RLD.L Regulatory News (RLD)

22 Oct 2007 07:01

Tanzanite One Limited22 October 2007 Monday 22 October 2007 TanzaniteOne Limited Commences Strategy to Expand into other Premium Coloured Gemstones with the Acquisition of a Tsavorite Project TanzaniteOne Limited ("TanzaniteOne" or the "Company") is pleased to announcethe commencement of a strategy to leverage its position as a leading premiumcoloured gemstone producer, following the acquisition of the Lemshuku-ShamberaiTsavorite Project (the "Tsavorite Project", the "Acquisition"). Commenting on the acquisition, Ian Harebottle, CEO of TanzaniteOne said:"TanzaniteOne is increasingly recognised as the leading producer of tanzaniteand a significant participant in the premium coloured gemstone market. As welook to grow and widen the Company's position as a producer of premium colouredgems, it is only natural that we apply our experience, knowledge andrelationships to other gems which are complementary to tanzanite. We are excited about tsavorite because it shares similar mineralogy, geology,locality, route-to-market and market positioning as tanzanite. In particular, Iam confident that the proximity of the project to our tanzanite operations willallow us to effectively leverage off our existing infrastructure. This shouldallow for rapid project development and economies on the mining, processing andtrading fronts." TanzaniteOne has, through its 75% owned Tanzanian subsidiary, TsavoriteOneMining Limited ("TsavoriteOne") entered into an asset sale and purchaseagreement with each of Kirkwood Resources (Tanzania) Limited and Green HillMining Company Limited ("Green Hill'') to acquire an unencumbered 100% share incertain assets constituting the Lemshuku-Shamberai Tsavorite Project. Theremaining 25% interest in TsavoriteOne is owned by Tanzanian nationals. The Tsavorite Project: • Comprises 12 prospecting licenses covering 100 square kilometres. • Could potentially represent the largest known single-source of tsavorite. • Is located approximately 20 kilometres to the southwest of TanzaniteOne's existing tanzanite operations. • Tsavorite enjoys a current quality-for-quality market-price per carat of approximately two to four times that of tanzanite. The total consideration for the Tsavorite Project is £5,952,700 million,comprising 7,450,000 fully paid common shares in TanzaniteOne and $350,000 cash. Diversification Strategy TanzaniteOne is unique, as the largest and most scientifically advanced minerand supplier of rough tanzanite, and by association, a leader in colouredgemstone mining. The board of TanzaniteOne believes that this foundationprovides the opportunity to expand its business model into other premiumcoloured gems and thereby create additional shareholder value and earningsdiversification. Tsavorite (a green grossular garnet) offers a complementary fitwith tanzanite and is a logical first step to initiating a strategy of growthand diversification. The impact of this strategy will provide TanzaniteOne withnew growth avenues beyond it's established position as the world's leadingsingle producer of tanzanite. The Tsavorite Project The Tsavorite Project comprises a portfolio of exploration properties locatedapproximately 20 kilometres to the southwest of TanzaniteOne's existing miningoperations. The Tsavorite Project covers over 100 square-kilometres, made up of 12prospecting licenses and potentially represents the world's largestsingle-source of tsavorite. Independent geological assessment of the Tsavorite Project suggests an inferredresource of between 7.6 and 10.4 million bank cubic metres, approximately 18.24to 24.96 million tonnes, of potentially open pit mineable tsavorite bearinggravels (both alluvial and eluvial). It should, however, be noted that thisresource estimation is not yet JORC compliant and is derived from internal workcarried out by an independent geologist. Mr Ross McMaster, the independentgeologist supervising the project, is a member of the Australasian Institute ofMining and Metallurgy and work is currently continuing on the project in orderto upgrade the resource to a JORC compliant Indicated Resource status. The inferred resource is detailed in the table below (assuming the acquisitionof all the Prospecting Licences). Table 1: Tsavorite Project, Internal Inferred Resource Deposit Type Resource Type Bank Cubic Metres Estimated Tonnes (million) (million)Eluvial Inferred 1.6-2.5 3.84-6Recent Alluvial Inferred 1.8-2.4 4.32-5.76Pleo Alluvial Inferred 4.2-5.5 10.08-13.2Total Inferred 7.6-10.4 18.24-24.96 Note that this inferred resource is an estimate only and has not been compiledin compliance with a recognised standard. The grade for tsavorite in carats pertonne is yet to be determined. Resource Evaluation Program TsavoriteOne's exploration focus will be on completing a bulk-sampling programmeand is due to commence before the end of 2007. The work will focus on upgradingthe alluvial resource category from 'inferred' to 'indicated' and will becompliant with the JORC-code standard. Funding will be covered out of availablecash from the Company and it is anticipated that the resource evaluation will becompleted by the end of the first quarter of 2009, with the results being madeavailable thereafter. Processing of the bulk samples will take place atTanzaniteOne's Merelani processing plant which has spare capacity available. Results of the bulk sampling will determine the scale and style of commercialproduction. Transaction details The Project is being acquired from Green Hill and Kirkwood for an aggregateconsideration of 7,450,000 fully paid common shares in the capital ofTanzaniteOne and $350,000 cash, to be paid on completion. The value of theshares equates to £5,811,000 at a share price of £0.78 and represents 9.18% ofthe enlarged share capital of TanzaniteOne. The cash element will be financedfrom the Company's cash reserves and is payable either on termination of theAcquisition or on the completion date. If prior to completion, any prospecting licence is allowed to lapse, expire orcannot be transferred to TsavoriteOne, then TsavoriteOne can elect to eitherterminate the Agreements with Green Hill and Kirkwood; or negotiate in goodfaith with Green Hill a reduction in the number of shares to be transferred toGreen Hill as part of the consideration. The shares are subject to an orderly market agreement for a period of twelvemonths from date of completion. For the purposes of the AIM rules, in view of the beneficial interests inKirkwood held by TanzaniteOne Directors Michael Adams, Edward Nealon andNicholas Sibley, the transaction is deemed to be a related party transactionpursuant to Rule 13 of the AIM Rules. Accordingly, the decision to acquire theTsavorite Project has therefore been made and its terms approved by theindependent directors of the Board comprising Ian Harebottle, Ami Mpungwe andMark Summers (the "Independent Directors"). The Independent Directors consider,having consulted with the Company's Nominated Advisor (NOMAD), EvolutionSecurities Limited, that the terms of the transaction are fair and reasonableinsofar as TanzaniteOne's shareholders are concerned. Assets acquired and Conditions Precedent The assets to be acquired comprise the prospecting licenses, relatedintellectual property, tangible assets and completed exploration data over theprospecting licence area. Completion of the agreements is conditional upon the receipt by TsavoriteOne ofconsent in writing in terms satisfactory to TsavoriteOne from the Commissionerfor Minerals in Tanzania consenting to the transfer of all the prospectinglicenses (whether granted or as applications) and second, the execution of theagreement with Kirkwood. Tsavorite Tsavorite is the brilliant green gemstone variety of grossular garnet (Ca3Al2(SiO4)3), first discovered in 1967 in Lemshuku in northeast Tanzania. In 1974the new gem was named "Tsavorite," after the famous nearby "Tsavo National Park"in Kenya, by Tiffany & Co, who introduced the gemstone to the world market.Tsavorite has a vivid-green colour, is bright and lively with a high refractiveindex, durability and clarity. Tsavorite has a hardness approaching 7.5 on theMohs Scale and no cleavage plane, which makes it suitable for almost anyjewellery application and durable enough for everyday wear. Tsavorite is enjoysa current quality-for-quality price per carat of between two to four times thatof tanzanite. Analysis of available historic data would indicate that a sustainable increasein reliable supply should impact positively on pricing, providing the confidenceneeded by the mid to high-end luxury brands to include tsavorite into theirproduct range in a meaningful way. Qualified Persons The technical information has been reviewed and verified by Dr. Bernard Olivier,who has sufficient relevant experience to the style of mineralisation and typeof deposit under consideration. Dr Olivier is a Member of the AustralasianInstitute of Mining and Metallurgy and meets the criteria of a qualified personunder the AIM guidance note for mining, oil and gas companies. For further information please visit tanzaniteone.com or contact: In TanzaniaIan Harebottle, CEO+255 755 600 99 In the United KingdomNick Bias, InvestorRelations+44 (0)7887 920 530 Nominated Advisor and Joint BrokerJoint Broker Evolution Securities Ambrian PartnersSimon Edwards/Neil Elliot Richard Chase+44 (0)20 7071 4300 +44 (0)20 7776 7400 This information is provided by RNS The company news service from the London Stock Exchange