GRN.L Regulatory News (GRN)

5 Dec 2006 07:00

Gravity Diamonds Limited05 December 2006 RELEASED ON BEHALF OF: GRAVITY DIAMONDS LIMITED (ASX & AIM : GRN) 5 December 2006 LETTER TO SECURITYHOLDERS RE RECENT DEVELOPMENTS Following is the text of a letter sent to securityholders: 4 December 2006 Dear Securityholder, I am writing to update you on the recent developments in your company, GravityDiamonds Limited ("Gravity"). You will have seen from our latest ASX releases that the board has proposed thatthe company merge with its largest shareholder, Mwana Africa Plc ("Mwana"),which acquired 14.99% of Gravity in August this year. Mwana (translated "Sons ofAfrica") is a pan African resources company listed on the AIM Market in Londonwith a portfolio of producing mines and advanced exploration projects in severalcountries in southern Africa, including the Democratic Republic of Congo("DRC"). Mwana has a strong management team with many years of combinedexperience of project acquisition and development in Africa. Importantly, Mwana recently acquired the 20% privately held share of MIBA, theDRC's largest (and only) kimberlite miner. Not only does MIBA operate the onlykimberlite mine, it also controls a significant area of prospective property inthe Kasai craton flanked by Gravity's exploration permits. The combination ofGravity's holdings with this package will give Mwana a greater interest in thisprospective and relatively unexplored diamond ground. Importantly, the seasonedGravity exploration team will supplement the high level experience in projectdevelopment and construction which already exists within Mwana. With the support of our shareholders over the past four years, Gravity'sprograms in Australia and the DRC have advanced at a very pleasing rate. InAustralia, follow-up of our FALCON(R) surveys has led to the discovery of anumber of new pipes at Blina/Ellendale and ABN 021 at Abner Range, where we havea bulk sample under evaluation during the wet season. In the DRC, the companydrilled what it believed were prime drilling targets within only 18 months ofentering into the project. Our programs in Australia and the DRC were highly ambitious for a small groupsuch as ours and have clearly demonstrated the potential of the ground to whichwe have access, as well as the validity of Gravity's approach. The Mwana proposal, if approved, gives shareholders the option of cashing outtheir holding at $0.28 per share or, if a shareholder holds more than 20,000shares, maintaining an interest in Gravity's programs through accepting oneMwana share for each four Gravity shares. Further, if the proposed option schemeproceeds, holders of listed options will receive a cash consideration of $0.06for each listed option they own. Additional information about the mergerproposal can be found in Gravity's announcement to ASX on 17 November 2006 onASX's website: www.asx.com.au. You can expect to receive detailed information about the proposal by earlyFebruary 2007 and be requested to vote on it about one month later. I would personally like to thank you for your support over the past few yearsand look forward to the programs that we have started together leading to majornew diamond discoveries. Yours sincerely, Phil Harman Managing Director Further Information: Phil Harman, Managing Director, Gravity Diamonds Ltd. Tel: +61-3-9909-7655 Elisa Bartlett, Assistant to the Managing Director, Gravity Diamonds Ltd. Tel: +61-3-9909-7655 Ron 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