TIDMFDI
RNS Number : 4034Z
Firestone Diamonds PLC
15 March 2012
THIS ANNOUNCEMENT IS NOT FOR RELEASE, PUBLICATION OR
DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, IN, INTO
OR FROM THE UNITED STATES, JAPAN, CANADA OR AUSTRALIA OR ANY OTHER
JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A BREACH OF THE
RELEVANT SECURITIES LAWS OF SUCH JURISDICTION.
Firestone Diamonds plc
Placing to raise GBP14.7 million, Capital Reorganisation and
Directorate Changes
LONDON: 15 March 2012
Firestone Diamonds plc, ("Firestone" or the "Company"), the
AIM-quoted diamond mining and exploration company (ticker: AIM:
FDI), is pleased to announce a financing through Mirabaud
Securities LLP to raise GBP14.7 million before expenses as part of
the restructuring of the Company and further development of the
Company's Liqhobong Mine, Lesotho.
The Company has provisionally placed 172,900,000 new ordinary
shares of 1 pence each in the Company (the "Placing Shares") with
institutional and other investors at a price of 8.5 pence per
Placing Share raising GBP14,696,500 before expenses (the
"Placing").
The proceeds of the Placing will be used in the ongoing
development of the Company's Liqhobong asset in Lesotho, repayment
of debt, ongoing costs of BK11 in Botswana and for general working
capital purposes.
Capital Reorganisation
As the Company's shares are trading at a price below their par
value, the Directors are unable to allot the Placing Shares under
the Companies Act 2006. Consequently, the Directors have proposed a
reduction in the par value of the Company's issued ordinary shares
from 20p per share to 1p per share by way of a sub-division and
re-classification of its existing issued share capital (the
"Capital Reorganisation").
Share Option Schemes
The Company's current share option schemes have now terminated
and there are 13,330,000 options to acquire ordinary shares
outstanding.
The Board wishes to incentivise employees, executive Directors
and key individuals by granting them options over ordinary shares.
The Company proposes adopting two new share option schemes - one
for employees and executive Directors and the other for
non-executive Directors and consultants (the "Share Option
Schemes"). The key terms relating to the Share Option Schemes are
set out in a circular to shareholders to be posted today.
The Placing, the Capital Reorganisation and the adoption of the
Share Option Schemes are conditional upon the approval of
Firestone's shareholders at a general meeting.
Director Changes
The Company wishes to announce the resignation of Mr Michael
Hampton and William Douglas Baxter from the Board of Directors with
immediate effect.
Notice of General Meeting
A circular giving details of the proposals and incorporating a
notice convening the General Meeting will be posted to shareholders
today. The General Meeting will be held at the offices of Lawrence
Graham LLP, 4 More London, Riverside, London SE1 2AU at 11 a.m. on
2 April 2012.
Extracts from the circular appear below and should be read in
conjunction with the full text of the circular which is available
to view on the Company's website at www.firestonediamonds.com with
effect from close of business today. References to 'this document'
shall be taken to mean the circular. Capitalised terms will have
the same meaning as defined in the circular.
Tim Wilkes, CEO of Firestone Diamonds, commented: "Today's
proposed financing concludes a strategic review of Firestone's
operations. We are very pleased with the support from new and
existing institutional shareholders in the Placing which was
oversubscribed and demonstrates the strong support for the
Company's flagship Liqhobong project in Lesotho. Following the
review and financing, Firestone is well positioned to continue the
plant modifications at Liqhobong and complete the Definitive
Feasibility Study in June 2012, a precursor to development of the
Main Treatment Plant which should enable Firestone to become a 1
million carat per annum producer by 2015. The Company wishes to
thank Mr Hampton and Mr Douglas Baxter for their support and
commitment to the Company over the years and wishes them well in
their future endeavours."
For further information, visit the Company's web site at
www.firestonediamonds.com or contact:
Tim Wilkes, CEO, +27 78 457 6623/+267 713
Firestone Diamonds 77686
Rory Scott,
Mirabaud Securities (Broker) +44 20 7878 3360
Robert Beenstock,
N+1 Brewin (Nominated Adviser) +44 20 3201 3710
Jos Simson / Emily Fenton, +44 20 7920 3150/+44 7899
Tavistock Communications 870 450
Background information on Firestone Diamonds:
Firestone Diamonds plc is an international diamond mining and
exploration company with operations focused on Lesotho and
Botswana. Firestone currently operates the Liqhobong Mine in
Lesotho and is also the largest holder of mineral rights in
Botswana's diamondiferous kimberlite fields, controlling
approximately 10,000 square kilometres around the major Orapa and
Jwaneng mines and the entire Tsabong kimberlite field. In addition
to Liqhobong and BK11, Firestone has 108 kimberlites in its
portfolio, of which 30 have been proven to be diamondiferous.
Lesotho is emerging as one of Africa's significant new diamond
producers, and hosts Gem Diamonds' Letseng Mine, Firestone's
Liqhobong Mine as well as the Kao and Mothae development projects.
Botswana is the world's largest and lowest cost producer of
diamonds, with annual production worth over $2.5 billion, and is
considered to be one of the most prospective countries in the world
to explore for diamonds.
Extracts from the Circular
Background and reasons for the Placing
The Company conducted a strategic review of its operations
during January and February 2012 in order to address concerns
relating to its operational performance. The review identified the
future development of the Liqhobong main treatment plant as the
Company's primary value driver. A definitive feasibility study
("DFS") of the main treatment plant will be completed by mid-2012
to be followed by detailed front end engineering and financing
during the latter half of calendar year 2012. A summary of the
schedule for the proposed future development is set out below. This
renewed focus is expected to transform the Company from an early
stage development and exploration business to a circa 1 million
carat per annum producer by 2015.
Development Schedule
Year Quarter
2012 Q1 Pilot plant production at 16,000 - 18,000 carats
(currently mining at 35-39 cpht and averaging $70-100/ct)
Q2 Pilot plant modifications to increase target production
to 24,000 carats per month, excluding specials
Q3 DFS for main treatment plant and detailed front
end engineering
Q4 Complete financing for the main treatment plant.
2013 Q1 Commence construction of 3.6 Mtpa main treatment
plant ("Project 500").
2014 Q2 Main treatment plant commissioning and ramp up and
removal of pilot plant.
The cost of completing the DFS study is approximately GBP1.6
million. The main treatment plant is being designed by DRA's
dedicated diamond plant design team who have extensive experience
of building diamond plants in Lesotho and elsewhere in Africa. A
further GBP1.9 million is required to increase the height of the
tailings dam wall in order to allow for continued production from
the pilot plant for the remainder of the calendar year 2012.
The pilot plant at Liqhobong is an interim measure that has to
date contributed significantly to ore body knowledge and will
continue to contribute operational revenue over the medium term.
The focus of the pilot plant is to generate positive operational
cash flow through improved diamond value management. To this end,
approximately GBP1.2 million will be invested in the pilot plant to
increase capacity from 80 tph to approximately 120 tph, reduce
bottle-necks and plant inefficiencies and to reduce diamond
breakage especially of larger diamonds. These improvements are
expected to reduce operating costs per ton and increase the average
$/carat revenue achieved. The pilot plant will be discontinued once
the main treatment plant reaches its target capacity.
On 28 February 2012 the Board of Directors announced that BK11
was placed on temporary care and maintenance. Though the Company
remains fully committed to its projects in Botswana, the temporary
suspension of operations was to avoid further negative cash flows
as a result of technical challenges experienced at the mine
exacerbated by lower diamond prices. During the calendar year 2012,
the Company will also repay a substantial portion of its GBP3.8
million total interest bearing loans and borrowings. These payments
together with costs relating to the recent corporate restructuring
are estimated to total GBP4.6 million.
The Company also announced that it is in the process of
reviewing its strategic options in relation to its exploration
portfolio in Botswana with a view to unlock value from these
assets. Further guidance on this matter will be announced in due
course.
Finally, various Board changes were introduced during the past
three months to ensure that the Company has the necessary skills to
execute its new strategy. Further additions to the Board and
management team are imminent as the Company continues its
transformation process.
The Board of Directors have concluded that a capital raising of
GBP14,696,500 would be required to implement the above strategic
objectives and to provide the Company with sufficient working
capital.
Use of Proceeds
The proposed Placing is conditional upon, inter alia, the
passing of Resolutions 1, 4 and 5 by the Company's Shareholders.
The proceeds of the Placing will be used as follows:
Liqhobong Main Treatment Plant DFS GBP1.6 million
Liqhobong Plant 2 tailings dam GBP1.9 million
Liqhobong Pilot Plant improvements GBP1.2 million
BK11 Project care and maintenance costs, debt GBP4.6 million
repayment and corporate restructuring
Working Capital GBP5.4 million
Total GBP14.7 million
Details of the Placing
The Company has conditionally raised GBP14,696,500, before
expenses, by way of a conditional placing of 172,900,000 New
Ordinary Shares at the Placing Price byMirabaud as agents for the
Company. The Placing Shares will represent 31.69 per cent. of the
enlarged issued share capital of the Company at Admission. The
Placing Shares will, when issued, rank pari passu in all respects
with the other New Ordinary Shares then in issue, including all
rights to all dividends and other distributions declared, made or
paid following their Admission. The Placing Shares have been
conditionally placed by Mirabaud as agent of the Company with
institutional and other investors in the UK.
Pursuant to the Placing Agreement, the Placing of the Placing
Shares is conditional upon, inter alia, (i) the passing of
resolutions at the General Meeting, to authorise and facilitate the
Capital Reorganisation and to give the Directors the authorities to
allot New Ordinary Shares and disapply statutory pre-emption rights
for the Placing and (ii) Admission occurring on 3 April 2012 (or
such later date as the Company and Mirabaud may agree, not being
later than 10 April 2012).
The Placing Agreement contains warranties from the Company in
favour of Mirabaud in relation inter alia, to the Company and its
business. In addition, the Company has agreed to indemnify Mirabaud
in relation to certain liabilities that they may incur in
undertaking the Placing. Mirabaud have the right to terminate the
Placing Agreement in certain circumstances prior to Admission, in
particular, in the event that there has been inter alia a material
breach of any of the warranties or for force majeure.
Application will be made for the Placing Shares to be admitted
to trading on AIM and it is expected that trading in the Placing
Shares will commence on 3 April 2012.
The Placing is conditional upon the passing of certain
Resolutions at the forthcoming General Meeting. If Resolutions 1, 4
and 5 are not passed at the General Meeting, the Company will be
unable to complete the Placing, which could have a material impact
on the Company's working capital position and the potential value
of its shares.
Director Dealings
Should Resolutions 1, 4 and 5 be approved at the General
Meeting:
Braam Jonker, who has agreed to subscribe for 2,255,215 New
Ordinary Shares pursuant to the Placing, will be interested in
2,255,215 New Ordinary Shares in the Company representing an
interest of 0.41 per cent. of the total voting rights of the
Company.
Lucio Genovese, who has agreed to subscribe for 3,758,692 New
Ordinary Shares pursuant to the Placing, will be interested in
5,721,095 New Ordinary Shares in the Company representing an
interest of 1.05 per cent. of the total voting rights of the
Company.
Tim Wilkes, who has agreed to subscribe for 350,000 New Ordinary
Shares pursuant to the Placing, will be interested in 1,028,000 New
Ordinary Shares in the Company representing an interest of 0.19 per
cent. of the total voting rights of the Company. In addition, Tim
Wilkes is interested in 1,650,000 options over New Ordinary Shares
in the Company as follows:
Options Held Option Exercise Price Expiry Date
650,000 GBP0.20 29/05/2015
1,000,000 N/A (Long term 25/10/2016
incentive shares)
Share Option Schemes
The Company's current share option schemes, which were approved
by the Company in August 1998 and on 11 July 2001 respectively (the
"Old Schemes"), have now terminated. There are 13,330,000 options
to acquire ordinary shares in the capital of the Company
outstanding under the Old Schemes.
The Board wishes to incentivise employees, executive directors
and Key Individuals by granting them options over New Ordinary
Shares. The Company proposes adopting, subject to Shareholder
consent, two new share option schemes, one for employees and
executive Directors (the Company's "Unapproved Executive Share
Option Scheme") and the other for non-executive Directors and
consultants (the Company's "Unapproved Share Option Scheme"). The
key terms relating to the Share Option Schemes are set out in the
Appendix to this document.
To the extent necessary to grant options under the Share Option
Schemes, the Directors are also seeking authority, pursuant to the
Act, to grant options up to a nominal amount of GBP150,000 and also
corresponding disapplication of pre-emption rights under the Act up
to a nominal amount of GBP150,000. The Company envisages that the
number of New Ordinary Shares which may be issued under both of the
Share Option Schemes shall not in aggregate exceed 10 per cent. of
the Company's issued share capital at all times.
Capital Reorganisation
As a result of the current share price of the Existing Ordinary
Shares, the Company is unable to issue any further ordinary shares
(including the Placing Shares) due to provisions of the Act which
prevents a company from issuing shares at less than their nominal
value which, in the case of the Existing Ordinary Shares, is 20
pence. Accordingly, in order to complete the Placing, the Company
proposes to implement the Capital Reorganisation. Save for the
dilution which will result from the issue of the Placing Shares the
interests of existing Shareholders (both in terms of their economic
interest and voting rights) will not be diluted by the
implementation of the Capital Reorganisation.
At present, there are 372,613,111 Existing Ordinary Shares in
issue. In order to implement the Capital Reorganisation a
resolution will be proposed at the General Meeting, to take effect
from 6:00 p.m. on 2 April 2012 (or such other date as the board of
directors of the Company may determine), whereby each Existing
Ordinary Share will be divided into:
(i) 1 New Ordinary Share of 1p; and
(ii) 19 Deferred Shares of 1p.
The New Ordinary Shares will have the same rights and benefits
as the Existing Ordinary Shares. The number of New Ordinary Shares
in issue following the Capital Reorganisation will be unchanged
from the number of Existing Ordinary Shares in issue immediately
prior to the Capital Reorganisation.
The Deferred Shares, which will not be listed, will be
effectively valueless, non-transferable and have no effect on the
economic interest of the Shareholders. No share certificates will
be issued for the Deferred Shares. Instead it is intended that, in
due course, all the Deferred Shares will be repurchased by the
Company for an aggregate consideration of GBP1 and cancelled.
Application will be made for the New Ordinary Shares to be
admitted to trading on AIM. Dealings in the Existing Ordinary
Shares will cease at the close of business on the date of the
General Meeting and dealings in the New Ordinary Shares are
expected to commence on the following day (3 April 2012). The ISIN
and SEDOL number of the New Ordinary Shares will be the same as the
Existing Ordinary Shares and any share certificates for the
Existing Ordinary Shares will remain valid for the New Ordinary
Shares.
Following the Capital Reorganisation, the Company will have in
issue, and Shareholders' individual holdings will be for, the same
number of New Ordinary Shares as the number of Existing Ordinary
Shares immediately prior to the General Meeting.
Following the Capital Reorganisation, the New Ordinary Shares of
the Company will have a nominal value of 1 pence and the Company
will therefore be in a position to issue the Placing Shares without
breaching the provisions of the Act.
Director's general authorities to issue securities and disapply
pre-emption rights
The Directors are seeking additional authority to allot up to
180,019,300 New Ordinary Shares (representing approximately 33 per
cent. of the enlarged issued share capital of the Company post the
Placing) together with an authority to disapply pre-emption rights
in respect of an allotment of up to 27,275,700 New Ordinary Shares
(representing approximately 5 per cent. of the enlarged issued
share capital of the Company post the Placing) subject to such
exclusions or other arrangements as the Directors may deem
necessary or expedient in relation to fractional entitlements or
any legal or practical problems relating to such an allotment.
General Meeting
Set out at the end of this document is a notice convening a
General Meeting to be held at 11.00 a.m. on 2 April 2012 at the
offices of Lawrence Graham LLP, 4 More London Riverside, London SE1
2AU. The resolutions which will be put to the General Meeting
are:
(i) to authorise and facilitate the Capital Reorganisation;
(ii) to approve the rules of the Unapproved Share Option Scheme;
(iii) to approve the rules of the Unapproved Executive Share Option Scheme;
(iv) to give the Directors the authorities to allot New Ordinary
Shares and disapply statutory pre-emption rights for the Placing
and in relation to the grant of options pursuant to the Unapproved
Share Option Scheme; and
(v) to give the Directors general authorities to allot New
Ordinary Shares and disapply statutory pre-emption rights.
Whether or not you intend to attend the General Meeting,
Shareholders are requested to complete and return the enclosed Form
of Proxy in accordance with the instructions printed thereon as
soon as possible and in any event so as to be received by Capita
Registrars, PXS, The Registry, 34 Beckenham Road, Beckenham, Kent
BR3 4TU not later than 48 hours before the General Meeting. The
completion and return of a Form of Proxy will not prevent a
Shareholder from attending the General Meeting and voting in person
if he/she wishes to do so.
Recommendation and voting intentions
The Board considers that the proposals described in this letter
are in the best interests of the Company and of Shareholders as a
whole. Accordingly, the Board recommends that Shareholders should
vote in favour of the Resolutions to be proposed at the General
Meeting. The Directors intend to vote in favour of the Resolutions
in respect of, in aggregate, 2,640,403 Existing Ordinary Shares
(representing 0.7 per cent. of the Existing Ordinary Shares).
In accordance with the Act, Resolutions 1 and 5 require the
approval of (i) on a show of hands, not less than 75 per cent. of
members present and voting or (ii) on a poll, members holding not
less than 75 per cent. of the total voting rights. A failure to
obtain the requisite support of Shareholders at the General Meeting
would prevent the Company from proceeding with the Placing.
Accordingly, the Board strongly urges all Shareholders to return
their Form of Proxy and/or attend the General Meeting.
The Placing is conditional upon the passing of certain
Resolutions at the forthcoming General Meeting. If Resolutions 1, 4
and 5 are not passed at the General Meeting, the Company will be
unable to complete the Placing, which could have a material impact
on the Company's working capital position and the potential value
of its shares.
EXPECTED TIMETABLE OF PRINCIPAL EVENTS
Publication of this document and posting to Shareholders 15 March 2012
Latest time and date for receipt of Forms of Proxy 11.00 a.m. on
31 March 2012
General Meeting 11.00 a.m. on
2 April 2012
Record Date and time for implementation of the Capital 6.00 p.m. on
Reorganisation 2 April 2012
Admission and dealings in the New Ordinary Shares 3 April 2012
expected to commence
Admission and dealings in the Placing Shares expected 3 April 2012
to commence
Latest date for despatch of definitive share certificates 10 April 2012
in respect of the Placing Shares
SUBSCRIPTION AND PLACING STATISTICS
Number of Existing Ordinary Shares 372,613,111
Number of New Ordinary Shares in issue following
completion of the Capital Reorganisation 372,613,111
Number of Deferred Shares in issue following the
Capital Reorganisation 7,079,649,109
Placing Price 8.5p
Number of Placing Shares being placed on behalf
of the Company 172,900,000
Proceeds received by the Company from Placing GBP14,696,500
Shares
Number of New Ordinary Shares in issue following
Admission of the Placing Shares 545,513,111
Number of Placing Shares as a percentage of the
enlarged issued ordinary share capital following
Admission 31.69%
This information is provided by RNS
The company news service from the London Stock Exchange
END
MSCBKPDNABKKAND
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