Kopane Diamond Developments PLC

March 30, 2009 02:00 ET

Kopane Fundraising Announcement and appointment of Non executive Chairman

30 March 2009



Kopane  Diamond  Developments plc ("Kopane" or the "Company") announces today that it has  placed  firm  50
million  new Ordinary Shares at 3.5p per share, representing approximately 23 per cent. of Kopane's  issued
ordinary  share  capital  immediately after the Placing, with Obtala Resources Plc.  ("Obtala"),  to  raise
approximately £1.7m after expenses for the Company. Francesco Scolaro, Chairman of Obtala, is  joining  the
board of Kopane as non executive Chairman on completion of the Placing.

The funds are being raised to finance work in respect of the Definitive Feasibility Study and Environmental
and  Social  Impact  Assessment of the Group's Main Pipe Project at Liqhobong in Lesotho  and  for  general
working capital purposes.

The  Placing  Shares  are being issued credited as fully paid and will rank pari passu  with  the  existing
Ordinary  Shares,  including the right to receive all dividends and other distributions declared,  made  or
paid on or in respect of such shares after the date of issue of the Placing Shares.

The  Company has applied for the Placing Shares to be admitted to trading on the AIM market of  the  London
Stock  Exchange  and it is expected that Admission will take place and that trading will commence  in  such
shares on or about 1 April 2009.

Canaccord  Adams  has entered into a placing agreement with the Company pursuant to which  Canaccord  Adams
agreed  to  use  its  reasonable endeavours to place the Placing Shares with Obtala Resources  Plc  at  the
Placing  Price.  The  placing  of the Placing Shares is conditional upon, inter  alia,  Admission  becoming
effective and upon the Placing Agreement not being terminated in accordance with its terms.

Background to the Placing and Recent Developments in Lesotho

The Company suspended production from its Satellite Plant operations at the beginning of December 2008 as a
result  of sharply falling prices available for rough diamonds due to the present world economic situation.
Rough diamond prices available to the Company have fallen by some 30 - 50% since October 2008 and it is, as
yet,  unclear  when  they will return to previously prevailing levels, although the medium  and  long  term
outlook  for  rough  diamond prices remains robust in the face of projected supply shortages.  In  the  two
months preceding the suspension, production at the small scale Satellite Plant had been running at its name-
plate  capacity of 60 tonnes per hour, from a blend of Satellite Pipe and Main Pipe kimberlites  and  plant
availability and diamond recovery performances have been excellent.

Other  than  completion of processing of 1,800 tonnes of mini bulk samples obtained from the wide  diameter
drilling  programme,  work at the Liqhobong site for the DFS has been largely completed.  In  particular  a
total  of  33,921 tonnes of bulk samples from each of the four facies of the Main Pipe has been treated  by
the  Satellite  Plant. These bulk samples yielded 12,514 carats of rough diamonds, valued independently  by
diamantiers  at  $86/ct in September 2008, equivalent to a total of some $1 million and  are  held  in  the
Company's inventory. The Company believes that it is in its best interests to retain these diamonds in  its
inventory  for the foreseeable future. The diamonds were recovered under strict QA/QC conditions  and  help
demonstrate  the  in-situ value of the Main Pipe kimberlite. The valuation could  be  re-assessed,  in  due
course, as required, to support the Company's eventual funding of the Main Pipe project.

The Company announced on 17 November 2008 a substantially increased interim resource statement for the Main
Pipe  which, on the modelled diamond valuation, showed an indicative value of the in-situ diamond  resource
of  $2.54  billion, consisting of 76 million tonnes of kimberlite at an average grade of  39.1  carats  per
hundred  tonnes  at  a  run of mine value of $86 per carat. This is a 213% increase in  the  value  of  the
resource against that published in the Company's Pre-Feasibility Study in July 2007.

In  the announcement of the suspension of production on 1 December 2008, the Company disclosed that it  was
taking  measures  to conserve cash in the difficult financial environment, including the  scaling  back  of
corporate overheads and that it would continue to progress a resolution to the Company's immediate  funding

The  placement of the operation at Liqhobong onto a care and maintenance footing has reduced the cash drain
on  the Company's financial resources. The principal focus of the Company in 2009 is the completion of  the
DFS and the ESIA in respect of the Main Pipe which will be largely funded from the proceeds of the Placing.
Further working capital will be required to finance the Company up to the point of funding of the Main Pipe
construction project.  This further working capital requirement is likely to be approximately £2.4  million
assuming the Main Pipe construction project funding takes place at the end of 2010.

The Group's Finnish Joint Venture

The  Company's  Finnish assets are being operated, financed and developed under a joint  venture  agreement
with  Mantle  Diamonds Limited. Under this agreement, Mantle can earn up to a 70% interest in  the  Finnish
assets  by  expending  $5  million, including producing a definitive feasibility  study  on  the  Lahtojoki
property and issuing Kopane with 10 million shares in Mantle, with a pre-IPO value of £2 million.  To date,
Mantle has spent approximately £668,000 in respect of the feasibility study at Lahtojoki.

The  Company  owns  3.4  million shares in Mantle, which at 31 December 2008 had  an  attributed  value  of
£334,000.  Under  the  terms of the JVA, the Company will, subject to certain conditions,  be  due  a  cash
payment  by  Mantle  of  £667,000  in  August 2009.  Sums that  may  become  due  from  Mantle  and/or  the
monetarisation of these assets have been excluded from the Company's near term cash projections.

Reasons for the Placing and use of proceeds

It  is planned that the net proceeds of the Placing will be used to progress the work in respect of the DFS
and  the ESIA which are estimated to be in aggregate £1.9 million and for general working capital purposes.
The  Company's  cash resources as at 1 March 2009 amounted to approximately £0.2 million  and  these  funds
together with the funds from the Placing, are projected to be exhausted in the third quarter of 2009  based
on  the Group's current planned expenditure. The Directors believe that additional funds over and above the
proceeds  of  the Placing announced today, of approximately £2.4 million will be required to  complete  the
DFS,  (subject  to  no  material overruns or delays) and to fund the Company for the period  following  DFS
completion until it is able to arrange funding for the Main Pipe construction project, which is planned  to
take  place  at the end of 2010. Further work in respect of the DFS is discretionary and can  therefore  be
carried out by the Company to the extent that the Company has available funds. If such further work on  the
DFS  were not to be carried out, the net proceeds of the Placing would fund the Company until approximately
December 2009.

In  view  of the Company's need for further working capital following the Placing, the Board are  reviewing
all  the  alternative  strategic options available to the Company including how this working  capital  need
might  be  funded.  Any further equity, or equity linked funding would be subject to shareholder  approval.
The above estimates are made on the assumption that the Company does not resume production at the Satellite
Plant (which it would do only if such production would provide a positive cash contribution), and that  its
Finnish JVA assets and diamond inventories are not monetised.

Current Trading and Prospects

The Company continues to progress the DFS. Remaining work on site consists of completing the processing  of
approximately 1,800 tonnes of mini bulk samples recovered from a 25 hole programme, totalling 4,415 metres,
of  large  diameter  drilling undertaken by Bauer, using a Prakla RB-40 RC drill  rig.  These  samples  are
currently  being treated in a custom-built dense media separation plant with a capacity of up to  5  tonnes
per hour, under independent QA/QC supervision. Once these samples have been processed, the Company will  be
able  to  demonstrate  grade data at depth for each of the four facies, which should  enable  more  of  the
resource  to  be classified into the higher definition measured and indicated categories. It is anticipated
that a final resource statement will be available in the second quarter of 2009.

Other  than the above work, the remaining DFS activities involve primarily completion of plant and tailings
disposal design, infrastructure requirements and completion of ESIA work.

The  Company is close to finalising a Memorandum of Understanding between its subsidiary, Liqhobong  Mining
Development  Company, Lesotho Electricity Company, the Government of the Kingdom of Lesotho and  a  lending
bank,  in  respect  of  funding of the construction of an electrical power line to the  Company's  mine  at
Liqhobong.   The Memorandum of Understanding contemplates funds being lent by the bank to LEC to  fund  the
construction  of the power line from LEC's sub-station at Ha Lejone, which is approximately  30  kilometres
from Liqhobong. In addition, LEC and GOL will contribute funds towards the cost of the project and GOL  has
agreed  to provide a sovereign guarantee to the bank in respect of the loan funding. LMDC will service  the
loan and its repayment on terms to be agreed.

The  engineering  specifications of the power line, together with environmental impact assessment  studies,
have been completed in readiness for an immediate start to the construction once funding is in place. It is
planned  that the loan documentation will be finalised between the parties in the first half of 2009,  with
funds  made available to allow construction to commence in the second half of the year, which should  allow
grid  electricity to be connected to the mine site by the end of 2010. The availability of grid power  will
also mean that it would become practicable to undertake a brown field expansion to increase the size of the
Satellite Plant significantly from the current capacity of 425,000 tonnes per annum.

As  noted  above the Company awaits, in common with many diamond mining companies, for a recovery of  rough
diamond  prices sufficient to justify a resumption in production; however, its plans are currently  on  the
basis  that  production  will not resume until the end of 2010. By the time the  new  Main  Pipe  plant  is
producing,  estimated  in  2012,  the Directors believe that the market  for  rough  diamonds  should  have
experienced some recovery.

Appointment of new Chairman

The Company is today pleased to announce the appointment of Mr Francesco Scolaro, aged 45, as Non-Executive
Chairman of the Company, in place of Tim Read who will remain on the Board as a Non-Executive Director.  Mr
Scolaro  is chairman of Obtala Resources Plc, which has African mining interests, and is an active investor
in  publicly  quoted companies in the resource, leisure and property sectors. Mr Scolaro was  Non-Executive
Chairman  of  Regal Petroleum plc from October 2006 to November 2007, in which time he was instrumental  in
the successful resolution of local litigation issues in the Ukraine. Until March 2008 Mr Scolaro was a Non-
Executive Director of Regal Petroleum plc.

There  is  no information in relation to Mr Scolaro's appointment required pursuant to Schedule 2 paragraph
(g) of the AIM rules for Companies other than as follows:

Current Directorships

Obtala Resources Plc
Uragold Limited
Obtala Limited

Past Directorships

African Rock Resources Ltd
ANSCO Petroleum Ltd
Regal Petroleum Plc
Regal Petroleum Jersey
Regal Petroleum Egypt
Regal Petroleum Corporation
Sierra Leone Diamond Coompany
African Minerals (UK) Plc
Funteam Leisure Ltd
Monte Cristo Investments Ltd
Avenimenti Turistici Italiani Limited

Other:  Mr  Scolaro was a director of Avenimenti Turistici Italiani Limited ("ATIL") at the time  when  the
shareholders of ATIL resolved to voluntarily wind up ATIL due to it being unable to meet its liabilities or
continue  its  business. A liquidator was appointed on 6 April 2004. On resolution of the  winding  up  the
amount  owed to creditors, as per the liquidators final Statement of Receipts and Payments, dated  22  June
2005, was £189,989. ATIL was dissolved on 26 September 2006.

Mr.  Scolaro was a director of Funteam Leisure Ltd which was dissolved on 28 March 2006 and of Monte Cristo
Investments Ltd which was dissolved on 15 August 2006.

Obtala Resources Plc

Obtala Resources Plc was admitted to AIM in April 2008 under the ticker OBT, and is the holding company  of
a  mineral  exploration and development group, with an initial focus in gold, nickel,  uranium,  iron  ore,
PGE's  and  gemstone opportunities in Tanzania, East Africa. Obtala is led by a management  team  who  have
experience  of  resource  companies  operating in emerging markets.  Obtala's  objective  is  to  undertake
exploration  of its portfolio of mineral assets and ultimately to increase the value of its assets  through
the  development  of  resource estimates and, where appropriate, commence production  of  the  economically
feasible assets.

Tim  Read,  Chairman of the Company today said "The investment by Obtala Resources Plc. not  only  provides
funding  for  further work on the DFS now but also gives potential access to future funding to  enable  the
Main  Pipe to be brought to full production. The Company continues to consider its strategic options. Frank
Scolaro brings with him a wealth of experience in developing resource companies and I am pleased to welcome
him  as  the new Chairman. I will remain a non-executive director of the Company and will continue to  work
for the successful development of our quality Liqhobong assets."


For further information contact:

Kopane Diamond Developments Plc:                                 Threadneedle Communications
Tim Read, Executive Chairman                                     Laurence Read/Graham Herring
James Cable, Finance Director                                    +44 (0) 20 7653 9855
+44(0) 20 7963 9590                                              

Canaccord Adams Limited                                          
Robert Finlay                                                    
Bhavesh Patel                                                    
+44 (0) 20 7050 6500                                             
E-mail: ir@kopanediamonds.com                                    
Website: www.kopanediamonds.com                                  

Canaccord  Adams,  which  is  authorised  and regulated by the  Financial  Services  Authority,  is  acting
exclusively for the Company and no-one else in relation to the Placing and will not be responsible  to  any
person  other than the Company under FSMA, the rules of the FSA or otherwise for providing the  protections
afforded to its clients or for any matter concerning the Placing or for providing advice in relation to the
Placing or in relation to the contents of this Announcement or any other transaction, arrangement or matter
referred to herein.

This  announcement is for information purposes only and does not constitute an offer to issue or  sell,  or
the solicitation of an offer to subscribe for or acquire, any securities to any person in any jurisdiction,
including without limitation in the United States, Canada, Australia or Japan.

The  distribution  of  this  announcement and the Placing and/or issue of the  Placing  Shares  in  certain
jurisdictions may be restricted by law. No action has been taken by the Company or Canaccord Adams, or  any
of  their  respective  affiliates  that  would permit an offer of  the  Placing  Shares  or  possession  or
distribution  of  this announcement or any other offering or publicity material relating  to  such  Placing
Shares  in  any jurisdiction where action for that purpose is required. Persons into whose possession  this
announcement  comes  are  required by the Company and Canaccord Adams, to inform themselves  about  and  to
observe any such restrictions.

This  Announcement  is  not an offer of securities for sale in the United States.  Securities  may  not  be
offered  or  sold  in  the  United States absent registration under the US  Securities  Act  of  1933  (the
"Securities Act") or an exemption therefrom. The Company has not registered and does not intend to register
any  of  its Ordinary Shares under the Securities Act. The Placing Shares are not being offered or sold  in
the United States.


In this announcement:

"Admission"  means the admission of the Placing Shares to trading on AIM becoming effective  in  accordance
with the AIM Rules;

"AIM Rules for Companies" means the AIM Rules for Companies published by London Stock Exchange;

"AIM  Rules  for Nominated Advisors" means the AIM Rules for Nominated Advisors published by  London  Stock

"AIM  Rules"  means  together, the AIM Rules for Companies and the AIM Rules for Nominated  Advisors,  both
published by London Stock Exchange governing admission to and the operation of AIM;

"AIM" means the AIM market of the London Stock Exchange;

"Announcement" means this announcement;

"Board" or "Directors" means the board of directors of the Company;

"Canaccord Adams" means Canaccord Adams Limited;

"Company" or "Kopane" means Kopane Diamond Developments PLC;

"ct" means carat;

"DFS" means Definitive Feasibility Study on the Main Pipe;

"ESIA" means Environmental and Social Impact Assessment for the Main Pipe;

"FSA" means the Financial Services Authority;

"FSMA" means the Financial Services and Markets Act 2000, as amended;

"GoL" means Government of the Kingdom of Lesotho;

"Group" means the Company and its subsidiaries;

"JVA" means the Company's joint venture agreement with Mantle Diamonds;

"LEC" means Lesotho Electricity Company;

"LMDC" means Liqhobong Mining Development Company, a subsidiary of the Company;

"London Stock Exchange" means London Stock Exchange plc;

"Main Pipe " means the main kimberlite pipe within the Group licence at Liqhobong;

"Mantle" or "Mantle Diamonds" means Mantle Diamonds Limited, Kopane's Joint Venture partner in relation  to
the Company's Finnish assets;

"Official List" means the Official List of the UK Listing Authority;

"Ordinary Shares" means ordinary shares of 1 pence each in the share capital of the Company;

"Placing"  means the conditional placing of the Placing Shares at the Placing Price by Canaccord  Adams  on
behalf of the Company pursuant to the Placing Agreement;

"Placing  Agreement"  means  the  agreement dated 27 March 2009 between the  Company  and  Canaccord  Adams
relating to the Placing;

"Placing Price" means 3.5 pence per Placing Share;

"Placing Shares" means 50 million new Ordinary Shares which are expected to be admitted to AIM on or around
1 April 2009;

"QA/QC" means quality assurance/quality control;

"Satellite Pipe" means the satellite kimberlite pipe within the Group licence at Liqhobong;

"Satellite Plant" means the diamond production plant adjacent to the Satellite Pipe;

"Securities Act" means the US Securities Act of 1933, as amended;

"SLB" means Standard Lesotho Bank Limited;

"UK  Listing  Authority"  means the Financial Services Authority acting in its capacity  as  the  competent
authority for the purposes of Part VI of the Financial Services and Markets Act 2000 (as amended);

"UK" or "United Kingdom" means the United Kingdom of Great Britain and Northern Ireland;

"United  States" or "US" means the United States of America, its territories and possessions, any State  of
the United States and the District of Columbia;

"$" means the lawful currency of the United States;

"£" means the lawful currency of the United Kingdom.

Contact Information

  • Kopane Diamond Developments PLC