DCP.L Regulatory News (DCP)

20 October 2016

DiamondCorp plc

AIM share code: DCP & JSE share code: DMC

ISIN: GB00B183ZC46

(Incorporated in England and Wales)

(Registration number 05400982)

(SA company registration number 2007/031444/10)

("DiamondCorp", "the Group" or "the Company")

NEW FINANCING FACILITY Totalling £700,000

Board Changes

DiamondCorp plc, the Southern Africa focussed diamond mine development and exploration company, is pleased to announce that, following the accelerated financing discussions as previously announced, the Company has entered into a Shariah-compliant secured convertible financing facility (the "Facility") with Rasmala plc ("Rasmala"), a leading independent investment manager and shareholder in the Company.

Financing Facility

The Company and Rasmala have agreed to the drawdown by DiamondCorp of two tranches under the Facility, for a total principal amount of £700,000. The first of the tranches (the "First Tranche"), in the amount of £400,000, is to be drawn down immediately. The second of the tranches (the "Second Tranche"), in the amount of £300,000, is anticipated to be drawn down in the near term.

The Facility will mature on 15 December 2016, with the option for early repayment at DiamondCorp's discretion. The Facility is to be repaid either in cash or convertible at Rasmala's discretion on maturity of the Facility (or earlier in certain circumstances as detailed below) into new ordinary shares at the equivalent of a 30 per cent. discount to the average daily volume weighted average price of the Ordinary Shares across each trading day from the date of the agreement of the Facility to the date of conversion. DiamondCorp will pay a markup on the commodities underpinning the Facility (whose value is equal to the principal drawn down) at an equivalent rate of 15 per cent per annum during the eight week term. The Facility is secured against up to 5,000 carats of diamonds currently held in inventory and/or to be produced from operations. Further details of the Facility terms are provided below.

The proceeds of the Facility will satisfy the Company's immediate term funding requirement of not less than approximately £500,000, and shall be utilised for working capital purposes, which, as per previous announcements, the Company urgently required in order to continue trading as a going concern in the immediate term.

Board Changes

The Company also announces the following Board changes pursuant to the terms of the Facility:

Euan Worthington, current Chairman of DiamondCorp, has resigned from the Board, effective immediately, but shall remain as an employee of the Company for the immediate future in order to ensure an orderly handover of his responsibilities.

Chris Ellis, current Non-Executive Director of DiamondCorp, shall shortly be formally appointed as Independent Interim Non-Executive Chairman and on or by 31 October 2016. It is currently intended that Mr Ellis' appointment shall be on an interim basis to oversee the formal sale process as announced on 18 October 2016 ("Formal Sale Process").

Rasmala has been granted the right to appoint an individual to the Board of DiamondCorp, subject to satisfactory completion of terms and in accordance with applicable rules and regulations. The right by Rasmala is in addition to the continued role of Michael Toxvaerd as Non-Executive Director of both DiamondCorp and Rasmala.

Further announcements in relation to the forthcoming changes to the Board shall be made as appropriate.

Financial and Corporate Update

As also previously announced, and notwithstanding entry into the Facility, the Company requires an additional equity and/or debt financing of c.£2.5 to £3.0 million in the near term to cover the anticipated cash required to fund operations through to commercial production. There can however be no certainty that the Company will subsequently secure the necessary funding solutions to meet its longer term financial requirements.

Pursuant to the Formal Sale Process, as entered into on 18 October 2016, the Board continues to explore all options available to the Company in parallel with its discussions to secure additional funding, including a corporate transaction such as a merger with or offer for the Group by a third party or a sale of the Group's businesses.

Consequently, and also pursuant to the terms of the Facility and in accordance with Rule 21.1 of the Takeover Code (the "Code"), it is the Board's intention to convene a General Meeting as soon as possible in order to seek shareholders' approval to provide the Board with increased authorities to, inter alia, allot and issue equity securities and to dis-apply statutory pre-emption rights in the event of a requested conversion of the Facility (in excess of the current authorised share capital). The passing of the requisite resolutions are a condition of the Facility. A further announcement in relation to the publication of the circular to shareholders, and notice of General Meeting, is due to be made on or prior to 31 October 2016.

Paul Loudon, CEO, commented, "We are pleased to have secured this new financing facility, which will enable us to sustain our operations at the Lace diamond mine whilst we conduct our Formal Sale Process and evaluate all options available to us."

"I would like to take this opportunity to thank Euan for the contribution he has made to the Company as Chairman since its IPO in 2007, including financial support in every fund raising and a deep experience in the London mining capital markets which proved invaluable at board level. We wish him the greatest of success in his future endeavours."

"I look forward to welcoming Chris into his new position in due course and I look forward to working with him during this challenging stage of the Company's development."

Further Terms of the Facility and Regulatory Disclosures

The Facility is structured as a Shariah-compliant commodity murabaha agreement with the option to convert.

Under the terms of the Facility, DiamondCorp will pay a markup on the commodities underpinning the Facility (whose value is equal to the principal drawn down) at an equivalent rate of 15 per cent per annum during the eight week term (payable in either cash or new DiamondCorp ordinary shares at Rasmala's discretion). In the event of a delay payment, the Company must pay a daily delay payment from the due date to the date of actual payment on the overdue amount at a rate of 2 per cent. per annum in addition to the Facility rate of 15 per cent. per annum. This penalty is structured in a Shariah-compliant manner.

The Company is required pursuant to the terms of the Facility to convene a General Meeting as soon as possible, with such circular published on or prior to 31 October 2016, to seek to obtain shareholder approval to increase authorities to a level considered sufficient to fulfil its obligations to issue Ordinary Shares to Rasmala pursuant to the terms of the Facility.

Rasmala shall be precluded from issuing a conversion notice for any number of new ordinary shares as shall (i) exceed the current authorised share capital of the Company unless and until increased by way of the passing of a resolution(s) at a general meeting of the Company; (ii) result in Rasmala holding in excess of 29.99 per cent of the issued ordinary shares of DiamondCorp as at the conversion date; and/or otherwise trigger an obligation to make a mandatory offer of the Company.

The outstanding principal amounts of the Facility drawn down by DiamondCorp under the Facility may become repayable (in either cash or new DiamondCorp ordinary shares at Rasmala's discretion) ahead of maturity of the Facility in the event that, and at Rasmala's discretion, the Company: (i) has released one or more announcements pursuant to Rule 2.4 of the Code ('the announcement of a possible offer') and/or (ii) has released one or more announcements pursuant to Rule 2.7 of the Code ('the announcement of a firm intention to make an offer').

Rasmala shall put in place appropriate confidentiality provisions to ensure that members of its board and staff who, under all applicable rules and regulations, are classified as insiders for the purpose of inside information in relation to the Company are appropriately segregated from the team authorised to deal with the Facility and the arrangements arising thereunder.

An administration fee of £25,000 in respect of the First Tranche has become payable to Rasmala, and a further administration fee of £25,000 in respect of the Second Tranche will be paid by the Company pro rata to the total amount drawn down under the Facility relative to the total principal amount. The Company shall also reimburse appropriate legal costs incurred.

The First Tranche of the Facility is collateralised against 2,800 carats of the Company's current diamond inventory. The Second Tranche of the Facility is to be collateralised against an additional 2,200 carats, in aggregate, of the Company's future diamond inventory, to be supplied in instalments every week from Lace mine production.

The Facility provides for customary events of default. On and at any time after the occurrence of an event of default, Rasmala may at its absolute discretion by written notice to the Company, declare all outstanding amounts under the Facility to be immediately due and payable, together with any other sums then owed by the Company to Rasmala.

Where a company enters into a related party transaction, under the AIM Rules for Companies (the "AIM Rules") the independent directors of the company are required, after consulting with the company's nominated adviser, to state whether, in their opinion, the transaction is fair and reasonable in so far as its shareholders are concerned.

By virtue of both Rasmala's current interests in the Company, which represent approximately 11.6% of the Company's issued share capital, and current Board representation, it is considered to be a "related party" as defined under the AIM Rules and accordingly the Facility is considered to be a "related party transaction" for the purposes of Rule 13 of the AIM Rules.

The independent directors of DiamondCorp (being each of the directors with the exception of Michael Toxvaerd, who is also a director of Rasmala), having consulted with the Company's nominated adviser, Panmure Gordon (UK) Limited, consider that the terms of the Facility are fair and reasonable insofar as the Company's shareholders are concerned.

Contact details:

DiamondCorp plc

Paul Loudon, Chief Executive

Tel: +27 56 216 1300

Chris Ellis, Interim Chairman-designate

Tel: +44 (0) 20 3151 0970

UK Broker & Nomad

Panmure Gordon (UK) Limited

Adam James/Karri Vuori/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"). Market soundings, as defined in MAR, were taken in respect of the Facility, with the result that certain persons became aware of certain inside information in relation to the Facility, as permitted by MAR. That inside information is set out in this announcement. Therefore, those persons that received inside information in relation to the Facility in a market sounding are no longer in possession of such inside information relating to the Company and its securities.

The notification below, made in accordance with the requirements of the EU Market Abuse Regulation, provides further details in respect of Michael Toxvaerd's interest in the Facility described above. Michael Toxvaerd is a director of Rasmala and of DiamondCorp.

Michael Toxvaerd