FDI.L Regulatory News (FDI)

RNS Number : 6900P

Firestone Diamonds PLC

21 July 2010

 

 

 

 

Firestone Diamonds PLC

21 July 2010

 

21 July 2010

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF ANY SUCH JURISDICTION

 

Recommended All Share Offer by Firestone Diamonds Plc for Kopane Diamond Developments plc (to be effected by means of a Scheme of Arrangement)

 

Highlights

 

·; The boards of Kopane and Firestone are pleased to announce today that they have reached agreement on the terms of a unanimously recommended all share offer by Firestone for Kopane on the basis of 0.4657 of a New Firestone Share for every 1 Kopane Share.

 

·; The Acquisition is to be effected by means of a scheme of arrangement under Part 26 of the Companies Act and values each Kopane Share at 17 pence, based on a Firestone share price of 36.5 pence.

 

·; The Enlarged Group will benefit from a diversified portfolio of production, development and exploration stage diamond projects. The portfolio is expected to provide cash flow from Firestone's new BK11 kimberlite mine in Botswana, significant potential future cash flows from the exploitation of the substantial resource that has been identified at the Main Pipe at Kopane's Liqhobong Project in Lesotho and from Firestone's Jwaneng Tailings Project in Botswana, and significant exploration potential from Firestone's portfolio of 107 other kimberlites in the Orapa and Tsabong kimberlite fields in Botswana.

 

·; Liqhobong is believed by the Firestone Directors to be the third largest undeveloped kimberlite resource as measured by contained carats and the fourth largest as measured by resource tonnage, and is considered by the Firestone Directors to be one of the most attractive undeveloped kimberlites in the world.

 

·; The Acquisition represents:

 

o a premium of 33.33 per cent. to the Closing Price of a Kopane Share of 12.75 pence on 20 July 2010 (being the Business Day prior to this Announcement);

o a premium of 44.68 per cent. to the Closing Price of a Kopane Share of 11.75 pence on 9 February 2010 (being the Business Day prior to the announcement by Kopane regarding a possible offer for Kopane); and

o a premium of 42.86 per cent. to the volume weighted average price of a Kopane Share of 11.90 pence over the thirty business days preceding the date of this Announcement.

 

·; Based on the current Kopane issued ordinary share capital, the number of New Firestone Shares to be issued in connection with the Acquisition will be 140,413,465. Assuming no further Kopane Shares or Firestone Shares are issued in the period between the date of this Announcement and the Effective Date, immediately following the Effective Date approximately 52 per cent. of the enlarged issued ordinary share capital of Firestone will be held by former Kopane Shareholders and approximately 48 per cent. will be held by existing Firestone Shareholders.

 

·; Based on the Kopane Fully Diluted Share Capital, the number of New Firestone Shares to be issued in connection with the Acquisition would be 144,268,053 and were all outstanding Kopane Options to be exercised prior to the Effective Date immediately following the Effective Date approximately 53 per cent. of the enlarged issued ordinary share capital of Firestone would be held by former Kopane Shareholders and approximately 47 per cent. would be held by Firestone Shareholders.

 

·; The Acquisition will be conditional on, amongst other things, the approval by Firestone Shareholders and the approval by Kopane Shareholders.

 

·; The Kopane Directors, who have been so advised by finnCap, consider the terms of the Acquisition to be fair and reasonable. In providing its advice, finnCap has taken into account the commercial assessments of the Kopane Directors.

 

·; The Firestone Directors, who have been so advised by Evolution Securities, consider the terms of the Acquisition to be fair and reasonable. In providing its advice, Evolution Securities has taken into account the commercial assessments of the Firestone Directors.

 

·; The Kopane Directors intend unanimously to recommend that Kopane Shareholders vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting.

 

·; The Firestone Directors intend unanimously to recommend that Firestone Shareholders vote in favour of the Firestone Resolutions at the Firestone General Meeting.

 

·; None of the Kopane Directors hold any Kopane Shares. However, Firestone has received an irrevocable undertaking to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from Obtala, a company associated with Francesco Scolaro, the Chairman of Kopane, which holds directly and indirectly 48,695,000 Kopane Shares representing approximately 16.15 per cent. of Kopane's existing issued ordinary share capital. Firestone has also received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from certain other Kopane Shareholders representing, in aggregate, approximately 19.58 per cent. of Kopane's existing issued ordinary share capital. In total Firestone has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from Kopane Shareholders representing approximately 35.73 per cent. of Kopane's existing issued ordinary share capital.

 

·; Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone General Meeting from each of the Firestone Directors who hold 2,000,363 Firestone Shares, representing approximately 1.56 per cent. of the existing issued share capital of Firestone. Firestone and Kopane have also received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone General Meeting from certain other Firestone Shareholders representing, in aggregate, approximately 28.27 per cent. of Firestone's existing issued ordinary share capital. In total Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone General Meeting from Firestone Shareholders representing approximately 29.83 per cent. of Firestone's existing issued ordinary share capital.

 

·; The Scheme Document setting out further details of the Acquisition and the procedures to be followed in connection with the implementation of the Scheme will be posted to Kopane Shareholders as soon as reasonably practicable. The Acquisition is expected to be completed on or about 30 September 2010.

 

·; For Firestone, the Acquisition constitutes a reverse takeover under the AIM Rules and requires Firestone shareholder approval. An AIM admission document setting out further details of the Enlarged Group and convening the Firestone General Meeting will be posted to Firestone Shareholders as soon as reasonably practicable.

 

James F Kenny, Chairman of Firestone, commented:

 

"We are very pleased with the agreement that we have reached with Kopane, which the Firestone Board will be unanimously recommending to Firestone shareholders for their approval. Firestone recently became one of only three listed kimberlite producers worldwide outside of the major mining companies, and the opportunity to acquire a kimberlite with the potential of Liqhobong is one that we believe complements our broad portfolio of exploration and development projects in Botswana and offers Firestone shareholders very significant benefits. Liqhobong is substantially larger than BK11, is at the final stages of a definitive feasibility study, which is the precursor for mine development, and is considered by the Firestone Board to be one of the most attractive kimberlites that has not yet been commercially developed. The Firestone Board believes that the acquisition of Kopane by Firestone will improve Firestone's prospects and enable the Enlarged Group to become one of the leading mid-tier diamond producers, with the potential to produce in excess of 1 million carats per annum."

 

Frank Scolaro, Chairman of Kopane, commented:

 

"We are delighted with the agreement that we have reached with Firestone, which the Kopane Board will be unanimously recommending to Kopane shareholders for approval. The Kopane Board believes the value that the Offer from Firestone places on Kopane is fair in current market conditions and that the all share Offer will afford Kopane shareholders the opportunity of benefiting from the attractive growth profile of Firestone's substantially broader asset base of diamond projects as well as the likely acceleration of the development of Liqhobong through the Enlarged Group's resources and operational capabilities. The Kopane Board believes that the synergies that can be achieved by combining the two groups will create greater value for shareholders and we look forward to an exciting next phase for the Enlarged Group."

 

 

Expected timetable of principal events

Posting of the Scheme Document	13 August 2010
Posting of Firestone Circular	13 August 2010
Firestone GM	3 September 2010
Court Meeting	6 September 2010
Kopane GM	6 September 2010
Court hearing to sanction the Scheme	27 September 2010
Reduction Record Time	6.00 p.m. on 28 September 2010
Court hearing to sanction the Reduction of Capital	29 September 2010
Scheme Record Time	6.00 p.m. on 29 September 2010
Effective Date of the Scheme	30 September 2010
Cancellation of trading in Kopane Shares on AIM	8.00 a.m. on 30 September 2010
Cancellation of trading in Existing Firestone Shares on AIM	8.00 a.m. on 30 September 2010
Admission and recommencement of dealings on AIM in Existing Firestone Shares and commencement of dealings on AIM in New Firestone Shares and crediting of New Firestone Shares to CREST accounts	8.00 a.m. on 30 September 2010
Latest date for despatch of share certificates in respect of New Firestone Shares	21 October 2010

 

The summary forms part of and should be read in conjunction with the full text of this Announcement and Appendices.   The Offer will be subject to the Conditions and further terms set out in Appendix I to this Announcement. Appendix II of this Announcement contains information on sources and bases of information used in this Announcement. Appendix III of this Announcement contains details of the irrevocable undertakings received by Firestone and Kopane in connection with the Acquisition. Appendix IV defines certain terms used in this Announcement (including this summary).

 

Analyst presentation

 

Wednesday 21st July 2010

 

Firestone Diamonds plc will be hosting an analyst presentation today at 2.30pm (BST) at Conduit PR's offices; 76 Cannon Street, London EC4N 6AE.

 

A teleconference facility will also be available to dial into the conference call. If you would like to attend the presentation or participate in the conference call please contact Jos Simson at Jos@conduitpr.com or on +44 (0) 207 429 6603.

 

A webcast of the presentation will be available on the Company's website after 4pm today.

 

Investor lunches

 

Friday 23rd July & Tuesday 27th July 2010

 

Firestone Diamonds will be hosting investor lunches for interested parties at 12.15 on Friday 23rd July and Tuesday 27th July 2010 in the City of London. If you would like to attend one of the lunch presentations please contact Emily Fenton at Emily@conduitpr.com or on +44 (0) 207 429 6608.

 

Investor Contacts: Firestone

 

Philip Kenny

+ 44 20 8834 1028

Tim Wilkes

+27 78 457 6623

 

Investor Contacts: Kopane

 

Frank Scolaro, Chairman

James Cable, Finance Director

+44 20 7963 9590

 

Evolution Securities, Financial Adviser, Rule 3 Adviser and Corporate Broker to Firestone

 

Simon Edwards / Tim Redfern

+44 20 7071 4330 / 4312

 

Brewin Dolphin, Nominated Adviser to Firestone

 

Alexander Dewar / Derrick Lee

+44 131 529 0276

 

finnCap, Financial Adviser, Rule 3 Adviser and Nominated Adviser to Kopane

 

Matthew Robinson / Sarah Wharry / Ed Frisby

+44 20 7600 1658

 

Conduit PR, media contacts for Firestone

 

Jos Simson / Leesa Peters

+44 20 7429 6603 / +44 7899 870 450

 

Threadneedle Communications,media contacts for Kopane

 

Laurence Read / Beth Harris

+ 44 20 7653 9850

 

This Announcement of which the above summary forms part is not intended to, and does not, constitute or form any part of an offer to sell or an invitation to purchase or subscribe for any securities or the solicitation of any vote for approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this Announcement in the United States or any jurisdiction in contravention of applicable law. The Offer will be made solely on the basis of the Scheme Document, which will contain the full terms and conditions of the Acquisition. The Scheme Document will be posted to those shareholders able to receive it in due course. Any response in relation to the Acquisition should be made only on the basis of the information in the Scheme Document.

 

Kopane Shareholders receiving the formal documentation in relation to the Acquisition are advised to read it carefully, once it has been dispatched as it will contain important information.

 

The availability of the Offer to Kopane Shareholders who are not resident in and citizens of the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. Further details in relation to overseas shareholders will be contained in the Scheme Document.

 

To the extent that the Acquisition is effected by way of the Scheme, the New Firestone Shares to be issued to Kopane Shareholders under the Scheme have not been, and will not be, registered under the US Securities Act, or under the securities laws of any state, district or other jurisdiction of the United States, the Republic of South Africa, Singapore, Canada or Japan.

 

If the Acquisition is carried out by way of a Takeover Offer, it will not be made, directly or indirectly, in or into the United States, Republic of South Africa, Singapore, Canada or Japan and will not be capable of acceptance from or within the United States, Republic of South Africa, Singapore, Canada or Japan. Accordingly, copies of this Announcement and all documents relating to the Takeover Offer will not be, and must not be, mailed or otherwise forwarded, distributed or sent in, into or from the United States, Republic of South Africa, Singapore, Canada or Japan. If the Acquisition is carried out by way of a Takeover Offer, the New Firestone Shares to be issued in connection with such Takeover Offer have not been and will not be registered under the Securities Act or under the securities laws of any state, of the United States and subject to certain exceptions, the Takeover Offer will not be made in or into the United States. There will be no public offering of the New Firestone Shares in the United States and the New Firestone Shares may not be offered, sold or delivered, directly or indirectly, in or into the United States, other than pursuant to an exemption from the registration requirements of the US Securities Act.

 

These written materials are not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act or an exemption therefrom. Firestone has not registered and does not intend to register any of the New Firestone Shares under the US Securities Act.

 

To the extent that the Acquisition is effected by way of the Scheme, it is expected that the New Firestone Shares will be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. Any offer of New Firestone Shares made by way of the Scheme will be made by means of the Scheme Document that may be obtained from Kopane which will contain detailed information about the Acquisition, Kopane, Firestone and their management, as well as financial and other important information. Any Kopane Shareholder in the United States that is an "affiliate" of Firestone under applicable US securities laws either within the 90 days prior to the implementation of the Scheme or following implementation of the Scheme will be subject to certain restrictions on the sale of New Firestone Shares received pursuant to the Scheme.

 

Evolution Securities and Brewin Dolphin, which are authorised and regulated in the United Kingdom by the Financial Services Authority, are acting exclusively for Firestone and no-one else in connection with the matters described in this Announcement and will not be responsible to anyone other than Firestone for providing the protections afforded to clients of Evolution Securities or Brewin Dolphin or for providing advice in relation to the Acquisition or any other matter described in this Announcement.

 

finnCap, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Kopane and no-one else in connection with the matters described in this Announcement and will not be responsible to anyone other than Kopane for providing the protections afforded to clients of finnCap nor for providing advice in relation to the Acquisition or any other matter described in this Announcement.

 

The Firestone Directors accept responsibility for all the information contained in this Announcement except for that information for which the Kopane Directors accept responsibility (being information relating to Kopane, the Kopane Group and the Kopane Directors). To the best of the knowledge and belief of the Firestone Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

The Kopane Directors accept responsibility for all information in this Announcement relating to Kopane, the Kopane Group and the Kopane Directors. To the best of the knowledge and belief of the Kopane Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

Forward-Looking Statements

 

This document contains certain forward‑looking statements with respect to the financial condition, results of operations and business of Firestone, Kopane and the Enlarged Group and certain plans and objectives of the Firestone Directors and the Kopane Directors with respect thereto. These forward‑looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward‑looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the Firestone Directors and/or the Kopane Directors in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward‑looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward‑looking statements in this Announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward‑looking statements. Although the Firestone Directors and/or the Kopane Directors believe that the expectations reflected in such forward‑looking statements are reasonable, they can give no assurance that such expectations will prove to have been correct and assume no obligation to update or correct the information contained in this document and Firestone and Kopane therefore caution investors not to place undue reliance on these forward‑looking statements which speak only as at the date of this Announcement.

Nothing in this Announcement is intended to be a profit forecast and the statements in this Announcement should not be interpreted to mean that the earnings per Firestone Share or Kopane Share for the current or future financial periods will necessarily be greater than those for the relevant preceding financial period.

The statements contained herein are made as at the date of this Announcement, unless some other time is specified in relation to them, and the issue of this Announcement shall not give rise to any implication that there has been no change in the facts set forth herein since that date. Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of Firestone or Kopane except where otherwise stated.

Dealing disclosure requirements

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the offer period and, if later, following the announcement in which any paper offeror is first identified.

 

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement date of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which the paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree or of a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an interest in relevant securities of the offeree company or a paper offeror they will be deemed to be a single person for the purposes of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree company, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and the offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

 

Firestone is a paper offeror for the purposes of the above disclosure requirements.

 

Publication on websites

 

A copy of this Announcement and certain information published or otherwise made available by Firestone in connection with the Acquisition is available at:

http://www.firestonediamonds.com/

 

A copy of this Announcement and certain information published or otherwise made available by Kopane in connection with the Acquisition is available at:

http://www.kopanediamonds.com/s/Home.asp 

 

Rule 2.10 Disclosure

 

In accordance with Rule 2.10 of the Code, Firestone has 127,891,637 ordinary shares of 20p each in issue with ISIN GB0003915336. Kopane has 301,511,651 ordinary shares of 1p each in issue with ISIN GB0002998978.

 

 

 

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, IN OR INTO THE UNITED STATES OR ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF ANY SUCH JURISDICTION

 

21 July 2010

 

Recommended All Share Offer by Firestone Diamonds Plc for Kopane Diamond Developments plc (to be effected by means of a Scheme of Arrangement)

 

1. Introduction

 

The Firestone Directors and the Kopane Directors are pleased to announce that they have reached agreement on the terms of a unanimously recommended all share Offer by Firestone for the entire issued and to be issued ordinary share capital of Kopane. It is proposed that the Acquisition will be implemented by way of a scheme of arrangement under Part 26 of the Companies Act involving a capital reduction of Kopane under section 641 of the Companies Act. The Acquisition is conditional, inter alia on sanction of the Scheme and confirmation of the Reduction of Capital by the Court, Kopane Shareholder approval and Firestone Shareholder approval.

 

The Kopane Directors, who have been so advised by finnCap, consider the terms of the Acquisition to be fair and reasonable. In providing its advice, finnCap has taken into account the commercial assessments of the Kopane Directors. Accordingly, the Kopane Directors unanimously intend to recommend Kopane Shareholders to vote in favour of the Scheme at the Court Meeting and in favour of the Kopane Resolution to be proposed at the Kopane GM.

Obtala, a company associated with Francesco Scolaro, the chairman of Kopane, which holds directly and indirectly 48,695,000 Kopane Shares representing approximately 16.15 per cent. of Kopane's issued ordinary share capital, has irrevocably undertaken to vote in favour of the Scheme and the Kopane Resolution. In addition, certain other Kopane Shareholders representing, in aggregate, approximately 19.58 per cent. of Kopane's issued ordinary share capital have irrevocably undertaken to vote in favour of the Scheme and the Kopane Resolution. In total Firestone has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from Kopane Shareholders representing approximately 35.73 per cent. of Kopane's existing issued ordinary share capital.

 

The Acquisition is classified as a reverse takeover of Firestone under the AIM Rules and therefore requires Firestone Shareholders' approval. In addition, to implement the Acquisition Firestone requires Firestone Shareholder approval in relation to the increase of its authorised share capital and to allot the New Firestone Shares which will be sought at the Firestone GM. In addition, Firestone will be seeking shareholder consent to adopt new articles of association and to disapply statutory pre-emption rights. Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone GM from each of the Firestone Directors who, directly or indirectly, hold in aggregate 2,000,363 Firestone Shares, representing approximately 1.56 per cent. of the existing issued share capital of Firestone. Firestone and Kopane have also received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone GM from certain other Firestone Shareholders who, directly or indirectly, hold in aggregate 36,151,667 Firestone Shares, representing approximately 28.27 per cent. of the existing issued ordinary share capital of Firestone. In total Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone General Meeting from Firestone Shareholders representing approximately 29.83 per cent. of Firestone's existing issued ordinary share capital.

 

2. Terms of the Acquisition

 

The Acquisition involves the acquisition by Firestone of the entire issued and to be issued ordinary share capital of Kopane and is to be effected by way of a scheme of arrangement between Kopane and Scheme Shareholders under Part 26 of the Companies Act. Under the terms of the Scheme, which will be subject to satisfaction or (where appropriate) waiver of the Conditions set out in Appendix I and to the further terms set out in Appendix I, Scheme Shareholders who are on the register of members at the Scheme Record Time will receive:

0.4657 of a New Firestone Share for every 1 Kopane Share

and so in proportion for any other number of Scheme Shares held at the Scheme Record Time. Fractions of New Firestone Shares will not be allotted or issued pursuant to the Acquisition and fractional entitlements will be rounded down to the nearest whole number of New Firestone Shares.

The terms of the Acquisition have been agreed on the basis of a price of 36.5 pence for each existing Firestone Share and a price of 17.0 pence for each Kopane Share which values the Kopane Fully Diluted Share Capital at approximately £52.7 million.

On this agreed basis, the Acquisition represents a premium of 33.33 per cent. to the Closing Price of a Kopane Share of 12.75 pence on 20 July 2010 (being the Business Day prior to this Announcement), a premium of 44.68 per cent. to the Closing Price of a Kopane Share of 11.75 pence on 9 February 2010 (being the Business Day prior to the announcement by Kopane regarding a possible offer for Kopane) and a premium of 42.86 per cent. to the volume weighted average price of a Kopane Share of 11.90 pence over the thirty business days preceding the date of this Announcement

Based on the current Kopane issued ordinary share capital, the number of New Firestone Shares to be issued in connection with the Acquisition will be 140,413,465. Assuming no further Kopane Shares or Firestone Shares are issued in the period between the date of this Announcement and the Effective Date, immediately following the Effective Date approximately 52 per cent. of the enlarged issued ordinary share capital of Firestone will be held by former Kopane Shareholders and approximately 48 per cent. will be held by existing Firestone Shareholders.

 

Based on the Kopane Fully Diluted Share Capital, the number of New Firestone Shares to be issued in connection with the Acquisition will be 144,268,053 and were all outstanding Kopane Options to be exercised prior to the Effective Date immediately following the Effective Date approximately 53 per cent. of the enlarged issued ordinary share capital of Firestone would be held by former Kopane Shareholders and approximately 47 per cent. would be held by Firestone Shareholders.

 

If the Scheme becomes effective, it will be binding on all Scheme Shareholders irrespective of whether or not they attended or voted in favour of the resolutions at the Court Meeting or the Kopane GM.

The New Firestone Shares will be issued and credited as fully paid, and on identical terms to and will rank pari passu with the Existing Firestone Shares, including the right to receive and retain all dividends and other distributions declared, paid or made on Firestone Shares after the Scheme becomes effective.

Application will be made for the New Firestone Shares to be admitted and for the Existing Firestone Shares to be re-admitted to trading on AIM.

The Acquisition will be subject to the conditions and further terms set out in the paragraphs contained in Appendix I to this Announcement and to be set out in the Scheme Document.

 

3. Background to and reasons for the Acquisition

 

Both Firestone and Kopane are diamond exploration and development companies with a geographical focus on Southern Africa. The majority of Firestone's assets are located in Botswana and Kopane's principal asset is located in Lesotho.

 

Firestone has assembled a substantial portfolio of diamond projects in Botswana and recently commenced production at its BK11 kimberlite in the Orapa region. The Firestone Board considers that Firestone's achievement in commencing production in just over three years from being granted a prospecting licence for BK11, and less than nine months after the decision was made in December 2009 to proceed with mine development, demonstrates Firestone's significant capabilities in evaluating and developing kimberlite projects. Firestone has a further 107 kimberlites in its Botswana portfolio, of which to date 29 have been proven to contain diamonds. Firestone intends to use cash flow from BK11 to accelerate the evaluation of these kimberlites with the objective of identifying additional Mineral Resources that can be developed and brought into production.

 

In addition to its exploration and development capabilities Firestone has proven experience in operating diamond projects, having successfully operated the Project Buffels toll treatment project for De Beers in South Africa. The Firestone Board has identified the toll treatment business as a relatively low risk way of generating cash flow as such projects are not dependant on rough diamond prices, thus reducing the potential impact to Firestone of any drop in rough diamond prices that could be caused by future economic or stock market volatility. Accordingly, Firestone is continuing to develop its toll treatment business and has several advanced toll treatment opportunities in both Botswana and Namibia that have the potential to generate significant cash flow for the Firestone Group.

 

Kopane's principal asset is the Liqhobong project in Lesotho, where a substantial resource of over 90Mt at an average grade of 34.3cpht containing 31 million carats has been identified at the Main Pipe. Small scale production was carried out at the Satellite Plant up to December 2008, when mining operations were suspended due to the sharp fall in diamond prices at that time. Kopane's recent activities have been focused on the completion of a definitive feasibility study on the Main Pipe. Preliminary results from the DFS, which is now at an advanced stage, indicate that the Main Pipe is likely to support a substantial, long life mining operation.

 

Within the scope of publicly available information, Liqhobong is believed by the Firestone Directors to be the third largest undeveloped kimberlite resource, as measured by contained carats (after the Gahcho Kue and Star kimberlites in Canada), and the fourth largest as measured by tonnes (after the Star and Orion South kimberlites in Canada and the Gope kimberlite in Botswana). With capital costs for Liqhobong expected by the Firestone Directors to be significantly lower than for these projects, the Firestone Directors consider Liqhobong to be one of the most attractive undeveloped kimberlites in the world.

 

In parallel with completing the outstanding work on the DFS, Kopane is planning to recommence production at Liqhobong in 2011 employing the Satellite Plant and using diesel-generated power until a connection to the electricity grid is available, which is expected to be in Q1 2012. In addition, following completion of the DFS, Kopane intends to construct a new diamond processing plant which will be significantly larger than the Satellite Plant and of suitable size to optimally exploit the Main Pipe resource. Estimates for the schedule and cost for construction of the new plant are being made as part of the DFS.

 

Firestone intends to proceed with Kopane's plans to recommence production at Liqhobong in 2011 and complete the DFS, subject to undertaking a review of these plans following completion of the Acquisition.

 

The Firestone Directors and the Kopane Directors believe that Firestone's and Kopane's respective projects complement each other, and that the acquisition of Kopane by Firestone will be value enhancing and will provide significant benefits to both Firestone Shareholders and Kopane Shareholders.

 

§ Firestone will acquire a large Mineral Resource at Liqhobong at the final stages of a DFS with substantial economic potential that will allow the Enlarged Group to significantly expand its production base.

§ Kopane will gain exposure to a diversified portfolio of diamond projects, with cash flow from BK11, potential future cash flow from toll treatment projects and a large number of both early and advanced stage kimberlites with significant potential for further economic discoveries.

§ Kopane will have access to Firestone's proven capability in kimberlite resource development, and mine construction, development and operation, which the Firestone Directors believe will enable full scale production to be achieved at Liqhobong in a shorter time and at a lower cost than currently planned.

§ The Firestone Directors and the Kopane Directors believe that the portfolio of projects and operational capability that the Enlarged Group will control will enable the Enlarged Group to become one of the leading mid-tier diamond producers, allowing Firestone to pay dividends to its shareholders in the mid to long term.

§ The Enlarged Group will benefit from having a larger market capitalisation, which the Firestone Directors and the Kopane Directors believe is likely to result in greater liquidity in the trading of Firestone's shares, an improved rating and greater access to capital to fund the Enlarged Group's growth plans.

§ The Firestone Directors believe that the proximity of Firestone's and Kopane's respective assets in Botswana and Lesotho and the fact that both Firestone and Kopane are listed on the AIM market will allow the Enlarged Group to operate more cost effectively by sharing corporate, administrative and technical support services across a larger portfolio of projects.

§ Rough diamond prices continue to strengthen, with prices recently returning to the previous highs seen in 2008. With the substantial shortfall in rough diamond supply projected in the coming years, the Firestone Directors believe that the Enlarged Group will be well positioned for significant growth and to become one of the leading mid-tier diamond producers.

 

 

4. Kopane Shareholder approval and recommendation of the Kopane Board

 

The Kopane Board is receiving financial advice on the Acquisition from finnCap. The Kopane Board, which has been so advised by finnCap, considers the terms of the Acquisition to be fair and reasonable. In providing advice to the Kopane Board, finnCap has taken into account the commercial assessments of the Kopane Directors.

 

The Kopane Directors unanimously intend to recommend that Kopane Shareholders vote in favour of the Scheme at the Court Meeting and in favour of the Kopane Resolution at the Kopane GM. None of the Kopane Directors hold any Kopane Shares, however, they have undertaken to Firestone that if they acquire any Kopane Shares prior to the Voting Record Time they shall vote such Kopane Shares in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane GM. Obtala, a company associated with Francesco Scolaro, the chairman of Kopane, which holds directly and indirectly 48,695,000 Kopane Shares representing approximately 16.15 per cent. of Kopane's issued ordinary share capital, has irrevocably undertaken to Firestone to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane GM. In addition, certain other Kopane Shareholders representing, in aggregate, approximately 19.58 per cent. of Kopane's issued ordinary share capital, have irrevocably undertaken to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane GM. In total Firestone has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from Kopane Shareholders representing approximately 35.73 per cent. of Kopane's existing issued ordinary share capital.

 

 

5. Firestone Shareholder Approval and Recommendation of the Firestone Board

 

The Firestone Board is receiving financial advice on the Acquisition from Evolution Securities. The Firestone Board, which has been so advised by Evolution Securities considers the terms of the Acquisition to be fair and reasonable. In providing financial advice to the Firestone Board on the Acquisition, Evolution Securities has taken into account the commercial assessments of the Firestone Board.

 

The Acquisition is classified under the AIM Rules as a reverse takeover of Firestone due to the size of the Acquisition in relation to Firestone and therefore requires approval by Firestone Shareholders at the Firestone General Meeting. In addition, Firestone requires Firestone Shareholders to approve an increase to its authorised share capital and the allotment of the New Firestone Shares in order to implement the Acquisition. Accordingly, the Acquisition is conditional on the approval by Firestone Shareholders of the First Firestone Resolution at the Firestone GM.

 

The Firestone Board intends unanimously to recommend that Firestone Shareholders vote in favour of the Firestone Resolutions, as they have irrevocably undertaken to do in respect of their own beneficial holdings of 2,000,363 Firestone Shares (representing as at the date of this Announcement, in aggregate, approximately 1.56 per cent. of the existing issued ordinary share capital of Firestone). In addition, Firestone and Kopane have also received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone General Meeting from certain other Firestone Shareholders representing, in aggregate, approximately 28.27 per cent. of Firestone's existing issued ordinary share capital. In total Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone General Meeting from Firestone Shareholders representing approximately 29.83 per cent. of Firestone's existing issued ordinary share capital.

 

6. Information on Firestone

 

Firestone is an international diamond mining and exploration company with operations primarily focused on Botswana. Botswana is the world's largest and lowest cost producer of diamonds, with annual production worth over $3.2 billion, and is considered to be one of the most prospective countries in the world to explore for kimberlite - the primary source rock for diamonds. Botswana has a ratio of economic kimberlites of 8%, compared to the global average of 1%.

 

Firestone is the largest holder of mineral rights in Botswana's kimberlite fields, with 16,500 square kilometres under license, covering the entire Tsabong kimberlite field and significant areas around the major Orapa and Jwaneng mines. Firestone has 108 kimberlites in its portfolio, of which 30 have been proven to be diamondiferous to date.

 

Firestone recently commenced commercial production at its BK11 kimberlite in the Orapa region. This represents a major milestone for Firestone, making it one of only three listed kimberlite producers worldwide outside of the major mining companies. The Firestone Directors consider that the achievement of commencing production in just over three years from being granted a prospecting licence for BK11, and less than nine months after the decision was made in December 2009 to proceed with mine development, demonstrates Firestone's significant capabilities in evaluating and developing kimberlite projects.

 

Phase 1 of the BK11 production plant, which has a capacity of approximately 650,000 tonnes per annum, is now in operation. Work on Phase 2 of the production plant, which will increase production capacity to 1,500,000 tonnes per annum, is on target for completion in Q3 2010. Under the BK11 mine plan approximately 11.1 Mt of kimberlite is expected to be mined at an average grade of 8.5 cpht, giving total production of approximately 1 million carats over a 10 year mine life at an average value of $155/carat (March 2010 valuation). Initial mining operations will be focused on the KW area, where approximately 5.4 Mt of kimberlite is expected to be mined at an average grade of 12.6 cpht, and at a diamond value of $175/carat (March 2010 valuation).

 

Firestone intends to use cash flow from BK11 to accelerate the evaluation of its other kimberlites in Botswana. The primary focus of these efforts will initially concentrate on the 21 other kimberlites controlled by Firestone in the Orapa kimberlite field close to the BK11 mine, of which 8 have been proven to be diamondiferous. Firestone intends to use the infrastructure that has now been established at BK11 to evaluate the economic potential of these kimberlites rapidly and at relatively low cost. The Firestone Directors believe that Firestone has the potential to develop a sizeable satellite mining operation based around BK11 and multiple other kimberlites in the Orapa area. Of these, the BK16 kimberlite is at the most advanced stage of evaluation, with high quality diamonds and encouraging grades recovered from historical work, and is expected to be the first of the satellite kimberlites to be evaluated for commercial mining.

 

Firestone also intends to resume exploration and evaluation work at the Tsabong kimberlite field, either through a joint venture with an industry partner or by resuming its own work. The Tsabong kimberlite field is one of the largest diamondiferous kimberlite fields in the world, with 84 kimberlites discovered to date, of which 20 have been proven to contain diamonds. Tsabong is noted for the exceptionally large size of many of its kimberlites, in particular the 146 hectare MK1 kimberlite, which is one of the largest known diamondiferous kimberlites. Substantial work has been carried out at Tsabong by Firestone, the results of which indicate that the Tsabong kimberlite field is located in a similar geological setting to the major Jwaneng Mine and that it has the potential to contain economic large sized diamondiferous kimberlite deposits.

 

Firestone has also proven its capability in operating diamond projects, having successfully operated the Project Buffels toll treatment project for De Beers in South Africa, and is continuing to develop its toll treatment business. Firestone has several advanced toll treatment opportunities in Botswana and Namibia that have the potential to generate significant cash flow for Firestone. The advantage of cash flow from these projects is that it would not be dependant on rough diamond prices, thus reducing the potential impact to Firestone of any drop in rough diamond prices that could be caused by future economic or stock market volatility.

 

In June 2010, Firestone announced that a decision had been made by Debswana to proceed with the Modular Tailings Treatment Plant at the Jwaneng Mine, with Firestone being responsible for supplying, constructing and operating the MTTP. Debswana is a joint venture between the Government of the Republic of Botswana and De Beers and is the world's leading diamond producer by value. Jwaneng is the largest diamond mine in the world by value and in 2008 produced approximately 13 million carats, with an estimated value of $1.8 billion. Subject to contractual arrangements, which are at an advanced stage, being finalised, and suitable financing arrangements being made for the capital costs of the project, construction is expected to commence in H1 2011 with full production scheduled for 2012. The Jwaneng tailings resource is estimated to be in excess of 30 million tonnes.

 

The MTTP is intended to serve as a pilot facility to demonstrate the economics and capability of the modular plant concept on the Jwaneng tailings resource, and could potentially lead to the deployment by Firestone of similar plants to exploit additional tailings resources at other Debswana mines. With the total tailings resources at Debswana's mines estimated to be approximately 300 million tonnes, the Firestone Directors consider that they represent a significant revenue opportunity.

 

In addition, Firestone has been selected by Namdeb as the preferred supplier and operator for the Dredge and Floating Treatment Plant project at Namdeb's diamond mining operations on the south west coast of Namibia. Namdeb is a joint venture between the Government of the Republic of Namibia and De Beers and is the world's 6th largest diamond producer by value. Firestone and the Namdeb project team are currently working together to revise Namdeb's feasibility study for the project to reflect current capital costs and Firestone's projected operating costs.

 

 

7. Information on Kopane

 

Kopane is a diamond company with its principal project at Liqhobong in Lesotho, Southern Africa. Liqhobong is operated by Liqhobong Mining Development Company (Proprietary) Limited, which is 75 per cent. owned by Kopane and 25 per cent. owned by the Government of Lesotho. The Letseng Mine, which is operated by Gem Diamonds Limited, and a number of other kimberlites that are currently undergoing evaluation by other companies, including the Kao and Mothae kimberlites, are also located in Lesotho.

 

The Liqhobong project is comprised of the Main Pipe and the Satellite Pipe, which cover areas of 8.5 hectares and 0.8 hectares, respectively. LMDC has been granted a mining lease by GOL covering an area of 390 hectares in respect of both pipes which expires in August 2017, but is then renewable for a further ten years.

 

Over 350,000 carats of diamonds have been produced at Liqhobong from the commencement of operations at the Satellite Plant in late 2005 up to the suspension of production in December 2008 due to the sharp fall in rough diamond prices at that time. Activities at Liqhobong since then have been focused on completion of the DFS on the Main Pipe, where a resource of some 31.14 million carats has been defined. Preliminary results from the DFS, which is now at an advanced stage, indicate that the Main Pipe is likely to support a substantial, long life mining operation.

 

In December 2009, Kopane's independent mining and geological consultants, ACA Howe International Limited, issued an updated resource statement for the Main Pipe which showed total resources of 90.66Mt at an average grade of 34.3cpht containing 31.14 million carats, with an independent run of mine valuation of US$86 per carat (September 2008 valuation), giving revenue of $29/t and a gross in-situ value of $2.7 billion. Of the Mineral Resources at Liqhobong, 38.54Mt at an average grade of 32.8cpht with contained diamonds of 12.64m carats are in the Indicated Resource category and the remainder are in the Inferred Resource category. With the Firestone Directors' estimated operating costs of $12/t for kimberlite mining in Lesotho (based on Gem Diamonds' costs at the Letseng mine), the Firestone Directors believe that this provides an indication of the significant economic potential at Liqhobong. In considering the merits of the Acquisition and the Scheme, Kopane Shareholders and Firestone Shareholders should not consider the estimated in-situ value of the Main Pipe to be an asset valuation for the purposes of Rule 29 of the Takeover Code.

 

Kopane is currently finalising the DFS for the Main Pipe, which, following the issue of the updated resource statement in December 2009, necessitated a reconsideration of plant design and tailings disposal as a result of the considerably larger kimberlite resource of 90.66 Mt.

 

In parallel with completing the outstanding work on the DFS, Kopane is planning for the recommencement of production at Liqhobong in 2011 employing the Satellite Plant and using diesel-generated power until a connection to the electricity grid is available. Following completion of the DFS Kopane intends to construct a new diamond processing plant, which will be significantly larger than the Satellite Plant and of suitable size to optimally exploit the Main Pipe resource. Kopane's pre-feasibility study in 2007 identified a plant size of 3.5 mtpa although the plant could be in the region of 4 mtpa processing capacity. Estimates for the schedule and cost for construction of the new plant are being made as part of the DFS.

 

The successful development of the Main Pipe will require a connection to the electricity grid operated by the Lesotho Electricity Company. A Memorandum of Understanding between LMDC, the LEC, GOL and Standard Lesotho Bank in respect of funding of the construction of an electrical power line to the Main Pipe was signed in August 2009. Terms for a bank loan to fund the work are in the course of negotiation and tender documents for construction contracts are being finalised. It is envisaged that LEC and GOL will contribute funds towards the cost of the project and GOL will provide a sovereign guarantee to the bank in respect of the loan funding. LMDC will finance the servicing of the loan and its repayment on terms to be agreed. The engineering specifications of the power line, together with environmental impact assessment studies, have been completed in readiness for the start of construction once funding is in place. It is expected that construction will start by the end of 2010, which should allow grid electricity to be available at the mine site by Q1 2012.

 

Kopane also has diamond exploration assets in Finland. These assets are being operated, financed and developed under a joint venture agreement with Mantle Diamonds Limited, but are considered to be non-core and not material relative to the value of Liqhobong and the Acquisition.

 

 

8. Directors, Management and Employees

 

The Firestone Directors and the Kopane Directors have discussed Firestone's plans for Kopane management and employees within the Enlarged Group.

 

The Firestone Directors will remain in the same respective positions that they currently hold on the Firestone Board and no Kopane Directors will join the Firestone Board. Each of the Kopane Directors, save for James Cable and Andrew Birnie, will resign from the Kopane Board, conditional upon, and with effect from, the Scheme becoming effective in accordance with its terms. James Cable and Andrew Birnie will each be engaged under consultancy agreements to provide services to the Kopane Group on a part-time basis from the Effective Date.

 

Further details of the termination arrangements and consultancy arrangements for the Kopane Directors will be set out in the Scheme Document.

 

Firestone has given assurances that, following the Scheme becoming effective, the existing employment rights, including accrued pension rights, of Kopane employees will be fully safeguarded and, save in the case of the Kopane Directors as referred to above, its plans for Kopane do not include any material changes in the terms and conditions of employment of Kopane employees.

 

 

9. Current Trading and Financial information relating to Kopane and Firestone

 

Firestone

For the year ended 30 June 2009, Firestone generated revenue of £4.0 million, all of which was derived from the Bonte Koe toll treatment project with De Beers in South Africa. Firestone made an operating profit of £0.7 million before impairment charges of £11.2 million related to the termination of operations at the Bonte Koe project and Firestone's other alluvial projects in South Africa, producing a loss for the year of £11.0 million. For the six month period ended 31 December 2009 Firestone generated no revenue and made a loss of £1.4 million.

 

Following the successful completion of the final phase of evaluation work on BK11 in December 2009 a decision was made to proceed with the development of commercial mining operations at BK11, and Firestone's activities since then have been primarily focused on BK11. In April 2010 Firestone raised £9.45 million, of which approximately £4.5 million was to cover the final costs to bring BK11 into full production. Commercial production commenced at BK11 in July 2010.

 

Firestone has also continued to develop its toll treatment business. In March 2010 Firestone announced that it had been selected by Namdeb as the preferred supplier and operator for the FTP project at Namdeb's diamond mining operations on the south west coast of Namibia. In June 2010, Firestone announced that a decision had been made by Debswana to proceed with the MTTP at the Jwaneng Mine, with Firestone being responsible for supplying, constructing and operating the MTTP.

 

As at 30 June 2010 Firestone's cash balances stood at approximately £5.4 million.

 

Kopane

For the year ended 30 June 2009, Kopane generated revenue of £1.9 million, and made a loss for the period of £4.5 million. For the six month period ended 31 December 2009 Kopane generated no revenue and made a loss for the period of £1.2 million.

 

Production at Liqhobong was suspended in early 2008 in response to the sharp fall in rough diamond prices at that time. Since 31 December 2009, Kopane has been focused on completion of the DFS on the Main Pipe, planning for the funding and engineering of the construction of electrical power to Liqhobong and planning for resumption of production using the Satellite Plant in 2011.

 

As at 30 June 2010 Kopane's cash balances stood at £2.1 million. Kopane is also entitled to receive further payments from Lanstead Capital LP, pursuant to the share placing arrangements agreed with Lanstead at the end of 2009 and the beginning of 2010. As at the date of this Announcement, Kopane expects to receive a further 18 monthly payments which at a Kopane share price of 17p per Kopane Share (being the price agreed pursuant to the Acquisition for each Kopane Share), will amount to approximately £295,000 for 14 months and £120,000 for a further 4 months. The funds receivable by Kopane pursuant to these arrangements vary depending on Kopane's share price from time to time. The monthly payments are currently suspended as a result of the Acquisition, but are expected to resume 30 days following the date of this Announcement and, after the Effective Date, will be calculated by reference to the price of a Firestone Share on a basis consistent with the current swap arrangements.

 

 

10. Prospects for the Enlarged Group

 

The Firestone Directors and the Kopane Directors believe that their respective projects complement each other and that the Enlarged Group's diversified portfolio of production, development and exploration stage projects will provide significant benefits to both Firestone Shareholders and Kopane Shareholders and enhance the prospects of the Enlarged Group.

The Enlarged Group is expected to generate cash flow from BK11, which is expected to reach full production capacity by the end of 2010, and, subject to the successful completion of discussions with Debswana, from the Jwaneng Tailings Project in 2012. Firestone intends to use the cash flow from these projects to accelerate the evaluation and development of the Enlarged Group's expanded portfolio of kimberlites. The primary focus of these efforts will initially be on Liqhobong and the other kimberlites controlled by Firestone in the Orapa kimberlite field.

With revenue of $29/t and Firestone's estimated operating costs of $12/t for a kimberlite mining operation in Lesotho (based on Gem Diamonds' costs at Letseng), the economic potential at Liqhobong is significant. Firestone intends to exploit this potential through the construction of a 4Mt per annum plant following completion of the DFS which, assuming a successful design and build process, would be expected to be commissioned in approximately three years' time

The Enlarged Group will benefit from having a larger market capitalisation, which the Firestone Directors and the Kopane Directors believe is likely to result in more liquidity in the trading of Firestone's Shares, an improved rating and greater access to capital to fund the Enlarged Group's growth plans.

In the medium to long term, the Firestone Directors and the Kopane Directors believe that the combination of BK11, the substantial Mineral Resource at Liqhobong, 21 other kimberlites in the Orapa kimberlite field, 84 kimberlites in the Tsabong kimberlite field, and the potential for developing a significant toll treatment business with Debswana and Namdeb, will enable the Enlarged Group to become one of the leading mid-tier diamond producers, with a target production level of 1 million carats by 2014.

11. Strategy

 

Firestone's objective is for the Enlarged Group to become one of the leading mid-tier diamond producers, and its strategy for doing so is comprised of three key elements:

 

The first is to build a diversified portfolio comprising both kimberlite exploration, evaluation and production projects and toll treatment projects. In the short term, cash flow from the production and toll treatment projects will be used to fund large scale exploration and evaluation projects with the potential to yield significant economic discoveries, and in the mid to long term it will be used to pay dividends to shareholders.

 

The second is to focus on projects in Southern Africa, which is a comparatively stable region politically and economically, and has relatively low capital and operating costs compared to other regions where diamond mining and exploration are carried out. Botswana, where most of Firestone's current projects are located, benefits from being among the most political and economically stable countries in Africa, and enjoys a high exploration success rate, with 8 per cent. of kimberlites proving to be economically viable, compared to 1 per cent. worldwide.

 

The third is to focus exploration and evaluation activities on projects in proven economic or diamondiferous kimberlite fields, where the probability of economic discoveries is significantly higher than for grass roots and early stage exploration projects.

 

The Firestone Directors believe that the Acquisition fits well with this strategy.

12. Kopane Options 

 

The Scheme will extend to any Kopane Shares that are unconditionally allotted or issued pursuant to the exercise of options or vesting of awards under the Kopane Share Option Scheme, in each case on or prior to the Reduction Record Time.

Appropriate proposals will be made to participants in the Kopane Share Option Scheme at the same time as the Scheme Document is posted to Scheme Shareholders or as soon as possible thereafter. Details of these proposals will be set out in the Scheme Document and in separate letters to be sent to participants in the Kopane Share Option Scheme.

13. Kopane Warrants

 

finnCap, the holder of the Kopane Warrants, has agreed with Kopane and Firestone that upon the Scheme becoming effective, the Kopane Warrants shall lapse, and accordingly no proposals are intended to be made to finnCap in respect of the Kopane Warrants.

 

14. Implementation Agreement 

 

Firestone and Kopane have entered into the Implementation Agreement, which contains certain obligations on both parties in relation to the implementation of the Scheme and the conduct of both Kopane's operations and Firestone's operations prior to the Effective Date or termination of such agreement.

 

Under the Implementation Agreement, Kopane has agreed with Firestone to pay an inducement fee of approximately £400,000 million (inclusive of VAT).

 

The inducement fee shall be payable by Kopane if, in summary:

 

(i) a Competing Proposal in relation to Kopane (or any amendment, variation or revision of such proposal) is announced pursuant to Rule 2.5 of the Code prior to the Acquisition lapsing or being withdrawn and such Competing Proposal subsequently becomes or is declared wholly unconditional or is otherwise completed; or

 

(ii) the Kopane Directors either (i) fail to recommend or (ii) withdraw or adversely modify or qualify their recommendation to Kopane Shareholders to vote in favour of the Scheme and the Kopane Resolution respectively at the Court Meeting and/or the Kopane GM or (as the case may be) accept a Takeover Offer or withdraw or adversely modify or qualify their recommendation of the Acquisition generally in any statement contained in an announcement issued by Kopane through a Regulatory Information Service after the date of the Kopane Shareholder Meetings, and subsequently the Acquisition lapses or is withdrawn, provided that an inducement fee will not be payable by Kopane in these circumstances if, prior to the Kopane Directors failing to recommend or withdrawing or adversely modifying, or qualifying, such recommendation:

(a) the Firestone Directors have failed to recommend or have withdrawn or adversely modified or qualified their recommendation to Firestone Shareholders to vote in favour of the Firestone Resolutions at the Firestone General Meeting or have withdrawn or adversely modified or qualified their recommendation of the Acquisition generally in any statement contained in an announcement issued by Firestone through a Regulatory Information Service after the date of the Firestone General Meeting;

 

(b) the Firestone Directors have recommended any Competing Proposal in relation to Firestone; or

 

(c) Firestone is in material breach of any provision of the Implementation Agreement such that the Kopane Directors determine, acting in good faith and having taken appropriate advice, that such recommendation should not be given or should be withdrawn or modified or qualified in order to comply with their fiduciary duties; or

 

(iii) the Kopane Directors recommend any Competing Proposal in relation to Kopane and subsequently the Acquisition lapses or is withdrawn.

 

In addition, under the terms of the Implementation Agreement, Firestone has agreed with Kopane to pay an inducement fee of approximately £400,000 million (inclusive of VAT).

 

The inducement fee shall be payable by Kopane, if in summary:

 

(i) a Competing Proposal in relation to Firestone (or any amendment, variation or revision of such proposal) is announced pursuant to Rule 2.5 of the Code prior to the Acquisition lapsing or being withdrawn and such Competing Proposal subsequently becomes or is declared wholly unconditional or is otherwise completed; or

 

(ii) the Firestone Directors either (i) fail to recommend or (ii) withdraw or adversely modify or qualify their recommendation to Firestone Shareholders to vote in favour of the Firestone Resolution at the Firestone General Meeting or withdraw or adversely modify or qualify their recommendation of the Acquisition generally in any statement contained in an announcement issued by Firestone through a Regulatory Information Service after the date of the Firestone General Meeting, and subsequently the Acquisition lapses, provided that an inducement fee will not be payable by Firestone in these circumstances if, prior to the Firestone Directors failing to recommend or withdrawing or adversely modifying, or qualifying, such recommendation:

 

(a) the Kopane Directors have failed to recommend or have withdrawn or adversely modified or qualified their recommendation to Kopane Shareholders to vote in favour of the Scheme and the Kopane Resolution respectively at the Court Meeting and the Kopane GM or (as the case may be) accept a Takeover Offer or have withdrawn or adversely modified or qualified their recommendation of the Acquisition generally in any statement contained in an announcement issued by Kopane through a Regulatory Information Service after the date of the Kopane Shareholder Meetings;

 

(b) the Kopane Directors have recommended any Competing Proposal in relation to Kopane; or

 

(c) Kopane is in material breach of any provision of the Implementation Agreement such that the Firestone Directors determine, acting in good faith and having taken appropriate advice, that such recommendation should not be given or should be withdrawn or modified or qualified in order to comply with their fiduciary duties; or

 

(iii) the Firestone Directors recommend any Competing Proposal in relation to Firestone and subsequently the Acquisition lapses or is withdrawn.

 

However, nothing in the Implementation Agreement obliges Kopane or Firestone to pay any amount which the Panel would determine would not be permitted by Rule 21.2 of the Code.

 

15. Irrevocable Undertakings 

 

None of the Kopane Directors hold any Kopane Shares, although each Kopane Director has given an irrevocable undertaking to Firestone to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane GM in respect of any Kopane Shares acquired after the date of this Announcement. Firestone has received an irrevocable undertaking to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane GM from Obtala, a company associated with Francesco Scolaro, the chairman of Kopane, in respect of its direct and indirect holding of Kopane Shares amounting in aggregate to 48,695,000 Kopane Shares, representing approximately 16.15 per cent. of Kopane's existing issued ordinary share capital. This undertaking will continue to be binding even in the event of a higher Competing Proposal for Kopane being announced, and cannot be withdrawn other than in the event of the Scheme lapsing or being withdrawn.

Firestone has also received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from certain other Kopane Shareholders representing, in aggregate, approximately 19.58 per cent. of Kopane's existing issued ordinary share capital. The circumstances when these undertakings cease to be binding are set out in Appendix III to this Announcement. In total Firestone has received irrevocable undertakings to vote in favour of the Scheme at the Court Meeting and the Kopane Resolution at the Kopane General Meeting from Kopane Shareholders representing approximately 35.73 per cent. of Kopane's existing issued ordinary share capital.

Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone GM from the Firestone Directors who hold Firestone Shares in respect of their entire holding of Firestone Shares amounting to, in aggregate, 2,000,363 Firestone Shares, representing approximately 1.56 per cent. of the existing issued share capital of Firestone. In addition, Firestone and Kopane have also received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone GM from Firestone Shareholders representing, in aggregate, approximately 28.27 per cent. of Firestone's existing issued ordinary share capital. In total Firestone and Kopane have received irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone General Meeting from Firestone Shareholders representing approximately 29.83 per cent. of Firestone's Ordinary existing issued ordinary share capital.

Further details of these irrevocable undertakings are contained in Appendix III to this Announcement.

16. Structure of the Acquisition and shareholder meetings for both Kopane Shareholders and Firestone Shareholders

 

It is intended that the Acquisition will be implemented by way of a scheme of arrangement between Kopane and the Scheme Shareholders under Part 26 of the Companies Act (including a reduction of capital under section 641 of the Companies Act). The purpose of the Scheme is to allow Firestone to become the owner of the entire issued ordinary share capital of Kopane. The procedure involves an application by Kopane to the Court to sanction the Scheme and confirm the cancellation of the Scheme Shares held by Scheme Shareholders at the Scheme Record Time, the application of the reserve arising from such cancellation in paying up in full a number of new shares in Kopane (which is equal to the number of the Scheme Shares cancelled) and issuing those new shares to Firestone in consideration for which Scheme Shareholders will receive New Firestone Shares on the basis set out in paragraph 2 of this Announcement.

The implementation of the Scheme is subject to the satisfaction or (where appropriate) waiver of all the Conditions and the further terms set out in Appendix I.

Implementation of the Scheme is subject, amongst other things, to the approval of a majority in number of the Scheme Shareholders present and voting in person or by proxy at the Court Meeting representing not less than 75 per cent. in value of the Scheme Shares voted by the Scheme Shareholders. Implementation of the Scheme will also require the passing of the Kopane Resolution, requiring the approval of Kopane Shareholders representing at least 75 per cent. of the votes cast at the Kopane GM. Application will shortly be made to the Court for leave to convene the Court Meeting which (subject to the approval of the Court) is expected to be held on 6 September 2010. It is expected that the Kopane GM will also be convened for 6 September 2010, immediately following the Court Meeting.

The Acquisition is classified under the AIM Rules as a reverse takeover of Firestone due to the size of the Acquisition in relation to Firestone and therefore requires approval by Firestone Shareholders at the Firestone General Meeting. In addition, Firestone requires Firestone Shareholders to approve an increase to its authorised share capital and the allotment of the New Firestone Shares in order to implement the Acquisition. Accordingly, the Acquisition is conditional on the approval by Firestone Shareholders of the First Firestone Resolution at the Firestone GM.

 

Following the passing of the relevant resolutions at the Meetings, the Scheme and the Reduction of Capital will become effective upon the Court sanctioning the Scheme and confirming the Reduction of Capital and copies of the Court Orders having been delivered to the Registrar of Companies in England and Wales. The Scheme is also conditional on Admission occurring (or the London Stock Exchange agreeing to admit the New Firestone Shares and agreeing to readmit the Existing Firestone Shares to trading on AIM). Once the Scheme becomes effective, it will be binding on all Kopane Shareholders whether or not they attended or voted at the Court Meeting or the Kopane GM.

The Scheme Document setting out full details of the Acquisition and the Scheme, together with notices of the Court Meeting and the Kopane GM, and the Firestone Circular for information only, will be posted as soon as practicable to Kopane Shareholders. At the same time, Firestone will post the Firestone Circular, containing a notice convening the Firestone GM, to Firestone Shareholders.

Subject to the terms of the Implementation Agreement, Firestone reserves the right to elect to implement the Acquisition by way of a Takeover Offer. In such event, the Acquisition will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme.

 

Further details of the Scheme, including an indicative timetable for its implementation, together with how Scheme Shareholders may participate in the Court Meeting and Kopane GM, will be contained in the Scheme Document.

 

17. Settlement, listing and dealings

 

Prior to the Scheme becoming effective, Kopane will make an application to the London Stock Exchange for the cancellation of the Kopane Shares from trading on AIM. Accordingly, if the Scheme is sanctioned by the Court and the other conditions of the Scheme are waived or satisfied, it is expected that the Kopane Shares will cease to be quoted on AIM on or before 8.00 a.m. on the Effective Date.

On the Effective Date, share certificates in respect of Kopane Shares will cease to be valid and should, if so requested by Kopane, be sent to Kopane for cancellation. In addition, on the Effective Date entitlements to Kopane Shares held within the CREST system will be cancelled. It is proposed that on the Effective Date, Kopane will be re-registered as a private limited company.

The New Firestone Shares will be issued free from all liens, charges, encumbrances and other third party rights and/or interests of any nature whatsoever. When issued, the New Firestone Shares will be in registered form and will be capable of being held in certificated or uncertificated form. Pending the issue of definitive certificates for the New Firestone Shares, transfers of New Firestone Shares in certificated form will be certified against the register. No temporary documents of title in respect of the New Firestone Shares will be issued. Settlement of the New Firestone Shares to which Kopane Shareholders are entitled is expected to occur as soon as possible after the Effective Date and in any event within 14 days of the Effective Date.

The Acquisition constitutes a reverse takeover under the AIM Rules. The AIM Rules require that the securities of an AIM company that is the subject of a reverse takeover are cancelled from trading on AIM following approval of that transaction by shareholders. Conditional upon the Firestone Shareholders passing the First Firestone Resolution at the Firestone GM and the Scheme and the Reduction of Capital being approved by Kopane Shareholders and sanctioned by the Court, the Existing Firestone Shares will be cancelled from trading on AIM and the Firestone Board will make an application for the New Firestone Shares to be admitted and for the Existing Firestone Shares to be readmitted to trading on AIM. It is envisaged that trading of the New Firestone Shares will commence on AIM and trading of the Existing Firestone Shares will re-commence on AIM on 30 September 2010.

 

 

18. Interests in Kopane securities held by Firestone and its concert parties

 

Except for the irrevocable undertakings referred to in paragraph 15 above, as at 20 July 2010 (the latest practicable date prior to the date of this Announcement), neither Firestone nor any member of the Firestone Group nor any Firestone Director nor (in the case of the Firestone Directors) any member of their immediate families or related trusts or any connected persons nor any persons acting in concert with Firestone or the Firestone Directors has any interest or short position in, or right to subscribe for, any relevant securities in Kopane.

 

19. Overseas Kopane shareholders

 

Kopane Shareholders who are resident in, ordinarily resident in, or who are citizens of any jurisdiction outside the UK ("Overseas Kopane Shareholders") should consult their independent professional advisers as to whether they require any governmental or other consents or need to observe any other formalities to enable them to participate in the Acquisition. If a Kopane Shareholder is in any doubt as to his eligibility to participate in the Acquisition, he should contact his independent professional adviser immediately.

The implications of the Scheme for Overseas Kopane Shareholders may be affected by the laws of the relevant jurisdictions. Such Overseas Kopane Shareholders should inform themselves about and observe any applicable legal requirements. It is the responsibility of each Overseas Kopane Shareholder to satisfy himself as to the full observance of the laws of the relevant jurisdiction in connection therewith, including the obtaining of any governmental, exchange control or other consents which may be required to be observed and the payment of any issue, transfer or other taxes in such jurisdictions.

Further details in relation to Overseas Kopane Shareholders will be set out in the Scheme Document.

20. General

 

The Acquisition will be subject to the Conditions and certain further terms set out in Appendix I.

 

The bases and sources of certain information contained in this Announcement are set out in Appendix II.

 

Certain terms used in this Announcement are defined in Appendix IV.

 

The Scheme Document setting out the details of the Acquisition will be posted to Kopane Shareholders as soon as possible, but in any event, within 28 days of today's date. The Scheme Document will include full details of the Scheme, together with notices of the Court Meeting and the Kopane GM, and the expected timetable, and will specify the necessary action to be taken by Kopane Shareholders. Kopane Shareholders receiving the formal documentation in relation to the Acquisition are advised to read it carefully, once it has been dispatched as it will contain important information.

 

The Firestone Circular setting out details of the Acquisition, and the Enlarged Group will be posted to Firestone Shareholders as soon as possible, but in any event within 28 days of today's date. The Firestone Circular will contain notice of the Firestone GM and will specify the necessary action to be taken by Firestone Shareholders.

 

Subject to the terms of the Implementation Agreement, Firestone reserves the right, subject to the prior consent of the Panel, to elect to implement the Acquisition by way of a Takeover Offer. In such event, such Takeover Offer will be implemented on the same terms (subject to appropriate amendments), so far as applicable, as those which would apply to the Scheme except that the Takeover Offer may exclude Kopane Shareholders resident in certain overseas jurisdictions. Furthermore, if sufficient acceptances of such offer are received and/or sufficient Kopane Shares are otherwise acquired, it is the intention of Firestone to apply the provisions of section 979 of the Companies Act to acquire compulsorily any outstanding Kopane Shares to which such offer relates.

 

This Announcement is not a prospectus. It does not constitute or form any part of an offer to sell or an invitation to purchase or subscribe for any securities or the solicitation of any vote for approval in any jurisdiction, nor shall there be any sale, issuance or transfer of the securities referred to in this Announcement in the United States or any jurisdiction in contravention of applicable law. The Offer will be made solely on the basis of the Scheme Document, which will contain the full terms and conditions of the Acquisition. The Scheme Document will be posted to those shareholders able to receive it in due course. Any response in relation to the Acquisition should be made only on the basis of the information in the Scheme Document.

 

The availability of the Offer to Kopane Shareholders who are not resident in and citizens of the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are located or of which they are citizens. Such persons should inform themselves of, and observe, any applicable legal or regulatory requirements of their jurisdictions. Further details in relation to overseas shareholders will be contained in the Scheme Document.

 

To the extent that the Acquisition is effected by way of the Scheme, the New Firestone Shares to be issued to Kopane Shareholders under the Scheme have not been, and will not be, registered under the US Securities Act, or under the securities laws of any state, district or other jurisdiction of the United States, the Republic of South Africa, Singapore, Canada or Japan.

 

If the Acquisition is carried out by way of a Takeover Offer, it will not be made, directly or indirectly, in or into the United States, the Republic of South Africa, Singapore, Canada or Japan and will not be capable of acceptance from or within the United States, Republic of South Africa, Singapore, Canada or Japan. Accordingly, copies of this Announcement and all documents relating to the Takeover Offer will not be and must not be, mailed or otherwise forwarded, distributed or sent in, into or from the United States, the Republic of South Africa, Singapore, Canada or Japan. If the Acquisition is carried out by way of a Takeover Offer, the New Firestone Shares to be issued in connection with such Takeover Offer have not been and will not be registered under the US Securities Act or under the securities laws of any state of the United States and, subject to certain exceptions, the Takeover Offer will not be made in or into the United States. There will be no public offering of the New Firestone Shares in the United States and the New Firestone Shares may not be offered, sold or delivered, directly or indirectly, in or into the United States other than pursuant to an exemption from the registration requirements of the US Securities Act.

 

These written materials are not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act or an exemption therefrom. Firestone has not registered and does not intend to register any of the New Firestone Shares under the US Securities Act.

 

To the extent that the Acquisition is effected by way of the Scheme, it is expected that the New Firestone Shares will be issued in reliance upon the exemption from the registration requirements of the US Securities Act provided by Section 3(a)(10) thereof. Any offer of New Firestone Shares made by way of the Scheme will be made by means of the Scheme Document that may be obtained from Kopane which will contain detailed information about the Acquisition, Kopane, Firestone and their management, as well as financial and other important information. Any Kopane Shareholder in the United States that is an "affiliate" of Firestone under applicable US securities laws either within the 90 days prior to the implementation of the Scheme or following implementation of the Scheme will be subject to certain restrictions on the sale of the New Firestone Shares received pursuant to the Scheme.

 

Evolution Securities and Brewin Dolphin, which are authorised and regulated in the United Kingdom by the Financial Services Authority, are acting exclusively for Firestone and no-one else in connection with the matters described in this Announcement and will not be responsible to anyone other than Firestone for providing the protections afforded to clients of Evolution Securities or Brewin Dolphin or for providing advice in relation to the matters described in this Announcement.

 

finnCap, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Kopane and no-one else in connection with the matters described in this Announcement and will not be responsible to anyone other than Kopane for providing the protections afforded to clients of finnCap nor for providing advice in relation to the Acquisition or any other matter described in this Announcement.

 

The Firestone Directors accept responsibility for all the information contained in this Announcement except for that information for which the Kopane Directors accept responsibility. To the best of the knowledge and belief of the Firestone Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

The Kopane Directors accept responsibility for all information in this Announcement relating to Kopane, the Kopane Group and the Kopane Directors. To the best of the knowledge and belief of the Kopane Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this Announcement for which they are responsible is in accordance with the facts and does not omit anything likely to affect the import of such information.

 

Forward-Looking Statements

 

This document contains certain forward‑looking statements with respect to the financial condition, results of operations and business of Firestone, Kopane and the Enlarged Group and certain plans and objectives of the Firestone Directors and the Kopane Directors with respect thereto. These forward‑looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward‑looking statements often use words such as "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "will", "may", "should", "would", "could" or other words of similar meaning. These statements are based on assumptions and assessments made by the Firestone Directors and/or the Kopane Directors in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe appropriate. By their nature, forward‑looking statements involve risk and uncertainty, because they relate to events and depend on circumstances that will occur in the future and the factors described in the context of such forward‑looking statements in this Announcement could cause actual results and developments to differ materially from those expressed in or implied by such forward‑looking statements. Although the Firestone Directors and/or the Kopane Directors believe that the expectations reflected in such forward‑looking statements are reasonable, they can give no assurance that such expectations will prove to have been correct and assume no obligation to update or correct the information contained in this document and Firestone and Kopane therefore caution investors not to place undue reliance on these forward‑looking statements which speak only as at the date of this Announcement.

Nothing in this Announcement is intended to be a profit forecast and the statements in this Announcement should not be interpreted to mean that the earnings per Firestone Share or Kopane Share for the current or future financial periods will necessarily be greater than those for the relevant preceding financial period.

The statements contained herein are made as at the date of this Announcement, unless some other time is specified in relation to them, and the issue of this Announcement shall not give rise to any implication that there has been no change in the facts set forth herein since that date. Nothing contained herein shall be deemed to be a forecast, projection or estimate of the future financial performance of Firestone or Kopane except where otherwise stated.

Dealing disclosure requirements

 

Under Rule 8.3(a) of the Code, any person who is interested in 1% or more of any class of relevant securities of an offeree company or of any paper offeror (being any offeror other than an offeror in respect of which it has been announced that its offer is, or likely to be, solely in cash) must make an Opening Position Disclosure following the commencement of the Offer period and, if later, following the announcement in which any paper offeror is first identified.

 

An Opening Position Disclosure must contain details of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) any paper offeror(s). An Opening Position Disclosure by a person to whom Rule 8.3(a) applies must be made by no later than 3.30 p.m. (London time) on the 10th business day following the commencement date of the offer period and, if appropriate, by no later than 3.30 p.m. (London time) on the 10th business day following the announcement in which the paper offeror is first identified. Relevant persons who deal in the relevant securities of the offeree company or a paper offeror prior to the deadline for making an Opening Position Disclosure must instead make a Dealing Disclosure.

 

Under Rule 8.3(b) of the Code, any person who is, or becomes, interested in 1% or more of any class of relevant securities of the offeree company or of any paper offeror must make a Dealing Disclosure if the person deals in any relevant securities of the offeree company or of any paper offeror. A Dealing Disclosure must contain details of the dealing concerned and of the person's interests and short positions in, and rights to subscribe for, any relevant securities of each of (i) the offeree company and (ii) the paper offeror, save to the extent that these details have previously been disclosed under Rule 8. A Dealing Disclosure by a person to whom Rule 8.3(b) applies must be made by no later than 3.30 p.m. (London time) on the business day following the date of the relevant dealing.

 

If two or more persons act together pursuant to an agreement or understanding, whether formal or informal, to acquire an interest in relevant securities of an offeree or a paper offeror, they will be deemed to be a single person for the purposes of Rule 8.3.

 

Opening Position Disclosures must also be made by the offeree company and by any offeror and Dealing Disclosures must also be made by the offeree, by any offeror and by any persons acting in concert with any of them (see Rules 8.1, 8.2 and 8.4).

 

Details of the offeree and the offeror companies in respect of whose relevant securities Opening Position Disclosures and Dealing Disclosures must be made can be found in the Disclosure Table on the Takeover Panel's website at www.thetakeoverpanel.org.uk, including details of the number of relevant securities in issue, when the offer period commenced and when any offeror was first identified. If you are in any doubt as to whether you are required to make an Opening Position Disclosure or a Dealing Disclosure, you should contact the Panel's Market Surveillance Unit on +44 (0)20 7638 0129.

 

Firestone is a paper offeror for the purposes of the above disclosure requirements.

 

Publication on websites

 

A copy of this Announcement and certain information published or otherwise made available by Firestone in connection with the Acquisition is available at:

http://www.Firestonediamonds.com/

 

A copy of this Announcement and certain information published or otherwise made available by Kopane in connection with the Acquisition is available at:

http://www.Kopanediamonds.com/s/Home.asp

 

Rule 2.10 Disclosure

 

In accordance with Rule 2.10 of the Code, Firestone has 127,891,637 ordinary shares of 20p each in issue with ISIN GB0003915336. Kopane has 301,511,651 ordinary shares of 1p each in issued with ISIN GB0002998978.

 

 

Appendix I

Conditions and Further Terms of the Acquisition

 

The Acquisition is conditional upon the Scheme becoming unconditional and becoming effective by not later than 31 December 2010, or such later date (if any) as Kopane and Firestone may, with the consent of the Panel (if required) agree and the Court may allow.

Part A: Conditions of the Acquisition

1. The Scheme is conditional upon:

1.1 the approval of the Scheme by a majority in number of Scheme Shareholders (or any relevant class or classes thereof), present and voting either in person or by proxy, at the Court Meeting (or at any adjournment of such meeting) representing 75 per cent. or more in value of the Scheme Shares voted by those Scheme Shareholders;

1.2 the resolution(s) required to implement the Scheme and set out in the notice of the Kopane General Meeting being duly passed by the requisite majority at the Kopane General Meeting (or at any adjournment of such meeting); and

1.3 the sanction (with or without modification, any such modification being on terms reasonably acceptable to Kopane and Firestone) of the Scheme and the confirmation of the Reduction of Capital by the Court being obtained and office copies of the Court Orders being delivered to the Registrar of Companies.

2. In addition, subject as stated in Part B below, the Acquisition is conditional upon the following matters, and accordingly the necessary actions to make the Scheme effective will not be taken unless such Conditions have been satisfied (where capable of satisfaction), or waived, prior to the Scheme being sanctioned by the Court in accordance with paragraph 1 above:

2.1 the passing at the Firestone General Meeting (or any adjournment thereof) of the First Firestone Resolution (as such resolution is set out in the Firestone Circular);

2.2 admission to AIM of the New Firestone Shares and the re-admission to AIM of the Existing Firestone Shares becoming effective in accordance with the AIM Rules or the London Stock Exchange agreeing to admit the New Firestone Shares to AIM and to re-admit the Existing Firestone Shares to AIM;

2.3 no central bank, government or governmental, quasi‑governmental, supranational, statutory or regulatory body, or any court, institution, investigative body, association, trade agency or professional or environmental body or (without prejudice to the generality of the foregoing) any other person or body having statutory or regulatory competence in any jurisdiction (each a "Relevant Authority") having decided to take, instituted, implemented or threatened any action, proceedings, suit, investigation or enquiry or enacted, made or proposed any statute, regulation or order or otherwise taken any other step or done any thing, and there not being outstanding any statute, legislation or order, which would or might reasonably be expected to:

(i) make the Acquisition or its implementation or the acquisition of shares in, or control of, Kopane by any member of the Firestone Group, illegal, void or unenforceable in or under the laws of any jurisdiction or directly or indirectly otherwise, to an extent which is material, restrict, restrain, prohibit, delay, impose additional conditions or obligations with respect to, or otherwise interfere with, challenge or require amendment to the implementation of, the Acquisition or the acquisition of any shares in, or control of Kopane by any member of the Firestone Group or any matters arising therefrom;

(ii) require, prevent, delay or affect the divestiture (or alter the terms of any proposed divestiture) by any member of the Wider Firestone Group or Wider Kopane Group of all or any portion of their respective businesses, assets or properties or of any Kopane Shares or other securities in Kopane or impose any limitation on the ability of any of them to conduct their respective businesses or own their respective assets or properties or any part thereof, in any such case to an extent which is material in the context of the Wider Firestone Group, or the Wider Kopane Group, as the case may be, taken as a whole;

(iii) impose any material limitation on the ability of any member of the Wider Firestone Group to acquire or hold or exercise effectively, directly or indirectly, all rights attaching to all or any of the Kopane Shares (whether acquired pursuant to the Acquisition or otherwise);

(iv) other than in connection with the Acquisition, require any member of the Wider Firestone Group or the Wider Kopane Group to acquire or to offer to acquire any shares or other securities or rights thereover in any member of the Wider Kopane Group owned by any third party, in any such case to an extent which is material in the context of the Wider Firestone Group, or the Wider Kopane Group, as the case may be, taken as a whole;

(v) impose any limitation on the ability of any member of the Wider Firestone Group or the Wider Kopane Group to integrate or co-ordinate its business, or any part of it, with the business of any other member of the Wider Firestone Group or the Wider Kopane Group in any such case to an extent which is material in the context of the Wider Firestone Group or the Wider Kopane Group, as the case may be, taken as a whole; or

(vi) otherwise adversely affect any or all of the businesses, assets, financial or trading position, prospects or profits of any member of the Wider Firestone Group or the Wider Kopane Group or the exercise of any rights attaching to the shares of any company in the Kopane Group, in any such case to an extent which is material in the context of the Wider Firestone Group, or the Wider Kopane Group, as the case may be, taken as a whole,

and all applicable waiting or other time periods during which such Relevant Authority could take, institute, implement or threaten any such action, proceeding, suit, investigation, enquiry or reference or otherwise intervene in respect of the Acquisition, having expired, lapsed or been terminated;

2.4 (i) all authorisations, orders, grants, consents, clearances, licences, permissions and approvals, in any jurisdiction, deemed reasonably necessary or appropriate by Firestone in respect of the Acquisition, being obtained in terms and in a form satisfactory to Firestone (acting reasonably) from all appropriate Relevant Authorities or (without prejudice to the generality of the foregoing) from any persons or bodies with whom any member of the Wider Firestone Group or the Wider Kopane Group has entered into contractual arrangements or which are necessary for Kopane or any member of the Kopane Group to carry on its business; (ii) all such material authorisations, orders, grants, consents, clearances, licences, permissions and approvals remaining in full force and effect and there being no intimation of any intention to revoke, suspend, restrict, modify or not to renew the same and all necessary notifications, applications and filings having been made, all appropriate waiting and other time periods (including extensions thereto) under any applicable legislation and regulations in any jurisdiction having expired, lapsed or been terminated and (iii) all material statutory or regulatory obligations in any jurisdiction in respect of the Acquisition or the proposed acquisition of Kopane by Firestone having been complied with;

2.5 appropriate assurances being received, in terms satisfactory to Firestone (acting reasonably), from the Relevant Authorities or any party with whom any member of the Wider Kopane Group has any contractual or other relationship that the interests held by any member of the Wider Kopane Group under any material licences, leases, consents, permits and other rights will not be materially and adversely amended or otherwise materially and adversely affected by the Acquisition or the proposed acquisition of Kopane or any matters arising therefrom, that such licences, leases, consents, permits and other rights are in full force and effect and that there is no intention to revoke or amend any of the same;

2.6 save as Disclosed, there being no provision of any agreement, instrument, permit, licence or other arrangement to which any member of the Wider Kopane Group is a party or by or to which it or any of its assets may be bound, entitled or subject which, as a consequence of the Acquisition or the proposed acquisition of Kopane or because of a change in the control or management of Kopane or any member of the Wider Kopane Group or otherwise, would or might reasonably be expected to have the result (which, in any such case is material and adverse in the context of the Wider Kopane Group taken as a whole), that:

(a) any monies borrowed by, or other indebtedness, actual or contingent, of, or grant available to, any member of the Wider Kopane Group becomes or is capable of being declared repayable immediately or earlier than the repayment date stated in such agreement, instrument or other arrangement or the ability of any member of the Wider Kopane Group to borrow monies or incur indebtedness is withdrawn, prohibited, inhibited or adversely affected or becomes capable of being withdrawn or inhibited;

(b) the creation or assumption of any liability, actual or contingent, by any member of the Wider Kopane Group other than in the ordinary course of business;

(c) any mortgage, charge or other security interest is created or enforced over the whole or any material part of the business, property or assets of any member of the Wider Kopane Group or any such security interest (whenever arising) becomes enforceable;

(d) any such agreement, instrument, permit, licence or other arrangement, or any right, interest, liability or obligation of any member of the Wider Kopane Group therein, is terminated, adversely modified or adversely affected, or any adverse action is taken or onerous obligation or liability arises thereunder;

(e) the value of any member of the Wider Kopane Group or its financial or trading position is adversely affected;

(f) any material asset or interest of any member of the Wider Kopane Group is or falls to be disposed of or charged or ceases to be available to any such member or any right arising under which any asset or interest could be required to be disposed of or charged other than in the ordinary course of business;

(g) the rights, liabilities, obligations or interests or business of any member of the Wider Kopane Group in or with any other person, firm or company (or any arrangement relating to such interest or business) are terminated, adversely modified or adversely affected; or

(h) any member of the Wider Kopane Group ceases to be able to carry on business under any name under which it currently does so.

2.7 since 31 December 2009 and save as Disclosed, no member of the Kopane Group having:

(a) issued or agreed to issue or authorised or proposed the issue of additional shares of any class or issued or authorised or proposed the issue of or granted or agreed to grant securities convertible into or rights, warrants or options to subscribe for or acquire such shares or convertible securities or redeemed, purchased or reduced or announced any intention to do so or made any other change to any part of its share capital, save as between Kopane and wholly owned subsidiaries of Kopane and save for the issue of Kopane Shares pursuant to or in connection with rights granted under, or the grant of rights under, the Kopane Share Scheme which has been Disclosed;

(b) recommended, declared, paid or made or proposed to recommend, declare, pay or make any dividend, bonus or other distribution other than dividends lawfully paid to other members of the Kopane Group;

(c) authorised or proposed or announced its intention to propose any merger or demerger or acquisition or disposal or transfer of assets or shares or securities (other than to other members of the Kopane Group) or any material change in its share or loan capital;

(d) issued or authorised or proposed the issue of any debentures or incurred or increased any indebtedness or contingent liability, in each case of an aggregate amount that is material in the context of the Wider Kopane Group taken as a whole;

(e) (save for transactions between members of the Kopane Group) disposed of or transferred, mortgaged or encumbered any asset or any right, title or interest in any asset or entered into or varied or terminated any contract, commitment or arrangement (whether in respect of capital expenditure or otherwise) which is of a long term or onerous or unusual nature or which involves or might reasonably be expected to involve an obligation of a nature or magnitude which is material or authorised, proposed or announced any intention to do so, where in each such case it is material in the context of the Wider Kopane Group taken as a whole;

(f) other than pursuant to the Acquisition (and save for transactions between members of the Kopane Group) entered into or varied or proposed to enter into or vary any contract, commitment, arrangement or other transaction which is of a long term or unusual or onerous nature or is otherwise than in the ordinary course of business or announced any intention to do so, that is material in the context of the Wider Kopane Group taken as a whole;

(g) implemented or authorised any reconstruction, amalgamation or other transaction (other than pursuant to the Acquisition and save for transactions between members of the Kopane Group) which is, in any case, material in the context of the Wider Kopane Group taken as a whole;

(h) entered into, or varied the terms of, any contract or agreement with any of the directors or senior executives of Kopane;

(i) taken or proposed any corporate action or had any legal proceedings started or threatened against it for its winding-up, dissolution or reorganisation or for the appointment of a receiver, administrator, administrative receiver, trustee or similar officer of all or any of its assets and revenues or the appointment of any analogous person in any jurisdiction;

(j) (other than in respect of claims between members of the Kopane Group) waived or compromised or settled any claim other than in the ordinary course of business, which is material in the context of the business of the Wider Kopane Group taken as a whole;

(k) (other than pursuant to the Acquisition and as envisaged in accordance with the terms of the Scheme) made any amendment to its articles of association or other constitutional documents;

(l) entered into any contract, commitment, transaction or arrangement which is or may be restrictive in a material way on the business of any member of the Wider Kopane Group;

(m) been unable or admitted that it is unable to pay its debts or having stopped or suspended (or threatened to stop or suspend) payment of its debts generally or ceased or threatened to cease carrying on all or a substantial part of its business;

(n) modified in any respect the terms of the Kopane Share Scheme or proposed, agreed to provide, or modified in any respect any other share option scheme or incentive scheme relating to the employment or termination of employment of any person employed by the Wider Kopane Group, in each case to the extent material in the context of the Wider Kopane Group taken as a whole; or

(o) entered into any contract, commitment or agreement or passed any resolution or made any offer (which remains open) with respect to, or proposed or announced any intention to effect or propose any of the transactions, matters or events referred to in this condition 2.7;

2.8 since 31 December 2009 and save as Disclosed:

(a) no litigation, arbitration, prosecution or other legal proceedings or investigation by any Relevant Authority having been instituted, announced or threatened or become pending or remained outstanding by or against any member of the Wider Kopane Group or to which any member of the Wider Kopane Group is or may become a party (whether as plaintiff, defendant or otherwise), and no enquiry or investigation by any Relevant Authority or other investigative body having been threatened, announced, implemented or instituted or remaining outstanding by, against or in respect of any member of the Wider Kopane Group which in any such case would have a material adverse effect on the Wider Kopane Group taken as a whole;

(b) no adverse change having occurred in the business, assets, financial or trading position, profits or prospects of any member of the Wider Kopane Group, which is material in the context of the Wider Kopane Group taken as a whole;

(c) no contingent or other liability in respect of any member of the Wider Kopane Group having arisen which would or might reasonably be expected materially and adversely to affect any member of the Wider Kopane Group and which in any such case is material in the context of the Wider Kopane Group taken as a whole; and

(d) no steps having been taken and no omissions having been made which would or would be reasonably likely to result in the withdrawal, cancellation, termination or adverse modification of any licence held by any member of the Wider Kopane Group which is necessary for the proper carrying on of its business and which, in any such case, is material in the context of the Wider Kopane Group taken as a whole; and

2.9 save as Disclosed, Firestone not having discovered that:

(a) any business, financial or other information concerning any member of the Wider Kopane Group that has been Disclosed, either contains a misrepresentation of fact or omits to state a fact necessary to make the information contained therein not misleading and which, in any such case, is material in the context of the Wider Kopane Group taken as a whole;

(b) any member of the Wider Kopane Group is subject to any liability, actual or contingent and which in each such case is material in the context of the Wider Kopane Group taken as a whole;

(c) any information which affects the import of any information disclosed at any time by or on behalf of the Wider Kopane Group to an extent which is material in the context of the Wider Kopane Group taken as a whole;

(d) any past or present member of the Wider Kopane Group has not complied with all applicable legislation or regulations of any jurisdiction or any notice or requirement of any Relevant Authority with regard to the storage, disposal, discharge, spillage, leak or emission of any waste or hazardous substance or any substance likely to impair the environment or to harm human or animal health or otherwise relating to environmental matters (which non-compliance might reasonably be expected to give rise to any liability (whether actual or contingent) or cost on the part of any member of the Wider Kopane Group) or that there has otherwise been any such disposal, discharge, spillage, leak or emission (whether or not the same constituted a non-compliance by any person with any such legislation or regulations and wherever the same may have taken place) which in any such case might reasonably be expected to give rise to any liability (whether actual or contingent) or cost on the part of any member of the Wider Kopane Group and which in each such case is material, in the context of the Wider Kopane Group taken as a whole;

(e) there is or is reasonably likely to be any liability (whether actual or contingent) to make good, repair, reinstate or clean up any property now or previously owned, occupied or made use of or controlled by any past or present member of the Wider Kopane Group or any controlled waters under any environmental legislation, regulation, notice, circular or order of any Relevant Authority or third party or otherwise in any jurisdiction, in each case to an extent which is material in the context of the Wider Kopane Group taken as a whole;

(f) circumstances exist (whether as a result of the Acquisition of otherwise) which might reasonably be expected to lead to any Relevant Authority instituting, or any member of the Wider Kopane Group might reasonably be expected to be required to institute, an environmental audit or take any other steps which in any such case might reasonably be expected to result in any actual or contingent liability to improve or install new plant or equipment or make good, repair, reinstate or clean up any land or other asset now or previously owned, occupied or made use of or controlled by any member of the Wider Kopane Group, which in each case, are material in the context of the Wider Kopane Group taken as a whole; or

(g) circumstances exist whereby a person or class of persons might reasonably be expected to have any claim or claims in respect of any product or process of manufacture or materials used therein now or previously manufactured, sold or carried out by any past or present member of the Wider Kopane Group which in each such case, are material in the context of the Wider Kopane Group taken as a whole.

Part B: Waiver of Conditions and further terms of the Acquisition

3. Firestone reserves the right to waive, in whole or in part, all or any of Conditions 2.3 to 2.9 (inclusive). Firestone shall be under no obligation to waive or treat as satisfied any of such Conditions by a date earlier than the date specified above for the satisfaction thereof notwithstanding that the other Conditions of the Acquisition may at such earlier date have been waived or fulfilled and that there are at such earlier date no circumstances indicating that any such Conditions may not be capable of fulfilment.

4. If Firestone is required by the Panel to make an offer for Kopane Shares under the provisions of Rule 9 of the Code, Firestone may make such alterations to any of the above Conditions as are necessary to comply with the provisions of that Rule.

5. The Acquisition will lapse and the Scheme will not proceed if the European Commission initiates proceedings under Article 6(1)(c) of the EC Merger Regulation or the Acquisition is referred to the Competition Commission before the date of the Court Meeting.

Part C: Certain further terms of the Acquisition

6. Firestone reserves the right, with the consent of the Panel and the consent (such consent not to be unreasonably withheld or delayed) of Kopane, to elect to implement the Acquisition by way of a takeover offer. In such event, such offer will be implemented on the same terms (subject to appropriate amendments including (without limitation) an acceptance condition set at 90 per cent. (or such lesser percentage (being more than 50 per cent.) as Firestone may decide) of the shares to which such offer relates and of the voting rights carried by those shares) so far as applicable, as those which would apply to the Scheme.

7. The availability of the Acquisition to persons not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions. Persons who are not resident in the United Kingdom should inform themselves about any applicable requirements.

8. If the Scheme is effected, the New Kopane Shares to be issued pursuant to the Scheme will be acquired by Firestone fully paid and free from all liens, charges, equitable interests, encumbrances, rights of pre-emption and any other rights and interests of any nature whatsoever and together with all rights now and hereafter attaching thereto, including voting rights and the right to receive and retain in full all dividends and other distributions (if any) declared, made or paid on or after the effective date of the Scheme. Under the terms of the Acquisition, each Kopane Shareholder will forego all rights to any future dividend or undeclared dividends or other returns of capital of Kopane.

This document and any rights or liabilities arising hereunder, together with the Acquisition and the Scheme, will be governed by English law and will be subject to the jurisdiction of the English courts. The AIM Rules and the rules contained in the Code, so far as they are appropriate, will apply to the Acquisition.

 

 

Appendix II

Sources and Bases

 

Save as otherwise stated, the following constitute the bases and sources of certain information referred to in this Announcement:

1. Historic financial information relating to Kopane has been extracted without material adjustment from the relevant published audited reports and accounts of Kopane.

2. Historic financial information relating to Firestone has been extracted without material adjustment from the relevant published audited reports and accounts of Firestone.

3. Reference to the Kopane Fully Diluted Share Capital assumes:

(a) 301,511,651 Kopane Shares in issue; and

(b) the vesting of all awards and exercise of all options (where such options have an exercise price of not more than 17 pence) issued and outstanding over Kopane Shares, representing 8,276,981 Kopane Shares in aggregate; and

(c) the Kopane Warrants have been excluded in view of the fact that they will lapse on the Effective Date,

in each case as at 20 July 2010 (being the Business Day prior to the date of this Announcement).

4. Unless otherwise stated, all prices quoted for shares are Closing Prices.

5. The percentage ownership of the Enlarged Group held by former Kopane Shareholders and existing Firestone Shareholders is based on the enlarged issued share capital of Firestone following the Acquisition, being the aggregate of 127,891,637 Firestone Shares in issue on 20 July 2010 (source: Firestone registrar) and approximately 140,413,465 million New Firestone Shares to be issued pursuant to the Offer.

6. The calculation of the 140,413,465 New Firestone Shares to be issued as the consideration payable for the Acquisition is based upon Kopane's undiluted share capital of 301,511,651 ordinary shares on 20 July 2010 and the Exchange Ratio.

 

Appendix III

Irrevocable Undertakings

 

None of the Kopane Directors hold any Kopane Shares, although all the Kopane Directors have given irrevocable undertakings to Firestone and Kopane as described in paragraph 4 of this Announcement in respect of any Kopane Shares acquired by them prior to the completion of the Scheme. In addition to the Kopane Directors, the following persons have given irrevocable undertakings to vote in favour of the Kopane Resolution at the Kopane GM and in favour of the resolution to be proposed at the Court Meeting in respect of the number of Kopane Shares set out below:

 

Name	Number of Kopane Shares
Obtala*	48,695,000
Lanstead**	30,000,000
JP Morgan Fleming	29,049,367

 

Notes:

 

*32,200,000 shares are registered in the name of Corporate Services TD (Waterhouse) Nominees Ltd and 16,495,000 shares are registered in the name of Pershing Nominees Limited

 

** registered in the name of KAS Bank NV

 

These undertakings will continue to be binding in the event that the Acquisition is implemented by way of a Takeover Offer. The undertaking from Obtala remains binding in the event of a higher Competing Proposal being made in relation to Kopane unless the Acquisition lapses or is withdrawn. The undertaking from Lanstead will cease to be binding in the event that an alternative offer for Kopane is announced pursuant to rule 2.5 of the Code ("Alternative Offer"), and the valuation of the consideration payable pursuant to the Alternative Offer represents an improvement in the reasonable opinion of finnCap of not less than 10 per cent. over the value of the Acquisition. The undertaking from JP Morgan Fleming will cease to be binding in the event that a third party announces an intention to make a general offer to acquire the issued share capital of Firestone which is recommended by the Firestone Directors, or a third party announce an intention to make a general offer to acquire the issued share capital of Kopane which is recommended by the Kopane Directors.

 

The following Firestone Directors have given irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone GM in respect of the number of Firestone Shares set out below:

 

Name	Number of Firestone Shares
James F. Kenny	505,765
Philip Kenny	538,806
Hugh Jenner-Clarke	586,057
James Kenny	157,023
Michael Hampton	190,712
William Douglas Baxter	22,000

 

In addition, the following Firestone Shareholders have given irrevocable undertakings to vote in favour of the Firestone Resolutions at the Firestone GM in respect of the number of Firestone Shares set out below:

 

 

Name	Number of Firestone Shares
JP Morgan Fleming	13,059,536
Axa Framlington	8,383,600
Blenheim	7,508,531
Aurora	7,200,000

 

The undertakings from Blenheim and Aurora remain binding remain binding unless the Offer lapses or is withdrawn. The undertaking from Axa Framlington will cease to be binding in the event that any third party announces an intention to make a general offer to acquire the issued share capital of Firestone regardless of whether such offer is recommended by the Firestone Directors. The undertaking from JP Morgan Fleming will cease to be binding in the event that a third party announces a intention to make a general offer to acquire the issued share capital of Firestone which is recommended by the Firestone Directors, or a third party announces an intention to make a general offer to acquire the issued share capital of Kopane which is recommended by the Kopane Directors.

 

Appendix IV

Definitions

 

 

Acquisition	means the recommended acquisition of the entire issued, and to be issued ordinary share capital of Kopane by Firestone to be implemented by way of the Scheme (or, subject to the terms of the Implementation Agreement, should Firestone elect, by means of a Takeover Offer) on the terms and subject to the Conditions set out in this Announcement and the Scheme Document and any subsequent revision, variation, extension or renewal thereof (such agreed terms and Conditions also being set out in the Scheme Document)
Admission	means the admission of the New Firestone Shares and the re-admission of the Existing Firestone Shares to trading on AIM in accordance with the AIM Rules
AIM	AIM, a market of the London Stock Exchange
AIM Rules	the AIM Rules for Companies as published from time to time by the London Stock Exchange
Announcement	this announcement made by Firestone under Rule 2.5 of the Code regarding the proposed acquisition of Kopane by means of the Scheme
Announcement Date	21 July 2010, being the date of this Announcement
Appendices	the appendices to this Announcement
Brewin Dolphin	Brewin Dolphin Limited, authorised and regulated by the Financial Services Authority and nominated adviser to Firestone
Business Day (or business day)	a day (excluding Saturdays, Sundays and UK public holidays) on which banks are generally open for business in London
Capital Reduction Hearing	the hearing by the Court to confirm the Reduction of Capital at which the Reduction Court Order is expected to be granted
Closing Price	the closing middle market quotation of a share at the close of business on a particular trading day as derived from the Daily Official List published for that day
Code	The City Code on Takeovers and Mergers
Companies Act	Companies Act 2006
Competing Proposal	means a proposed offer, tender offer, merger, acquisition, scheme of arrangement, recapitalisation or other combination, whether or not subject to any pre-conditions and howsoever implemented relating to any direct or indirect acquisition or purchase of 50 per cent. or more of the Kopane Shares or (as the case may be) Firestone Shares or all or substantially all of the business and assets of Kopane or (as the case may be) Firestone and its respective subsidiaries proposed by any third party
Conditions	the conditions to the implementation of the Acquisition (including the Scheme) set out in Appendix I to this Announcement and Condition means any one of them
Court	the High Court of Justice in England and Wales
Court Meeting	means the meeting (and any adjournment thereof) of the holders of Scheme Shares convened by the Court under section 896 of the Companies Act 2006 to consider and, if thought fit, approve the Scheme
Court Orders	the Scheme Court Order and the Reduction Court Order
cpht	carats per hundred tonnes;
CREST	means the relevant system, as defined in the CREST Regulations (in respect of which Euroclear UK & Ireland Limited is operator as defined in the CREST Regulations)
CREST Regulations	means the Uncertificated Securities Regulations 1996 (SI 1995 NO. 93/3272), as amended
Daily Official List	the Daily Official List published by the London Stock Exchange
De Beers	De Beers SA
Debswana	Debswana Diamond Company Limited
Definitive Feasibility Study or DFS	the definitive feasibility study in the course of being produced by LMDC in relation to the Main Pipe
Disclosed	fairly disclosed in: (i) the 2009 annual report and accounts of Kopane (including the audited consolidated financial statements of Kopane for the year ended 30 June 2009); (ii) the interim financial statements of Kopane for the six month period ended 31 December 2009;  (iii) all documents in Kopane's online data room which has been made available as at 6.00pm on 20 July 2010 to Firestone and its advisers; or (iv) any public announcement released by or on behalf of Kopane to a Regulatory Information Service at any time prior to 6.00 p.m. on 20 July 2010
Dredge and Floating Treatment Plant or FTP	the floating dredge and processing plant proposed to be used by Firestone to process alluvial diamond material for Namdeb
Effective Date	the date on which the Scheme becomes effective in accordance with its terms
Enlarged Group	the Firestone Group and the Kopane Group following the Acquisition becoming effective
Evolution Securities	Evolution Securities Limited, authorised and regulated by the Financial Services Authority and financial adviser and broker to Firestone
Exchange Ratio	0.4657 of a New Firestone Share for every 1 Kopane Share
Existing Firestone Shares	the Firestone Shares in issue as at the Effective Date
Financial Services Authority or FSA	the UK Financial Services Authority
finnCap	finnCap Limited, authorised and regulated by the Financial Services Authority and financial adviser, rule 3 adviser and nominated adviser to Kopane
Firestone	Firestone Diamonds plc, a company registered in England and Wales with registered number 3589905
Firestone Board	the board of directors of Firestone
Firestone Circular	the document comprising an admission document in accordance with the AIM Rules to be produced by Firestone and posted to the Firestone Shareholders as soon as practicable following the Announcement Date containing the notice convening the Firestone GM and providing information on the New Firestone Shares and the Enlarged Group
Firestone Directors	the directors of Firestone as at the date of this Announcement and "Firestone Director" means any one of them
Firestone GM or Firestone General Meeting	the general meeting of Firestone to be convened in connection with the Acquisition, including any adjournment thereof
Firestone Group	Firestone and its Group
Firestone Resolutions	the resolutions to be proposed at the Firestone GM for the purposes of, inter alia, approving and implementing the Acquisition
First Firestone Resolution	the ordinary resolution to be proposed at the Firestone GM to approve and implement the Acquisition, to approve the increase in authorised share capital and to grant the Firestone Directors authority to allot the New Firestone Shares
Firestone Shareholder	a holder of Firestone Shares
Firestone Shares	ordinary shares of 20p each in the capital of Firestone (including, if the context so requires, the New Firestone Shares)
FSMA	means the Financial Services and Markets Act 2000 (as amended)
GOL	Government of the Kingdom of Lesotho
Group	in relation to any person, that person and any companies which are holding companies, subsidiaries or subsidiary undertakings of it or of any such holding company
holding company	has the meaning given to it in the Companies Act
Implementation Agreement	the implementation agreement between Firestone and Kopane dated the date hereof in connection with the implementation of the Acquisition
Indicated Resource	the part of a mineral resource for which the tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed
Inferred Resource	the part of a mineral resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability
Jwaneng Mine	the Jwaneng Mine in Botswana, which is owned and operated by Debswana
Jwaneng Tailings Project	the tailings treatment project proposed to be operated by the Firestone Group at Debswana's Jwaneng mine
Kopane	Kopane Diamond Developments plc, registered in England and Wales with registered number 4108629
Kopane Board	the board of directors of Kopane
Kopane Directors	the directors of Kopane at the date of this Announcement and "Kopane Director" means any one of them
Kopane Fully Diluted Share Capital	has the meaning set out in Appendix II
Kopane GM or Kopane General Meeting	the general meeting of Kopane convened for the purpose of passing the Kopane Resolution, including any adjournment thereof
Kopane Group	Kopane and its Group
Kopane Resolution	the resolution to be proposed at the Kopane GM for the purposes of approving the Reduction of Capital, re-registering Kopane as a private limited company and certain amendments to the articles of association of Kopane, together with such other matters as may be agreed between Kopane and Firestone as necessary or desirable for the purposes of implementing the Acquisition
Kopane Shareholder	a holder of Kopane Shares
Kopane Share Option Scheme	the Kopane plc Share Option Scheme 2000
Kopane Options	8,276,981options over Kopane Shares granted pursuant to the Kopane Share Option Scheme ;
Kopane Shares	ordinary shares of one pence each in the capital of Kopane
Kopane Warrants	the warrants to subscribe for 1,500,000 Kopane Shares with an exercise price of 25 pence per Kopane Share held by finnCap
Lanstead	Lanstead Capital LP
LEC	Lesotho Electricity Company
Liqhobong or Liqhobong Project	the Kopane Group's project at Liqhobong, Lesotho operated by LMDC
LMDC	Liqhobong Mining Development Company (Proprietary) Limited
London Stock Exchange or LSE	London Stock Exchange plc or its successor
Main Pipe	the Kimberlite pipe within the Kopane Group's licence at Liqhobong amounting to approximately 8.5 hectares
Mantle	Mantle Diamonds Limited
Meetings	the Court Meeting, the Kopane GM and the Firestone GM
Mineral Resource	a concentration of material of economic interest in or on the Earth's crust in such form, quality and quantity that there are reasonable and realistic prospects for eventual economic extraction. The location, quantity, grade, continuity and other geological characteristics of a Mineral Resource are known, estimated from specific geological evidence and knowledge, or interpreted from a well constrained and portrayed geological model. Mineral Resources are subdivided, in order of increasing confidence in respect of geoscientific evidence, into Inferred, Indicated and Measured Resource categories. A deposit is a concentration of material of possible economic interest in, on or near the Earth's crust. Portions of a deposit that do not have reasonable and realistic prospects for eventual economic extraction must not be included in a Mineral Resource;
Modular Tailings Treatment Plant or MTTP	the processing plant proposed to be used by Firestone to process tailings resources at the Jwaneng Mine
Mt	million tonnes
Mtpa	million tonnes per annum
Namdeb	Namdeb Diamond Corporation
New Firestone Shares	the new Firestone Shares proposed to be issued and credited as fully paid to Scheme Shareholders pursuant to the Acquisition
Obtala	Obtala Resources plc
Offer	the Acquisition, the Scheme and the Reduction of Capital
Overseas Kopane Shareholders	Kopane Shareholders who are resident in, ordinarily resident in or who are citizens of any jurisdiction outside the UK
Panel	The Panel on Takeovers and Mergers
Reduction Court Order	the order of the Court confirming the Reduction of Capital
Reduction of Capital	the proposed reduction of the ordinary share capital of Kopane provided by the Scheme under section 641 of the Companies Act
Reduction Record Time	6.00 p.m. on the last Business Day before the date of the hearing at which the Reduction Court Order will be sought
Registrar of Companies or Registrar	the Registrar of Companies in England and Wales
Regulatory Information Service	an information dissemination provider approved by the Financial Services Authority and whose name is set out on a list approved by the Financial Services Authority
Restricted Jurisdiction	United States, Australia, Republic of South Africa, Singapore, Japan, Canada and any other jurisdiction where the New Firestone Shares cannot be made available to Scheme Shareholders without breaking any applicable securities laws
Satellite Pipe	the Kimberlite pipe within the Kopane Group's mining lease at Liqhobong amounting to approximately 0.8 hectares
Satellite Plant	Kopane's 420,000 tonnes per annum diamond processing plant at Liqhobong originally constructed to process kimberlite from the Satellite Pipe
Scheme	the proposed scheme of arrangement to be made under Part 26 of the Companies Act 2006 to be proposed by Kopane to the Scheme Shareholders with or subject to any modification, addition or condition approved or imposed by the Court and agreed to by Kopane and Firestone, particulars of which will be set out in the Scheme Document
Scheme Court Order	the order of the Court granted at the Court hearing to sanction the Scheme, sanctioning the Scheme under Part 26 of the Companies Act
Scheme Document	the document to be posted to the Kopane Shareholders as soon as practicable following the Announcement Date containing and setting out, amongst other things, the terms and conditions of the Acquisition, the Scheme, certain information about Firestone and Kopane, the Scheme and the notices convening the Court Meeting and the Kopane GM
Scheme Record Time	6.00 p.m. on the Business Day immediately prior to the Effective Date
Scheme Shareholders	the holders of Scheme Shares
Scheme Shares	means the Kopane Shares: a) in issue at the date of the Scheme Document; b) issued after the date of the Scheme Document and before the Voting Record Time in respect of the Court Meeting; and c) issued on or after the Voting Record Time in respect of the Court Meeting but on or before the Reduction Record Time either on terms that the original or any subsequent holders thereof shall be bound by the Scheme or in respect of which the holder thereof shall have agreed in writing to be, bound by the Scheme
subsidiary and subsidiary undertaking	have the meanings given to them to be construed in accordance with in the Companies Act
Takeover Offer	a takeover offer governed by the Code to implement the acquisition of Kopane as Firestone may elect to make in accordance with the terms of the Implementation Agreement
UK or United Kingdom	United Kingdom of Great Britain and Northern Ireland
UK Listing Authority	the Financial Services Authority in its capacity as the competent authority for the purposes of Part VI of the Financial Services and Markets Act 2000
US or United States	the United States of America, its territories and possession, any state of the United States and the District of Columbia
US Securities Act	the US Securities Act of 1933, as amended
Voting Record Time	the time and date specified in the Scheme Document by reference to which entitlement to vote on the Scheme will be determined
Wider Kopane Group	Kopane and its subsidiary undertakings, associated undertakings and any other body corporate, partnership, joint venture or person in which the Kopane Group and such undertakings (aggregating their interests) have an interest of more than 20 per cent of the voting or equity capital or the equivalent
Wider Firestone Group	Firestone and its subsidiary undertakings, associated undertakings and any other body corporate, partnership, joint venture or person in which the Firestone Group and such undertakings (aggregating their interests) have an interest of more than 20 per cent of the voting or equity capital or the equivalent

 

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