VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 10, 2009)
Diamond Corp. ("Lucara" or the "Company") (TSX VENTURE:LUC) is pleased to
announce that it has entered into a Sale Agreement to acquire a 70.268%
interest in Boteti Exploration (Pty) Ltd. ("Boteti"), which holds a 100%
interest in the AK6 project, from De Beers Prospecting Botswana (Pty) Limited
("De Beers"). The AK6 project is an advanced diamond development project
located in the Orapa district of Botswana, the largest diamond producing region
in the world.
A mining license was awarded to the project
in October 2008. The development of AK6 is planned as an open pit operation. Detailed
design work will commence as soon as the feasibility study has been updated,
which is expected to be completed in the first half of 2010. It is expected
that the AK6 mine will be in production within 18 months of completion of the
feasibility study update, subject to approval from the Government of the Republic of Botswana. In addition, the Company expects to prepare an NI 43-101 technical
report on the property within four months following the closing of the
There is excellent infrastructure within a
reasonable distance from the AK6 deposit including paved roads, water and power
from the national grid. The project is proximal to some of Botswana's largest
diamond mines. The AK6 body comprises three intersecting pipe-shaped lobes of
diamond-bearing kimberlite with similar geology to the nearby diamond mines.
Botswana has one of the highest credit ratings in Africa (A+), a democratically elected government since independence in 1966 and
internationally recognized transparent mining regulation. It maintains one of
the highest and most consistent economic growth rates in the world.
Mr. William Lamb, President and COO of
Lucara, commented, "We are extremely excited about this acquisition and are
looking forward to working with African Diamonds on the development of the AK6
project. The Company's mission since inception has been to build a leading
African-focused diamond production and development company. With this
acquisition, we are well on our way to achieving that goal. We have the Mothae
project in Lesotho going into pre-production test mining next year and now the
AK6 deposit in Botswana expected the year after. AK6 adds another strong asset
to Lucara's growing portfolio."
Pursuant to the Sale Agreement, Lucara will
acquire from De Beers a 70.268% interest in Boteti Exploration (Pty) Ltd.
("Boteti") which holds a 100% interest in the AK6 project. Lucara will acquire
its interest in consideration of US$49 million. The remaining interest in
Boteti is held as to 28.381% by African Diamonds PLC ("African Diamonds") and
indirectly by Wati Ventures (Pty) Ltd. ("Wati Ventures") as to 1.351%.
Lucara has agreed to grant African Diamonds a
call option exercisable for 120 days from the completion of the acquisition of
AK6, allowing African Diamonds to increase its interest in Boteti by a further
10.268% in consideration for approximately US $7 million plus interest at 8%
per annum. If African Diamonds elects to exercise this option, Lucara would
hold a 60% interest in Boteti, African Diamonds would hold a 38.65% interest
and Wati will hold 1.35%. The parties also have an option to acquire Wati
Ventures' interest for US$700,000.
To fund the AK6 acquisition, Lucara has
entered into a guarantee and loan facility with an insider of the Company in
the amount of US$49 million. As a condition of the guarantee and loan facility,
the lender will receive consideration of 12,191,200 shares of Lucara, of which 5,202,436
will be subject to shareholder approval. No further consideration is payable. The
shares will be subject to a four month hold period.
In addition, Lucara has agreed to provide a US$2
million convertible loan to African Diamonds to fund their portion of the
updated feasibility study and working capital. The loan is convertible into
shares of African Diamonds at a conversion price equal to 85% of the 5 day
volume weighted average share price prior to the date of conversion. The
convertible loan bears interest at 8% and is due within 120 days of demand. Lucara
has funded this convertible loan by a short term loan facility from an insider
of the Company in the amount of US$2 million. The short term loan facility
bears interest at US prime plus 2% and is due in six months.
The acquisition transaction is subject to the
approval of the Government of the Republic of Botswana.
Haywood Securities Inc. acted as financial adviser to Lucara in respect of the transaction.
The technical contents of this release have
been reviewed by Dr. Tom Nowicki of Mineral Services Canada, a Qualified Person
in terms of NI43-101.
On Behalf of the Board,
William Lamb, President and COO
Forward-looking statements: This press
release contains statements about expected or anticipated future events, including
the completion of the transactions contemplated by the Sale Agreement and
development and production activities on the AK6 project, that are
forward-looking in nature and, as a result, are subject to certain risks and
uncertainties, such as: general economic, market and business conditions; the
regulatory process and actions in Botswana and the other locations in which the
parties to the Sale Agreement operate; the availability of financing on
commercially reasonable terms; technical issues; new legislation in Botswana
and the other locations in which the parties to the Sale Agreement operate; competitive
factors and conditions; the uncertainties resulting from potential delays in
development or changes in plans; the occurrence of unexpected events and
management's capacity to finance, execute and implement its future plans. Actual
results may differ materially from those projected by management.