3 Dec 2010 12:35
Firestone Diamonds plc
Placing to raise £13 million
LONDON: 3 December, 2010
Firestone Diamonds plc, ("Firestone" or "the Company"), the AIM-quoted diamond mining and exploration company (ticker: AIM:FDI), today announces that it has conditionally placed 52,000,000 new ordinary shares of 20 pence each ("Ordinary Shares") in the Company (the "Placing Shares") with institutional and other investors through Mirabaud Securities LLP ("Mirabaud") at a price of 25 pence per Placing Share (the "Placing Price") to raise £13 million before expenses (the "Placing"). The Placing Price is the closing middle market price of 25 pence per Ordinary Share on 2 December 2010.
HIGHLIGHTS
• | Placing to raise £13 million through the issue of 52,000,000 new Ordinary Shares at current market price | |
• | Proceeds to enable accelerated development of the Main Pipe at Liqhobong | |
| - | Plant 1 now scheduled to commence production in Q1 2011 |
| - | Plant 1 production capacity to be tripled to 1.3 million tonnes per annum by Q4 2011 |
• | Remaining work on the Definitive Feasibility Study for Plant 2 to be undertaken in 2011 | |
| - | Target production capacity of 4.2 million tonnes per annum |
| - | Plant 2 construction decision expected to be made in 2012 |
Philip Kenny, CEO of Firestone Diamonds, commented: "We are very pleased to have received significant support from existing and new institutional shareholders for this financing. We believe that the Liqhobong Mine has the potential to be a highly profitable mining operation and the Company is now well financed to restart production and commence work on the planned Plant 1 expansion programme in Q1 2011. With BK11 in full production in 2011 and the expanded Plant 1 at Liqhobong expected to reach full production capacity in Q4 2011, Firestone is very well positioned to reach its target of producing 1 million carats per annum by 2014."
The placing
Of the Placing Shares, 27,215,000 Ordinary Shares (the "First Placing Shares") have been placed conditional, inter alia, upon the First Placing Shares being admitted to trading on AIM. Application has been made for the First Placing Shares to be admitted to trading on AIM ("First Admission"), and it is expected that trading will commence at 8.00 am on 9 December 2010. The First Placing Shares will represent approximately 9 per cent. of the Company's enlarged issued share capital immediately following First Admission.
The balance of the Placing Shares, comprising 24,785,000 Ordinary Shares (the "Second Placing Shares"), have been placed conditional, inter alia, on the Company securing approval from its shareholders at the annual general meeting that has been convened for 23 December 2010 (the "AGM") for the general allotment of securities and disapplication of pre-emption rights (the "Approvals"), and upon the Second Placing Shares being admitted to trading on AIM ("Second Admission"). Notice convening the AGM was sent to shareholders on 30 November 2010. Application will be made for the Second Placing Shares to be admitted to trading on AIM, and subject to the Approvals being granted, it is expected that trading will commence at 8.00 am on 24 December 2010. On the assumption that the First Placing Shares are admitted to AIM, the Second Placing Shares will represent approximately 9 per cent. of the Company's enlarged issued share capital immediately following Second Admission.
The proceeds of the Placing will be used to accelerate the Company's plans to recommence production and to expand the production capacity of Plant 1 at the Liqhobong Mine in Lesotho, as detailed in the Company's announcement on 24 November 2010, and for general working capital purposes.
Liqhobong development plans
Following completion of the Placing, the Company will accelerate its plans to recommence production at the Main Pipe at Liqhobong, which is now expected to take place in Q1 2011. Planning work has already commenced for the mobilisation of the required staff, equipment and contractors to site in January 2011.
Design work for the proposed expansion of Plant 1, which will triple its production capacity to 1.3 million tonnes per annum ("mtpa"), is at an advanced stage and procurement of long lead time items has now commenced. The Company expects work on the expansion programme to commence in Q1 2011 and to be completed in Q4 2011. At full capacity of 1.3 mtpa, Plant 1 is expected to generate revenue of $36 million per annum.
The remaining work required on the Definitive Feasibility Study ("DFS") for the construction of a 4.2 mtpa plant (Plant 2) will be undertaken in 2011. The specifications and design for Plant 2 will be finalised using data from the operation of Plant 1. It is expected that the decision to commence construction of Plant 2 will be made in 2012, with initial production from Plant 2 expected to commence in 2013.
Placing Details
Pursuant to the terms of a placing agreement between the Company and Mirabaud (the "Placing Agreement"), Mirabaud has agreed to use its reasonable endeavours, as agents for the Company, to place the Placing Shares at the Placing Price with certain institutional and other investors. In consideration for providing such services, the Company has agreed to pay Mirabaud a commission of 5 per cent. of the total gross proceeds raised under the Placing.
The obligations of Mirabaud in respect of the First Placing Shares under the Placing Agreement are conditional, inter alia, upon admission of the First Placing Shares to trading on AIM becoming effective in accordance with the AIM Rules by not later than 9 December 2010 (or such later time as the Company and Mirabaud may agree, being not later than 16 December 2010).
The obligations of Mirabaud in respect of the Second Placing Shares under the Placing Agreement are conditional, inter alia, upon the passing of the relevant resolutions at the AGM and admission of the Second Placing Shares to trading on the AIM becoming effective in accordance with the AIM Rules by not later than 24 December 2010 (or such later time as the Company and Mirabaud may agree, being not later than 31 December 2011).
The Placing Agreement contains warranties from the Company in favour of Mirabaud in relation to, inter alia, the accuracy of the information contained in this announcement, the Company's investor presentation and certain other matters relating to the Group and its business. In addition, the Company has agreed to indemnify Mirabaud in relation to certain liabilities they may incur in respect of the Placing, except in certain limited circumstances.
Mirabaud has rights, at any time prior to the Second Admission, to terminate its obligations under the Placing Agreement (to the extent not already performed) in certain limited circumstances. Such circumstances include, inter alia, material breach by the Company of the terms of the Placing Agreement or any warranty therein being untrue, inaccurate or misleading in any material respect.
The First Placing Shares and the Second Placing Shares will, when issued, rank pari passu in all respects with the existing Ordinary Shares including the right to receive any dividends and other distributions declared following First Admission and Second Admission (as applicable).
Issued Share Capital
Following admission to AIM of the First Placing Shares, the total issued ordinary share capital of the Company will be 295,520,114 Ordinary Shares, all of which have voting rights.
A copy of the Company's current investor presentation is available on the Company's website, www.firestonediamonds.com. For further information, visit the Company's web site or contact:
Philip Kenny, Firestone Diamonds
| +44 20 8834 1028/+44 7831 324 645 |
Rory Scott, Mirabaud Securities (Broker)
| +44 20 7878 3360 |
Alexander Dewar, Brewin Dolphin (Nominated Adviser)
| +44 131 529 0276 |
Jos Simson / Leesa Peters, Conduit PR
| +44 20 7429 6603/+44 7899 870 450 |
Background information on Liqhobong:
Firestone has a 75% interest in the Liqhobong Mine, where a resource of 91 million tonnes at an average grade of 34 cpht containing 31 million carats has been identified at the Main Pipe. With an average estimated diamond value of $86/carat and a contained value of approximately $2.7 billion, Liqhobong is considered by the Company to be one of the most attractive undeveloped kimberlites in the world. Initial mine planning and pit optimisation studies on Liqhobong indicate that open pit mining operations can be undertaken to a depth of 390 metres and would result in the mining of approximately 60 million tonnes of kimberlite and 19 million carats over a period of approximately 17 years. No waste stripping will be required for the first 9 million tonnes.
Background information on Firestone Diamonds:
Firestone Diamonds plc is an international diamond mining and exploration company with operations focused on Lesotho and Botswana. Firestone operates the Liqhobong Mine in Lesotho and the BK11 Mine in Botswana. Firestone 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.
DISCLAIMER
Brewin Dolphin Limited ("Brewin Dolphin") is acting as nominated adviser to the Company for the purpose of the AIM Rules. Mirabaud, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for the Company in relation to the Placing. Neither Mirabaud nor Brewin Dolphin is acting for any other person in connection with the matters referred to in this announcement and they will not be responsible to anyone other than the Company for providing the protections afforded to clients of Mirabaud or Brewin Dolphin for giving advice in relation to the matters referred to in this announcement.
This announcement has been issued by the Company and is the sole responsibility of the Company.
This announcement does not constitute a prospectus relating to the Company and has not been approved by the UK Listing Authority, nor does it constitute or form any part of any offer or invitation to purchase, sell or subscribe for, or any solicitation of any such offer to purchase, sell or subscribe for, any securities in the Company under any circumstances, and in any jurisdiction, in which such offer or solicitation is unlawful. Accordingly, copies of this announcement are not being and must not be mailed or otherwise distributed or sent in or into or from the United States, Canada, Australia or Japan or any other jurisdiction if to do so would constitute a violation of the relevant laws of, or require registration thereof in, such jurisdiction or to, or for the account or benefit of, any United States, Canadian, Australian or Japanese person and any person receiving this announcement, (including, without limitation, custodians, nominees and trustees) must not distribute or send it, in whole or in part, in or into or from the United States, Canada, Australia or Japan.