TIDMDCP
RNS Number : 4360O
Diamondcorp Plc
07 November 2016
7 November 2016
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")
Corporate AND OPERATIONAL UPDATE
The Board of Directors of DiamondCorp, the Southern African
diamond mining, development and exploration company, announces the
following statement with respect to corporate activities and
financing initiatives as well as mining operations at the Lace
diamond mine.
Termination of Formal Sale Process
DiamondCorp announced on 18 October 2016 that it was launching a
strategic review in response to initial expressions of interest
from potential acquirers, to explore opportunities such as a merger
with or offer for the Group or a sale of the Group's businesses, in
parallel with its discussions to secure additional funding. As
such, the Company commenced a "formal sale process" in accordance
with Note 2 on Rule 2.6 of The City Code on Takeovers and Mergers
(the "Code"), as the most appropriate framework under which to
conduct its strategic review.
The Company has now conducted a review of various strategic
options and has entered into discussions with a number of third
parties and received certain indicative proposals and/or
approaches, including in relation to the acquisition of DiamondCorp
and various financing options. In particular, the Company
successfully concluded the financing facility with Rasmala plc
totalling GBP700,000 to satisfy the Company's immediate funding
requirements, as announced on 20 October 2016.
Such approaches included an early stage non-binding indicative
cash proposal at a substantial premium to the share price at the
time, which remained subject to, inter alia, amendment and due
diligence.
The Board considers that the approaches it has received from
third parties are opportunistic in nature and significantly
undervalues the Company as well as unable to be completed in a
sufficient period of time in light of the Company's financing
objectives. The Board notes that the Lace asset, irrespective of
start up delays, still contains an estimated 9.39 million carats of
diamonds with an in-ground value in excess of $1.5 billion based on
the $164/ct base case and grade and tonnage estimates contained in
the independent resource statement announced in March 2016. The
Board further notes that the various interested parties with
underground mining experience who have reviewed the Company's
technical data and visited the Lace mine all recognised the
Company's technical strength evident from the Lace mine underground
mine development and surface recovery plant.
As a result, the Board has decided to terminate the "formal sale
process" with immediate effect. The Board will continue to examine
alternative means of enhancing shareholder value in the normal
course of business.
As a result of the termination of the formal sale process, the
Company is no longer in an offer period under the Code and,
accordingly, the requirement to make disclosures under Rule 8 of
the Code has now ceased.
In accordance with Rule 26.1 of the Code, a copy of this
announcement will be published, subject to certain restrictions
relating to persons in any restricted jurisdiction, at
www.diamondcorp.plc.uk.
Operational update
The Board and management are pleased to report that despite the
four day Section 54 shutdown, announced on 13 October, mining
activities in October operated close to plan. Pleasingly, ground
conditions on the 310m level are improving as trough blasting moves
away from old workings. Diamond recoveries were also close to plan
and the next diamond sale in excess of 5000 carats is expected to
be completed at the end of November.
With the continuing ramp up in production tonnage, the Board and
management anticipate the Lace mine to reach commercial production
in the early part of 2017.
Board changes and major shareholder support
Concurrent with obtaining the financing facility ("Facility")
with the Company's major shareholder, Rasmala plc ("Rasmala")
(announced on 20 October), a number of board changes were
instituted aimed at strengthening corporate governance and
providing the Company's executive management team with additional
support and financial management experience required to
successfully implement its mine development plan. This included the
appointment of Interim Non-Executive Chairman Chris Ellis and
Rasmala's finance director, Neil McDougall as Non-Executive
Director. Over the coming period the Board will consider the
additional appointment of an independent non-executive director
with specific financial and operational mining experience.
Financing
On 28 October, the Board posted a circular to shareholders
convening a General Meeting of the Company to take place on 16
November 2016, with the purpose of granting the Directors of the
Company the necessary authority to issue such new shares to Rasmala
should they opt, pursuant to the terms of the Facility, to convert
the outstanding principal amounts under the Facility, as well as
increase the general authorities to issue further equity securities
in addition to those required for the purposes of the Facility.
As previously announced, these authorities are necessary to
assist the Company in raising sufficient additional capital in the
near term to cover the anticipated cash required to fund operations
through to commercial production. The Company has engaged PWC to
assist with the review and development of the Company's financial
projections in this regard.
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 56 216 1300
Chris Ellis, Interim Non-Executive Chairman
Tel: +44 (0) 20 3151 0970
UK Broker & Nomad
Panmure Gordon (UK) Limited
Adam James/ Atholl Tweedie
Tel: +44 20 7886 2500
JSE Designated Advisor
Sasfin Capital (a division of Sasfin Bank Limited)
Megan Young
Tel: +27 11 445 8068
SA Corporate Advisor
Qinisele Resources Proprietary Limited
Dennis Tucker/Andrew Brady
Tel: +27 11 883 6358
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) No 596/2014
("MAR").
This information is provided by RNS
The company news service from the London Stock Exchange
END
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