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Attention Business Editors
BRC DiamondCore announces agreement to sell alluvial diamond projects in South Africa and provides update on liquidation application
TORONTO and JOHANNESBURG, July 3 /CNW/ - BRC DiamondCore Ltd. ("BRC" or
the "Company") (TSX - "BCD"; JSE - "BCD") announces that it has entered into a
Heads of Agreement (the "Agreement") with KIG Mining Plc ("KIG") pursuant to
which KIG has agreed to purchase BRC's alluvial diamond projects in South
Africa, consisting of the Silverstreams, De Kalk, Muishoek, Sanddrift and
Uitdraal projects, together with the processing plant, mining fleet and
equipment which are associated with these projects. These assets (the
"Purchased Assets") are held by BRC through South African subsidiaries of BRC.
The purchase price for the Purchased Assets set out in the Agreement is
US$10.7 million, consisting of the following:
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(a) US$2.0 million in cash to be paid to BRC (such payment is to be made
in two tranches, with the first tranche of US$500,000 to be made no
later than one month after the hand-over of operations at the
Silverstreams project and the remaining US$1,500,000 to be made no
later than two months after the hand-over);
(b) 18,000,000 ordinary shares of KIG (the "KIG Consideration Shares") to
be issued to BRC at a price of US$0.478 per share (or US$8.6 million
in the aggregate); and
(c) US$100,000 to be paid by KIG directly to existing creditors to
facilitate the resumption of operations at the Silverstreams project
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KIG is a publicly-traded gold and diamond exploration company (symbol:
5KM on the Frankfurt Exchange) with properties in Liberia, West Africa. KIG's
head office is in the United Kingdom.
The Agreement provides that (i) BRC will have a put option to sell the
KIG Consideration Shares, which trade on the Frankfurt Exchange, to KIG at a
price of US$0.478 per share, exercisable in stages over a 13 month period
commencing in May 2010, and (ii) KIG will have a call option to purchase the
KIG Consideration Shares from BRC at a price of US$0.75 per share exercisable
in stages over a 13 month period commencing in May 2010. The said put and call
options will remain in place until August 31, 2011, after which BRC may sell
any of the KIG Consideration Shares still held by BRC (i.e. which have not
been previously sold or purchased pursuant to the put and call options).
The transfer of the Purchased Assets to KIG will only be completed upon
the expiry of the said put and call options. For as long as the said put and
call options are still in place, BRC will be entitled to nominate one director
to the board of directors of KIG.
KIG intends to resume operations at the Silverstreams project, utilizing
staff previously employed at this operation, and a plan for the transition of
the project into production will be assisted by BRC over the next two to four
weeks. KIG will be responsible for providing the working capital to resume
such operations.
The Agreement further provides that should KIG default on any of the
terms contained in the Agreement, BRC would be entitled to cancel the
Agreement and that, in the event of cancellation, KIG would be required to
vacate the project sites, the Purchased Assets would be returned to BRC, and
any amounts paid to BRC under the Agreement would be forfeited to BRC as
unliquidated damages.
The Agreement contemplates the entering into by BRC and KIG of a further
purchase and sale agreement (which is referred to in the Agreement as the
"Main Agreement") containing such other terms and conditions as are normal and
appropriate for a sale and purchase of assets as envisaged by the Agreement.
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Liquidation Application
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As reported in the Company's interim financial statements for the three
month period ending March 31, 2009, an application was made in Kimberley,
South Africa by a former advisor to the Company for the liquidation of the
Company's wholly-owned subsidiary, Diamond Core Resources (Pty) Ltd. ("DCR").
DCR holds all of the Company's South African projects and assets. The claim
arises from an alleged debt for services allegedly provided before the
acquisition of DCR by the Company. The judgment of the Northern Cape High
Court (Kimberley) is expected to be delivered today (Friday, July 3, 2009).
The outcome of the liquidation application may adversely affect the
ability to complete the sale of the Purchased Assets pursuant to the Agreement
with KIG. Although the outcome of the liquidation application is not known at
the time of issuing this press release, the Company intends to use the
proceeds from the sale of the Purchased Assets to settle the South African
creditors.
BRC DiamondCore Ltd. is an African-focused diamond explorer active in
South Africa and the Democratic Republic of the Congo. Led by a management
team with extensive experience in diamond exploration and mine development,
the Company has a broad spectrum of projects ranging from advanced stage trial
mining operations through grass-roots exploration. The Company's projects
comprise both prospective alluvial gravels and primary kimberlite targets. The
Company works in a systematic and responsible manner to discover, assess and
develop diamond resources for the benefit of its shareholders and local
stakeholders.
Forward-Looking Information
This press release contains forward-looking information which is not
comprised of historical facts. Forward-looking information involves risks,
uncertainties and other factors that could cause actual events, results,
performance and opportunities to differ materially from those expressed or
implied by such forward-looking information. Forward looking information in
this press release includes, but is not limited to, the expected effect of the
sale of the Purchased Assets (the "Sale") on the Company's financial position,
the expected terms and conditions of the Sale, the anticipated timing for the
Company receiving from KIG the cash payments completing by the terms of the
Sale, the value of the KIG Consideration Shares and the Company's put option
to sell the KIG Consideration Shares to KIG. Factors that could cause actual
results to differ materially from those described in such forward-looking
information include, but are not limited to, the Court ordering the
liquidation of DCR pursuant to the liquidation application referred to in this
press release, failure to complete the Sale in accordance with all of the
terms contemplated by the Agreement, adverse general market conditions,
adverse changes in diamond prices, foreign currency fluctuations, inflation,
political developments in South Africa, changes to regulations affecting the
Company's activities, delays in obtaining or failure to obtain required
project approvals and those other risks set out in the Company's public
documents filed on SEDAR. Although the Company believes that the assumptions
and factors used in preparing the forward-looking information are reasonable,
undue reliance should not be placed on such information, which only applies as
of the date of this press release, and no assurance can be given that such
events will occur. The Company disclaims any intention or obligation to update
or revise any forward-looking information, whether as a result of new
information, future events or otherwise, other than as required by law.
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/For further information: please visit our website,
www.brc-diamondcore.com, or contact: In Toronto: Martin D. Jones, Vice
President, Corporate Development, (416) 366-2221 or 1-800-714-7938; In
Johannesburg: Brian P. Scallan, Vice President, Finance +27 11 9582885/
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