AMI.L Regulatory News (AMI)

23 Oct 2006 16:08

Sierra Leone Diamond Company Ld23 October 2006 Immediate Release 23 October 2006 Sierra Leone Diamond Company Limited ("SLDC" or the "Company") Related Party Transaction Sierra Leone Diamond Company Limited (AIM: SLD), the diamond exploration companywith licence interests wholly focused in the country of Sierra Leone, announcesa related party transaction. Sierra Leone Diamond Company announces that on 17 October 2006 it entered into aloan agreement with Timis Diamond Corporation Limited ("TDC") (the "LoanAgreement"). TDC owns 34.6% of the issued and fully paid Common Shares ofUS$0.01 each of the Company. Under the terms of the Loan Agreement, TDC has agreed to lend to SLDC the sum ofUS$ 3.1 million (the "Loan"). The Loan is repayable on demand on 17 April 2007or at any time thereafter (as determined by TDC). Interest on the Loan accruesat the rate of 1% plus the annual rate of interest equal to the arithmetic meanof the rates offered to the lending banks in the London interbank market at11a.m. on 17 October 2006 for the offering of deposits in US Dollars for theamount of the Loan for 12 months. The proceeds from the loan will fund the purchase of additional plant andmachinery to enable the Company to advance its production capacity during theforthcoming dry season and thereby address the inefficiencies of productionduring the rainy season. The Directors consider the loan to be an efficientsource of funds and provides an opportunity to accelerate capital expenditure atan appropriate time in the development of SLDC's mining operations. It isexpected that the loan will be repaid out of the Company's future earnings. The Loan is secured by way of a separate legal charge in favour of the trusteeof The Timis Trust over the plant and equipment purchased from the proceeds ofthe Loan. Frank Timis, the non-executive chairman of SLDC, is a beneficiary of The TimisTrust, the sole trustee of which is CA Fiduciary Services Limited. CA FiduciaryServices Limited, in its capacity as a trustee of The Timis Trust, wholly ownsTDC which, as mentioned above, owns 34.6% of the issued and fully paid CommonShares of US$0.01 each of the Company. The Loan is a therefore a related partytransaction according to the AIM Rules. Having consulted with the Company'snominated adviser, Canaccord Adams Limited, the directors of SLDC, with theexception of Frank Timis who is a related party, consider that the terms of thetransaction are fair and reasonable insofar as its shareholders are concerned. For further information, please contact: Sierra Leone Diamond Company Limited 01442 257 246David Gadd-Claxton, Chief Executive OfficerGordon Stein, Interim Chief Financial Officer Buchanan Communications 020 7466 5000Bobby MorseBen Willey This information is provided by RNS The company news service from the London Stock Exchange