15th Aug 2008 12:00
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")
GENERAL MEETING OF SHAREHOLDERS FOR THE SPECIFIC ISSUE OF WARRANTS
1. Introduction
On Monday, 28 July 2008, shareholders were advised that DiamondCorp had entered into a funding transaction ("funding transaction") with African Opportunity Fund L.P ("AOF"). In terms of the funding transaction, AOF will issue DiamondCorp with a US$5,000,000 bond, to be repaid by semi-annual coupon payments, capital amortisation payments and the issue to AOF of 1,650,000 warrants for conversion into DiamondCorp shares. The funding transaction is subject to shareholder approval of the warrants ("AOF warrants" or "warrants"). In terms of the Listings Requirements of the JSE Limited ("JSE"), the issue of the warrants to AOF constitutes a 'specific issue' as defined ("AOF specific issue"). Shareholder approval, representing not less than three-fourths (75%) of the votes exercisable by shareholders present and voting at a general meeting, either in person or by proxy, is therefore required.
2. The funding transaction
In terms of the funding transaction, AOF will issue DiamondCorp with a US$5,000,000 bond and in turn DiamondCorp undertakes the following obligations:
- to pay a coupon of 12% p.a (payable semi-annually);
- to make capital repayments according to the following schedule; US$500,000 to be repaid 18 months after the issue date, US$1,000,000 to be repaid 24 months after issue date, US$1,500,000 to be repaid 30 months after the issue date, and the outstanding principal of US$2,000,000 to be repaid on the third anniversary of the issue date; and
- to issue AOF with 1,650,000 warrants, where each warrant confers on the AOF the right to acquire one fully paid share in DiamondCorp at a price of 72 pence per share at any time between the date falling six months after the issue date and the third anniversary of the issue date.
DiamondCorp has the right to redeem the bond at any time after the first anniversary date at between 105 percent and 108 percent of face value (depending on the date of redemption), plus accrued interest.
3. Rationale for the funding agreement
Management has focused on accelerating development of Phase Two, which is underground mining at the Lace Mine. Phase Two requires capital expenditure of approximately R100 million (£6.9 million) over 2008 and 2009 to achieve underground production of 4,000 tonnes of kimberlite per day.
The expenditure will be financed in part by the funding transaction with AOF, in part by the equity placement of R26 million (£1.8 million) completed earlier this year, and with the balance of funding to be provided by operating cashflow as Lace moves into underground mining later in 2008. Also, DiamondCorp's BEE partners, Shanduka Resources (Proprietary) Limited and Sphere Investments (Proprietary) Limited, are scheduled to invest an aggregate R26 million (£1.8 million) in 2009 upon completion of a positive feasibility study for Phase Two. Further detail on the Lace project is contained in the circular which has been posted to shareholders.
4. General meeting
The general meeting will be held on Monday, 1 September 2008 at 10:00 am (UK time) at DiamondCorp's UK registered office: First Floor, Georgian House, 63 Coleman Street, London, EC2R 5BB.
If you are unable to attend the general meeting, but wish to be represented thereat, you must complete and return the attached form of proxy contained in the circular which has been posted to shareholders, in accordance with the instructions contained therein, to be received by DiamondCorp at their registered office at First Floor, Georgian House, 63 Coleman Street, London, EC2R 5BB, by no later than 10:00 am (UK time), or by Computershare SA at their registered office at Ground Floor, Marshall Street, Johannesburg, 2001 or PO Box 61051, Marshalltown, 2107 by no later than 11:00 am (SA time) on Thursday, 28 August 2008.
5. Salient dates and times
The salient dates and times in respect of the general meeting are as follows:
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2008
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Last day for receipt of forms of proxy for the general meeting by no later than 10:00 am (UK time) and 11:00 am (SA time) respectively
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Thursday, 28 August
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General meeting to be held at 10:00 am (UK time)
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Monday, 1 September
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Results of the general meeting released on SENS and RNS
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Monday, 1 September
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Results of the general meeting to be published in the press
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Tuesday, 2 September
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6. Financial effects
The table below sets out the unaudited pro forma financial effects of the funding transaction on DiamondCorp. The unaudited pro forma financial effects are presented for illustrative purposes only and because of their nature may not give a fair reflection of DiamondCorp's results, financial position and changes in equity after the funding transaction has been effected. It has been assumed for purposes of the pro forma financial effects that the funding
transaction took place with effect from 1 January 2007 for income statement purposes and 31 December 2007 for balance sheet purposes. The directors are responsible for the preparation of the unaudited pro forma financial effects.
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Published
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Pro forma
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Scenario 12
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Scenario 22
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Before funding transaction1
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After funding transaction3
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Change6 (%)
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After funding transaction4
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Change6 (%)
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Basic loss per share (p)
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(6.27)
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(8.45)
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34.77
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(8.66)
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38.12
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Headline loss per share (p)
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(6.26)
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(8.44)
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34.82
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(8.65)
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38.18
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NAV per share (p)
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38.15
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39.48
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3.49
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37.94
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(0.55)
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Tangible NAV per share (p)
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20.75
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22.86
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10.17
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20.53
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(1.06)
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Number of shares in issue
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34,770,408
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36,420,408
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4.75
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34,770,408
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-
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Weighted average number of shares in issue
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33,501,444
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34,328,704
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2.47
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33,501,444
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-
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Notes:
1. The "Before funding transaction" financial information is based on DiamondCorp's published audited results for the year ended 31 December 2007.
2. The "After funding transaction" pro forma information is presented under two scenarios. Both scenarios incorporate the issue of the US$5 million (£2.5 million) bond to DiamondCorp and include the transaction costs related to the funding transaction. Of the £74,400 transaction costs associated with the funding transaction, the £30,000 relating to the bond have been expensed through the income statement, whilst the £44,400 relating to the AOF specific issue have been written off against share premium. The income statement has been adjusted for the £300,540 coupon payment on the bond and a once-off IFRS 2 charge of £468,569 relating to the issue of the AOF warrants, as calculated using a Black-Scholes model. It has been assumed that the vesting period of the AOF warrants is 1 July 2007, in scenario 1 and 2, as the vesting period of the warrants is six months after the issue date of the bond, as detailed in paragraph 2 above.
3. Scenario 1 presents the case where all the warrants are exercised after six months, being 1 July 2007:
- EPS and HEPS are adjusted for the exercise of warrants at 1 July 2007. - NAV and TNAV are adjusted to include the cash received from the issue of the 1.65 million ordinary shares at 72 pence per share, in addition to the cash received in terms of the loan (net of transaction costs).
4. Scenario 2 presents the case where no warrants are exercised in 2007:
- EPS and HEPS are calculated using the original weighted average number of shares as published for the period to 31 December 2007.
- NAV and TNAV are calculated using the original number of shares in issue as published at 31 December 2007 and the cash received in terms of the loan (net of transaction costs).
5. An exchange rate of £0.5009/$, being the closing exchange rate on 31 December 2007, has been used in this pro forma analysis.
6. The percentage change has been calculated on rounded numbers.
The pro forma balance sheet and income statement relating to the AOF specific issue are set out in the circular details of which are included in paragraph 7 below.
7. Documentation relating to the general meeting
The circular containing full details of the general meeting and the form of proxy has been posted to shareholders today, Friday, 15 August 2008. An electronic copy of the circular is available on the Company's website at www.diamondcorp.plc.uk
London15 August 2008
Sponsor:
Investec Bank Limited
For further information, please contact:
Paul Loudon
DiamondCorp plc
+44 20 7256 2651
Joe Nally/Liz Bowman
Cenkos Securities plc
+44 20 7397 8900
Robert Smith/Tanis Crosby
Investec Bank Limited
+27 11 286 7662
Charmane Russell
Russell & Associates
+27 11 880 3924
Jane Stacey/Jos Simson
Conduit PR
+44 20 7429 6606/+44 7922 923 306
Related Shares:
DCP.L