GRN.L Regulatory News (GRN)

6 Dec 2005 07:00

Gravity Diamonds Limited06 December 2005 RELEASED ON BEHALF OF: GRAVITY DIAMONDS LIMITED (ASX & AIM : GRN) 6 December 2005 GRAVITY DIAMONDS' 1-FOR-4 RIGHTS ISSUE FINANCES NEXT STAGES OF PROMISING DIAMOND SEARCH IN DRC AND AUSTRALIA • Company continues to recover diamonds from ABN 021 discovery pipe in NT • Up to A$12.6 million fundraising gives 'better chance of delivering successful outcomes' • Regional sampling of 113,000 square kilometres in DRC completed: 30 targets being drilled **************************************** Significant progress by Gravity Diamonds on both its Australian and DemocraticRepublic of Congo exploration programmes has been achieved cost effectivelythrough focused and dedicated field personnel. "However, in order to give abetter chance of delivering successful outcomes on both programmes, furtherfunding beyond Gravity's present cash resources is required," statesDr Robert V. Danchin, chairman, in the prospectus despatched to shareholderson 24 November 2005 for shares that went ex rights on 14 November 2005. The company is raising up to A$12.6 million by a non-renounceable 1-for-4 rightsissue at 42 cents per share with a 1-for-2 November 2007 option exercisable at50 cents (bringing in possible additional funding of A$7.4 million). The issue,which is not underwritten, closes on 14 December 2005 and is intended to raiseadditional working capital and enable shareholders to further participate in thegrowth potential of Gravity. Directors have reserved the right to place sharesand options not taken up within the three month period after the close of theoffer. "In Australia," says Dr Danchin, "follow-up results from FALCON(R) airbornesurveys is yielding new discoveries. At Abner Range in the Northern Territory, anew diamondiferous kimberlite pipe, ABN 021, has been found with a surface areaof about 1.4 hectares. The company is continuing to recover diamonds there. "The commercial potential of this discovery will be evaluated by a bulk samplingprogramme that is to be funded in part by the proposed capital raising," headds. Analytical results recently completed on samples from elsewhere in theNorthern Territory are expected to give results that will require detailedfollow-up leading to drilling. In the Ellendale/Blina field, Western Australia, exploration based on theresults of FALCON(R) surveys has resulted in the discovery of two non-commercialdiamondiferous lamproite pipes and relocation of a third, as well as previouslyunknown palaeochannels. "The significance of this discovery has recently beenupgraded because of further positive sampling results from palaeochannels on anadjacent tenement south of Gravity's farm-in agreement area," comments DrDanchin. "Progress in the DRC," he says, "has been 'very promising' ". On the Lueboblock, the programme has proceeded from the reconnaissance stage to targetdefinition in less than one year. Recently, a major drilling programme hascommenced to test 30 targets identified by high resolution aeromagnetics. Asignificant number of targets are adjacent to rivers where both diamonds andpositive indicator minerals have been recovered. Regional sampling has beencompleted over ground holdings elsewhere totalling 113,000 square kilometres.The analysis of 1,700 samples collected will be ongoing over the next six or somonths and, as a result, areas progressively prioritised for further targetgeneration work. Further Information:Phil Harman, Managing Director, Gravity Diamonds Ltd. Tel: 00-61-3-9909-7655Elisa Bartlett, Assistant to the Managing Director, Gravity Diamonds Ltd. Tel:00-61-3-9909-7655Ron Marshman/John Greenhalgh, City of London PR Ltd. Tel: 020-7628-5518 This information is provided by RNS The company news service from the London Stock Exchange