Hi Guys
Please see below a copy and reply I have received from KIM.
Use lot is all I can say.
Cheers
PC43
________________________________________
From: Jean Mathie [mailto:[email protected]]
Sent: Thursday, 19 July 2007 10:12 AM
Subject: RE: GEM offer - very poor!!
Please refer to the attached report and summary set out below.
Headline: Flash: Kimberley Diamond Company NL (KIM.AX): The Cavalry Arrives
Analyst(s): Jonathan Battershill; Brian Warner
Industry: Mining & Precious Metals
Ticker(s): KIM.AX(3S, A$.62)
Summary
* A70¢ cash bid - Gem Diamonds Ltd has bid 70¢/share for KIM, a 33% premium to the prior share price. KIM directors have unanimously recommended the bid and GEM will immediately acquire 14.9% of KIM stock from a range of shareholders. A $2m break fee has been agreed.
* Great result for KIM shareholders - We rate KIM a Sell (3S) with a valuation of 42¢/share but with a warning that costs remained too high and that the rising A$ could materially affect earnings and cash flow. Therefore the GEM bid is a good result under the circumstances. Note that KIM's holding in Blina Diamonds represents 7¢/share of our valuation.
* The pain wasn't over for KIM - The KIM chairman stated that the company has faced challenges outside its control, chief among these being the A$ strength. Indeed GEM has provided KIM with $10m for working capital indicating possible cash flow issues not long after the ~$15m capital raising in May'07.
* We recommend selling - Given our modest earnings profile for KIM that would be negatively impacted by possible higher A$ forecasts we recommend selling into the deal or into a stronger price emerges when the stock resumes trading.
* GEM an aggressive acquirer - GEM was listed in the UK in February '07 and produces gem quality diamonds from Lesotho and Indonesia with development projects in Botswana, The Congo, The Central African Republic and potentially Angola. KIM would provide geographic diversification and gems quality stones.
Sent: Thursday, 19 July 2007 9:04 AM
To: General(KDC)
Subject: GEM offer - very poor!!
Dear Sir
As a hold of KIM stock I think the offer from GEM is awful.
What terrible stock price manipulation prior to the offer!!!
As a minimum you should have question the dumping of stock by JP Morgan on the days before the bid.
Very poor show!!!
An AUD 2.0 break fee, why?
Do not expect me to be investing in any company that you run again.
Best Regards
KIM
kimberley diamond company nl.
