Dianor Resources Inc.
TSX VENTURE : DOR

Dianor Resources Inc.

September 27, 2010 09:00 ET

Dianor Delivers Notice for Initial Draw Down of $500,000 Under $30 Million Equity Line of Credit With Kodiak Capital Group, LLC

VAL-D'OR, CANADA--(Marketwire - Sept. 27, 2010) - Dianor Resources Inc. (TSX VENTURE:DOR)

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Dianor Resources Inc. (TSX VENTURE:DOR) announces that it has sent a notice to Kodiak Capital Group, LLC for an initial draw down of $500,000 under its previously-announced $30 million equity line of credit with Kodiak Capital (press releases March 3rd 2010, July 19th 2010 and September 20th 2010).

In accordance with the Amended and Restated Standby Equity Distribution Agreement dated July 9, 2010 between Dianor and Kodiak Capital, as amended, the common shares to be issued to Kodiak Capital under the draw down will be issued at a price per share equal to the volume weighted average price of Dianor's common shares on the TSX Venture Exchange for the five consecutive trading days (September 27 to October 1, 2010) following the delivery of the draw-down notice to Kodiak, less a discount of 10%. Under the policies of the TSX Venture Exchange, the minimum issue price per share is $0.05. Based on a minimum issue price of $0.05, the maximum number of common shares that can be issued by Dianor under this initial draw down is 10 million. The closing price of Dianor's shares on the TSX Venture Exchange on Friday, September 24, 2010 was $0.085. Closing of the initial draw down of $500,000 will take place on October 8, 2010.

Dianor's final base shelf prospectus dated September 13, 2010 with respect to the equity line of credit is available under Dianor's company profile on SEDAR at www.sedar.com. Following completion of the draw-down pricing period, Dianor will file a prospectus supplement qualifying the issue and sale of the shares to be issued to Kodiak Capital under the initial draw down.

Dianor's base shelf prospectus dated September 13, 2010 sets out the risk factors associated with the equity line of credit with Kodiak Capital, including the following key risks, which are extracted from the base shelf prospectus:

"Financial Risk - Financial Condition of the Company

As set out in Note 1 of the Notes to Financial Statements for the six-month periods ended June 30, 2010 and 2009 (on page 6 thereof), "there is material uncertainty as to whether the Company will have the ability to continue as a going concern beyond 2010...". See as well the section of Management's Discussion and Analysis for such period entitled "Liquidity Situation – Going Concern" on pages 10 to 12 thereof. Any person contemplating an investment in the Common Shares should consider this "going concern" risk factor prior to making such investment.

As set out in the Company's financial statements for the six-month periods ended June 30, 2010 and 2009, the Company had a working capital deficiency as at June 30, 2010 of approximately $3.2 million. As set out in Note 1 of the Notes to Financial Statements for the six-month periods ended June 30, 2010 and 2009, as at that date, the Company's required liquidities for the following twelve months totalled approximately $6.4 million. In this regard, as at June 30, 2010, the Company had approximately $82,000 in cash reserved for exploration expenses and approximately $131,000 in accounts receivable.

In light of the foregoing and the limitation, pursuant to the Regulatory Relief, on the number of Common Shares that can be issued by the Company to the Subscriber in any twelve-month period, it will in all likelihood be necessary for the Company to effect one or more financings in addition to this Offering, whether of equity or debt, in order to have the required liquidities of $6.4 million referred to above. The Company is actively seeking such financings, and has entered into the Credit Agreement referred to above under "Recent Developments – Credit Facility"; however, no assurances can be given that the Company will be able to effect such financings or have the required liquidities of $6.4 million referred to above. Failure by the Company to effect one or more such financings, whether of equity or debt, may have a material adverse effect on the Company's business and financial condition, potentially involving the insolvency of the Company.

Financing of Leadbetter Diamond Project

The Company has disclosed in several continuous disclosure documents that the estimated cost of the recommended work program on the Company's Leadbetter Diamond Project is approximately $32 million, comprised of a recommended first-phase program in an amount of $23 million and a recommended second-phase program in an amount of $9 million. In light of the limitation, pursuant to the Regulatory Relief, on the number of Common Shares that can be issued by the Company to the Subscriber in any twelve-month period, and the current trading price of the Common Shares on the TSXV (a closing price of $0.085 on September 10, 2010), it is unlikely that the Company will be able to raise, pursuant to the SEDA [Standby Equity Distribution Agreement], more than a portion of the funds needed for the recommended work program on the Leadbetter Diamond Project.

The Company will not rely exclusively on the SEDA in order to raise funds for the Leadbetter Diamond Project. The Company is actively seeking both debt and equity financing, whether by way of private placement or public offering, and has entered into the Credit Agreement referred to above under "Recent Developments – Credit Facility". The Company may also explore other alternatives, including the sale or optioning of certain of its properties. At such time, if any, as the Company signs definitive documentation for such a transaction, the Company will make public disclosure thereof, as required by applicable securities law. However, no assurance can be given that the Company's financing efforts will be successful. Furthermore, even if such a financing is successfully completed, there can be no assurance that it will be obtained on terms favourable to the Company. Any person contemplating an investment in the Common Shares should consider, prior to making such investment, that the Company does not at present, and may not in future, have sufficient funds to achieve its stated business objective (as of the date of this Prospectus), that is, the development of the Leadbetter Diamond Project. If the Company does not have sufficient funds to achieve its stated business objective, it will have a material adverse effect on the Company's business and financial condition."

In addition, there is a risk that Dianor might not be able to complete the initial draw down under the equity line of credit with Kodiak Capital or gain access to funds under the previously-announced Credit Agreement with Third Eye Capital Corporation, as administrative agent, and a syndicate of lenders (press release August 30th 2010). 

About Kodiak Capital Group, LLC

Kodiak Capital Group, LLC is engaged in assisting growth companies in all facets of their long term strategy by providing capital and progressive business solutions. Kodiak manages a portfolio of investments in public and private equities. Founded in 2009, Kodiak has already transacted in excess of $100 million in financing for companies across a multitude of industries, including biotechnology, business services, consumer products, defense, healthcare, Internet, manufacturing, medical devices, natural resources, oil and gas, renewable energy and wireless communications. Headquartered in New York City, Kodiak has assisted companies throughout North America and Australia.

About Dianor

Dianor is an innovative exploration company focused on advancing diamond exploration properties in the Superior Craton of Canada. The Leadbetter Diamond Project is its most advanced project and is geographically well situated and easily accessible, some 12 kilometres north east of Wawa in Northern Ontario. Substantial exploration work has been conducted on the project since 2005 and in May 2009, the Company received government approval to proceed with a 50,000 tonne bulk sampling programme of the 2.697 Ma old Archean Conglomerate. A preliminary tonnage estimate for this conglomerate is in the range of 549 million to 583 million tonnes (press release July 24th 2007). In addition to diamonds, the conglomerate contains gold, sapphires and rubies (press release January 18th 2007). In 2008, additional diamond discoveries, including rare purple diamonds, were made by the Company in rocks of similar type, age (Archean) and geological settings (press release March 3rd, April 10th, & May 13th 2008) in Quebec. The Quebec diamond properties have increased our portfolio of low cost, accessible exploration targets. These diamond discoveries (Ontario and Quebec) are both unique and amongst the oldest diamond-bearing occurrences in the world.

You can also visit our Web Site: www.dianor.com

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), or any state securities laws, and may not be offered or sold within the United States or to United States Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available.

Forward-Looking Statements

This news release contains statements that may constitute "forward-looking information" or "forward-looking statements" within the meaning of applicable securities legislation. This forward-looking information is subject to numerous risks and uncertainties, certain of which are beyond the control of Dianor Resources Inc. ("Dianor"). Actual results or achievements may differ materially from those expressed in, or implied by, this forward-looking information. No assurance can be given that any events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that Dianor will derive therefrom. Forward-looking information is based on the estimates and opinions of Dianor's management at the time the information is released and Dianor does not undertake any obligation to update publicly or to revise any of the forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable securities laws.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Dianor Resources Inc.
    Mr. John Ryder, P. Geo.
    President
    819-825-7090
    819-825-7545 (FAX)
    info@dianor.com
    or
    Dianor Resources Inc.
    Mr. Daniel Duval
    Chairman of the Board
    819-825-7090
    819-825-7545 (FAX)
    info@dianor.com
    or
    Resultz Media Group Corp.
    Mr. Tyler M. Troup, B.Comm
    Senior Associate - RMG IR
    877-301-9748
    519-979-7820 (FAX)
    Tyler@thinkRMG.com