14th Nov 2005 07:00
Gravity Diamonds Limited14 November 2005 RELEASED ON BEHALF OF: GRAVITY DIAMONDS LIMITED (ASX & AIM : GRN) 14 November 2005 Letter to Shareholders re Rights Issue Following is the text of the letter mailed to shareholders today: 14 November 2005 Dear Shareholder, Gravity Diamonds Limited - Rights Issue Gravity Diamonds Limited (Gravity) is making a non-renounceable pro rata offerto shareholders to subscribe for one new share in Gravity for every four sharesheld as at Monday, 21 November 2005. Shareholders who subscribe for new shareswill also receive one free attaching new option for every two new sharessubscribed for. You will shortly receive a prospectus and (if eligible) an application form. Theoffer is expected to close on 14 December 2005. If you are eligible and wish toparticipate, please read the prospectus when you receive it and carefully followthe instructions. In the prospectus you will be given the opportunity to increase your investmentin Gravity and thereby support the promising programmes that your company has inits portfolio. Considerable progress has been made in our exploration programmes both inAustralia and in the Democratic Republic of Congo (DRC). In Australia, follow-up of the results from the FALCON(R) surveys is yieldingnew discoveries. In particular, at Abner Range in the Northern Territory, a newdiamondiferous kimberlite pipe, ABN021, has been found. Drilling has outlined akimberlite pipe approximately 1.4 hectares in area. The commercial potential ofthis discovery will be evaluated by a bulk sampling programme that is to befunded in part by this proposed capital raising. Elsewhere in the Northern Territory, analytical results from the samplingprogrammes recently completed on the Benda Bluff, Cox Arnold and Tee Dee areasare expected to give results that will require further detailed follow-upleading to drilling. In the Ellendale/Blina field in Western Australia, follow-up exploration hasbeen conducted based on the results of FALCON(R) surveys. This exploration hasresulted in the discovery of two non commercial diamondiferous lamproite pipesand relocated a third, as well as previously unknown palaeochannels. Thesignificance of this discovery has recently been upgraded because furtherpositive sampling results from palaeochannel sampling on an adjacent tenementsouth of the company's farm-in agreement area have been announced by BlinaDiamonds NL. In the DRC, progress to date has been very promising. On the Luebo block, theprogramme has proceeded from the reconnaissance stage to target definition stagein less than one year. Currently, drilling is underway to test the nature ofapproximately 30 targets identified by a high resolution aeromagnetic survey. Asignificant number of these targets are located adjacent to rivers where bothdiamonds and positive indicator minerals have been recovered. Elsewhere, theregional sampling programme has been completed over other ground holdingstotalling 113,000 square kilometres to which Gravity has access. Analysis ofapproximately 1,700 samples collected will be ongoing over the next six or somonths. Areas will be progressively prioritised for further target generationwork or relinquishment as the results become known. This significant progress has been achieved cost effectively through focused anddedicated field personnel. However, in order to give Gravity a better chance ofdelivering successful outcomes both in Australia and in the DRC, further fundingbeyond Gravity's current cash resources is required. Accordingly, Gravity intends to use the proceeds of this offer to fund itscontinued exploration and drilling programmes in Australia and in the DRC and toadd to its working capital. Gravity is seeking to raise up to approximately $12.6 million through the issueof the new shares, with additional funding of up to approximately $7.4 millionbeing sought through the potential exercise of the new options. The offer is notbeing underwritten and there are no brokers to the issue. The key information and timetable are set out below for your information. Summary of Key Information: Type of Non-renounceable pro rata rights offer to Eligible Shareholders ofoffer: up to 29.9 million fully paid ordinary shares (New Shares) and up to 14.9 million options to subscribe for fully paid ordinary shares (New Options). Eligible The following shareholders are eligible to participate inshareholders: the offer: • holders of shares in Gravity, who are entered on the register of shareholders, as at the Record Date (as set out below); • who are resident in any of the following jurisdictions: Australia, New Zealand, the United Kingdom, Belgium, Dubai (United Arab Emirates), France, Hong Kong, Israel, Luxembourg, South Africa and Switzerland; and • who are not US Persons. Offer price: $0.42 per New Share. No further consideration is payable on the issue of the New Options. Offer ratio: One New Share for every four existing shares held at the Record Date, and one New Option for every two New Shares subscribed for. Fractions will be rounded up. Option terms: Expiry Date: 30 November 2007. Exercise Price: $0.50 per share. Shareholders who accept their entitlements in full will be able to apply foradditional New Shares and New Options not accepted by other Shareholders underthe offer. Also, in the event that not all New Shares and New Options are subscribed for,the company reserves its right to place such securities at not less than thesame price at any time within the three month period after the close of theoffer. Shareholders should note that as the offer is non-renounceable, entitlements toNew Shares and New Options are not able to be traded on ASX or otherwise dealtwith. Timetable: The current proposed timetable for the Entitlement Offer is as follows*: Prospectus date: 11 November 2005 Existing shares quoted ex-rights: 15 November 2005 Record Date: 5.00pm Melbourne, Australia time on 21 November 2005 Prospectus mailing date: 24 November 2005 Offer closes (Closing Date): 5.00pm Melbourne, Australia time on 14 December 2005 Issue of New Shares and New Options and entry into register: 20 December 2005 Normal trading in New Shares and New Options commences 21 December 2005 \* These dates are subject to change and are indicative only. Gravity reserves theright to amend this timetable including, subject to the Corporations Act 2001(Cth) and the Listing Rules of ASX, to extend the Closing Date. If you are eligible and wish to participate in the offer, it will be necessaryfor you to complete your personalised Entitlement and Acceptance Form which willaccompany your copy of the Prospectus and return it, with the appropriateapplication monies, to the company's share registry before the Closing Date. If you have any questions in relation to the offer, please do not hesitate tocontact the company on (03) 9909 7655. Yours sincerely, Dr Robert V. DanchinChairman Further Information: Phil Harman, Managing Director, Gravity Diamonds Ltd. Tel: 00-61-3-9909-7655Elisa Bartlett, Assistant to the Managing Director, Gravity Diamonds Ltd. Tel:00-61-3-9909-7655Ron Marshman/John Greenhalgh, City of London PR Ltd. Tel: 020-7628-5518 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
GRN.L