Diamonex to Give Up 80 Percent of Lerala Mine to Fleming. 5 October 2009
BOTSWANA - Embattled diamond junior, DiamonEx Limited has announced that it had entered into an agreement to sell 80 percent of its Botswana subsidiary to its bondholders in return for acquiring all of its liabilities.
Fleming Asset Management Botswana ("Fleming Botswana") is acting on behalf of DiamonEx's convertible bond holders. DiamonEx will also transfer its diamond exploration interests in the United States.
DiamonEx financed the development of its Lerala diamond mine primarily through convertible bonds and a loan from the European Investment Bank. However, the mine moved into production in 2008 just as prices for rough diamonds collapsed, immediately undermining the economics of the project. The project was placed on care and maintenance a few months later and DiamonEx filed for protection from its creditors while it sought to restructure its debt.
Today's agreement will see Fleming Botswana assume all of the obligation and liabilities under the terms of the A$10 million in convertible bonds. Liability for a European Investment Bank loan of approximately A$10 million will also be transferred to DiamonEx's Botswana subsidiary as part of the restructuring, and Fleming will also repay a P10 million loan due to Stanbic Bank of Botswana, and will lend A$0.5 million to DiamonEx, due to be repaid in 2 years. The loan will carry a 15 percent interest rate.
In addition to assuming control of DiamonEx's debt and taking an 80 percent stake in the diamond mine, Fleming Botswana and/or other bondholders will invest a further A$6.5 million into DiamonEx Botswana to provide working capital for the Lerala Diamond Mine.
"On successful completion of the transaction, DiamonEx will manage its 20 percent investment in DBL, continue exploration and evaluation of remaining tenements and will restructure the company to pursue other exploration and development opportunities," the company said in a statement to shareholders posted on the BSE.
The company's directors also said once the transaction has been completed it is intended that DiamonEx seeks re-instatement to trading of shares on the ASX and the BSE, however this will be subject to DiamonEx having complied with the relevant exchange's requirements. The company is focused on developing the Lerala diamond resource which lies within the company's Martin's Drift project area. The Lerala diamond resource comprises five diamondiferous kimberlite pipes. The estimated Indicated Diamond Resource is 13.5 million tonnes at a grade of 27.41 carats per hundred tonnes representing approximately 3.7 million carats of diamonds.
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