it can be considered in subsequent, higherconfidence-level, evaluations. Tonnages and grades from depths of 240 metres tosurface are likely to be similar to this figure based on all historical data,but similarly need confirmation which will be effected as the pit is dewatered. No value has yet been established for the diamonds in the Lace Kimberlites andconsequently the global tonnage of 28.2 million tonnes between depths of 345 and855 metres at 42.2 cpht is regarded as an Inferred Resource under allinternational mining codes, although the tailings bulk-sampling program hasestablished a benchmark net average price of $63/ct for the historical tailingsstones, as of June 2005. The directors believe that this constitutes the bottomof a range of potential values for the in-situ diamond resource of the LaceProperty. A rough industry ''rule-of-thumb'' is to double tailings stones' values ($126/ct, rounded to $125/ct) to arrive at production values for the substrata fromwhich the stone values were removed. MPH considers that this value isconservative but, until a modern bulk-sample has extracted a representativecarat parcel from further sections of the main pipe and the satellite pipe, the$125/ct base case value is considered prudent for a prefeasibility study andevaluation. Silverbank and Moregroet projects The Exploration Properties contain several kimberlite dykes known as Silverbank,Normandien and Besterkraal. De Beers reportedly discovered several pipes andblows along these dykes during very preliminary evaluations and the directorsconsider that the proposed exploration programs on these properties iswarranted. Further detail is contained in the CPR. The CPR gives a full explanation of the methods used to infer the geology ofvarious properties and the information in this section should be read inconjunction with the full report which is contained in the Pre-ListingStatement. 6. DIRECTORS AND MANAGEMENT OF DIAMONDCORP The following tables sets out the various details of the directors and seniormanagement of DiamondCorp: Name Business address Board of directors of DiamondCorp Euan Arthur Worthington Six Yards House Stoke Charity Winchester SO21 3PF, UK Paul Robert Loudon Georgian House 63 Coleman Street London EC2R 5BB, UK Dr Jonathan Willis-Richards Georgian House 63 Coleman Street London EC2R 5BB, UK Nicholas Richard Allen 35 Milton Close Henley-on-Thames Oxfordshire RG9 1UJ, UK Other John Charles Forrest Georgian House 63 Coleman Street London EC2R 5BB, UK Alistair Gordon Dean Holmes PO Box 2013 Kroonstad 9500 South Africa Ms Pulane Kingston AON House 28 Fricker Road Illovo 2196 Johannesburg South Africa Gert Johannes (Gerry) Robbertze Block B Homestead Office Park 65 Homestead Avenue Cramerview 2060 South Africa Eric Paul Sharples c/o Lace Mine PO Box 6016 Kroonheuwel 9501 South Africa 7. FUTURE PROSPECTS The directors of DiamondCorp aim to build a diamond production company withSouthern African-based production properties. The Lace Property has thepotential to provide a profitable diamond production platform from which theCompany can implement its growth strategy. Looking forward, the directorsforesee growth based on acquisition and expansion of existing operations. 8. COPIES OF THE PRE-LISTING STATEMENT Copies of the Pre-Listing Statement (in English only) can be obtained duringnormal business hours from Thursday, 20 March 2008, for a period of fourteendays, from the advisor and sponsor, Investec Bank Limited at 100 Grayston Drive,Sandown, 2196. 20 March 2008Johannesburg Investment Bank and Sponsor:Investec Bank Limited Corporate law advisors in South Africa:Werksmans Attorneys Auditors:Deloitte & Touche LLP Technical advisor:MPH Consulting Limited Nominated Adviser and Broker on AIM:Cenkos Securities plc For further information please contact: DiamondCorp Paul Loudon (CEO)+44 7879 478 301 (UK mobile)+27 82 824 6897 (SA mobile) [email protected] Russell and Associates Charmane Russell+27 11 880 3924 [email protected] Cenkos Securities plc Elizabeth BowmanIvonne Cantu+44 207 397 8924 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
DCP.L