DCP Diamondcorp

TIDMDCP

RNS Number : 0518P

Diamondcorp Plc

19 October 2012

19 October 2012

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", "the Group" or "the Company")

Placing to raise GBP1 million, GBP10 million Equity Finance Facility and update on Lace project finance

Placing

The Board of DiamondCorp, the Southern African diamond development and exploration company, is delighted to announce that it has placed 28,571,430 new ordinary shares of 3 pence each in the Company ("the Placing Shares") at a price of 3.5 pence per share ("the Placing Price") to raise, in aggregate, GBP1 million gross proceeds for the Company ("the Placing").

The net proceeds of the Placing (which are expected to be approximately GBP940,000) will be used to fund the development of the Lace mine, corporate overheads and for general working capital purposes.

Application has been made to the London Stock Exchange and the JSE for the Placing Shares to be admitted to trading on AIM and AltX. It is expected that Admission will become effective and that trading in the Placing Shares will commence on AIM and AltX at 8.00 am UK time on 25 October 2012. The Placing Shares will rank pari passu with the Company's existing issued ordinary shares.

Following the issue of the Placing Shares there will be a total of 270,839,478 ordinary shares of 3 pence each in the capital of the Company in issue.

Lace mine financing arrangements

Background

On 21 September 2012, the Company announced that its 74% owned subsidiary Lace Diamond Mines (Proprietary) Limited had signed a firm agreement for a R220 million (c. GBP15.8 million) project finance facility with the Industrial Development Corporation of South Africa (the "IDC Facility"). Prior to the initial draw down under the IDC Facility, DiamondCorp is required to arrange a further R100 million (c. GBP7.2 million) of funding to be invested into its 74% operating subsidiary Lace Diamond Mines (Pty) Limited, thereby providing a total funding package of R320 million (c. GBP22.9 million) for the 1.2 million tonne per annum 47 level block cave development at Lace, representing a 33% contingency over the budgeted capital cost.

In addition to the Placing, DiamondCorp is working to complete the final funding package which is likely to include a convertible bond offering, off-take agreements, royalty sales and a long-term equity finance facility, as described below.

Bond Offering

Pursuant to the announcement on 21 September 2012, the Company has been working with Rand Merchant Bank and PSG Capital to market a convertible bond in the South African market, and its UK brokers Fairfax I.S. PLC and Ocean Equities Limited to market a similar instrument in the UK market. Marketing of the bonds has to date resulted in significant in-principle commitments from new and existing investors in the Company on the condition that the Company's full funding requirement is met. The UK bonds have a fixed coupon of 14% and are being sold in minimum units of GBP50,000. The Company's CEO Paul Loudon has committed to investing GBP100,000 in the bonds, and the Company's chairman Euan Worthington has also committed GBP100,000 to the bond instrument. The Company expects that the majority of the required funding for Lace will come from the proceeds of the bond issue. It is anticipated that the balance will come from an off-take agreement, royalty sales or an equity finance facility.

Off-take and Royalty Discussions

The Company is in advanced discussions with respect to a potential diamond off-take agreement and/or royalty from the Lace mine. It is the intention of the Board to conclude such arrangements as soon as possible.

Equity Finance Facility

The Board of DiamondCorp is pleased to advise that in addition to the equity placing an equity finance facility of GBP10 million (c. R140 million) (the "EFF") has been arranged with Darwin Strategic Limited ("Darwin"), a majority owned subsidiary of Henderson Global Investors' Alphagen Volantis fund and was signed on 18 October 2012.

Pursuant to the EFF, the Company may make draw downs up to an aggregate of GBP10 million ("Maximum Commitment Amount") by way of Darwin subscribing for new ordinary shares of 3p each in the Company ("Ordinary Shares") during the period of 36 months commencing on 18 October 2012 ("Commitment Period").

The EFF will be drawn down at the Company's sole discretion, but it is the intention of the Board to only use this facility if and to the extent that the Lace funding requirement is not met by the proceeds of the Placing, the convertible bond issue, off-take arrangements and/or royalty sales. Further details of the EFF agreement are set out in Appendix 1 below.

Commenting on the Placing and the EFF, DiamondCorp's CEO Paul Loudon said:

"We are delighted with the support of new and existing shareholders in this equity placing at a time of difficult market conditions. We are also very pleased to have received the support of Henderson Global Investors and Darwin Strategic in offering a funding structure to assist us in fulfilling the initial drawdown conditions of the IDC project loan. We look forward with much excitement to restarting underground development of the Lace mine."

Contact details:

DiamondCorp plc

Paul Loudon, Chief Executive

Tel: +44 20 3151 0970

Euan Worthington, Executive Chairman

Tel: +44 775 3862097

Fairfax I.S. PLC

AIM Nomad and Broker

Ewan Leggat/Laura Littley

Tel: +44 207 598 5368

Ocean Equities Limited

Guy Wilkes

Tel: +44 207 786 4370

Darwin Strategic Ltd

Anand Sambasivan/Jamie Vickers

Tel: +44 207 938 5754

PSG Capital (Pty) Limited

John-Paul Dicks

Tel: +27 21 887 9602

Russell & Associates

Charmane Russell/Marion Brower

Tel: +27 11 880 3924

Appendix 1

Further details of the Equity Finance Facility

The EFF agreement with Darwin provides DiamondCorp with a facility which (subject to certain limited restrictions) can be drawn down at any time over the next three years. The timing and floor subscription price of any draw down is at the sole discretion of the Company.

DiamondCorp may drawdown at its sole discretion, up to the total value of the EFF, by way of issuing subscription notices to Darwin. Following delivery of a subscription notice, Darwin will subscribe and the Company will allot to Darwin new Ordinary Shares.

The subscription price for any Ordinary Shares to be subscribed by Darwin under a subscription notice, subject to certain exceptional circumstances, will be the average of the three lowest closing bid prices for ordinary shares over the 15 trading days immediately following the delivery date of the subscription notice (the "Pricing Period").

DiamondCorp is obliged to specify in each subscription notice a minimum price below which Ordinary Shares will not be issued to Darwin. The Company will have the right (with the consent of Darwin) to modify that minimum price at any time during the relevant Pricing Period.

The number of Ordinary Shares which may be issued under any individual subscription notice may be up to the lower of 25 per cent of the company's issued share capital following completion of the relevant subscription, or four times the average daily trading volume of DiamondCorp's Ordinary Shares over the 15 trading days preceding the issue of the relevant subscription notice. This may be reduced in certain circumstances, including where the minimum price is not maintained. The maximum draw down under a subscription notice may not exceed GBP500,000 without Darwin's consent.

There is an over-allotment facility available to DiamondCorp, under which the Company may authorise Darwin, at Darwin's discretion, to increase the amount of the draw down by up to the aggregate undrawn amount under the EFF. Darwin may direct allotments under the EFF to its parent fund, Henderson Global Investors' AlphaGen Volantis Fund.

Darwin and DiamondCorp may mutually agree at the end of the pricing period to a variation of subscription price. This may allow for a larger subscription via any over-allotment facility authorised by the Company.

The issuance of a subscription notice is conditional upon the satisfaction of certain subscription notice conditions which have been agreed between Darwin and the Company. Any subscription notice which DiamondCorp may issue will only be valid to the extent that it has the requisite shareholder authority to issue the maximum number of Ordinary Shares that Darwin may be required to subscribe under the relevant subscription notice.

Darwin and the Company may terminate the EFF agreement if certain conditions are not met.

In respect of agreeing to provide the EFF to DiamondCorp, Darwin has been granted warrants over 5 million Ordinary Shares in the Company (the "Warrants"). The Warrants are exercisable at Darwin's discretion at a price of 9 pence per ordinary share over a period of three years commencing on 18 October 2012.

This information is provided by RNS

The company news service from the London Stock Exchange

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