TIDMFDI
RNS Number : 8114I
Firestone Diamonds PLC
22 June 2017
22 June 2017
Firestone Diamonds plc
("Firestone", the "Group" or the "Company") (AIM: FDI)
Amendment to the Standby Facility, drawdown of US$5.0
million
and issue of shares
Firestone Diamonds plc, the AIM-quoted diamond company,
announced on 26 April 2017 that commissioning activities at its
Liqhobong Diamond Mine ("Liqhobong") were largely complete and that
final ramp up was progressing on track, having achieved the plant's
nameplate throughput capacity on multiple occasions since the
commencement of operations.
Operations at Liqhobong continue to progress well and recoveries
and grade are improving in line with management's expectations.
Accordingly, the Company now expects to recover approximately
360,000 carats in the financial year ending 30 June 2017, against
April's guidance of 300,000 carats.
The Company has also commenced quarterly repayments under the
terms of its US$82.4 million ABSA debt facility, having achieved
first production, and made its first capital repayment of US$1.4
million in March 2017.
The current US$15.0 million standby facility provided by
Resource Capital Fund VI L.P. ("RCF") (the "Standby Facility")
expires on 30 June 2017 and, while the Company has sufficient
financial headroom to continue operations and meet its debt
repayment obligations as they fall due, the Directors of the
Company have decided to extend the Standby Facility to provide the
Company with a prudent level of financial and operational
flexibility.
Accordingly, the Company and RCF have agreed to extend the
Standby Facility for a further year to 30 June 2018, subject to the
Company drawing US$5.0 million on signature of the amendments to
the Standby Facility. As a result, the Company has submitted a
drawdown request to RCF for US$5.0 million under the Standby
Facility and as at 21 June 2017, assuming receipt of the US$5.0
million and including the proceeds from the Company's first diamond
sale for the current quarter, the Company will have cash on hand of
US$13.1 million.
The balance of US$10.0 million remaining under the Standby
Facility will give the Company the ability to maintain a prudent
working capital buffer and to provide the Company with the
flexibility to continue to optimise mining operations as they see
fit.
Summary of the amendments to the Standby Facility
-- US$5.0 million drawn on signature of the amendments. A
further US$10.0 million available until 30 June 2018
- Further drawdowns will be for a minimum of US$2.0 million and in increments of US$1.0 million
-- The final redemption of the Standby Facility shall now be no
later than 36 months following the first drawdown, being 21 June
2020
-- Arrangement fee of US$0.3 million payable to RCF for the
amendments to the Standby Facility to be satisfied by the issue of
556,680 new ordinary shares of 1 pence each ("Ordinary Shares")
-- All other terms of the Standby Facility remain the same,
including being structured by way of Series B Bonds
-- The proposed amendments are a related party transaction for
the purposes of the AIM Rules for Companies ("AIM Rules") as RCF is
a substantial shareholder in the Company
For more information contact:
+44 (0)20
Firestone Diamonds plc 8741 7810
Stuart Brown
+44 (0)20
Strand Hanson Limited (Nomad) 7409 3494
Stuart Faulkner
Richard Tulloch
James Dance
Macquarie Capital (Europe) Limited +44 (0)20
(Joint Broker) 3037 2000
Raj Khatri
Nick Stamp
Mirabaud Securities LLP (Joint
Broker)
+44 (0)20
Rory Scott 7878 3360
+44 (0)20
Ed Haig-Thomas 7878 3447
Tavistock (Public and Investor +44 (0)20
Relations) 7920 3150
+44 (0)7788
Emily Fenton 554 035
Jos Simson
Barney Hayward
Amendments to the Standby Facility
As detailed in the Company's announcement and circular of 24
April 2015, the Company and RCF entered into the Standby Facility.
The Standby Facility was to be drawn in up to three tranches for up
to, in aggregate, US$15.0 million before the end of June 2017. The
Company and RCF have agreed to extend the availability period of
the Standby Facility by a further year, until 30 June 2018, subject
to the Company drawing US$5.0 million on signature of the
amendments to the Standby Facility. Accordingly, the Company has
now submitted a drawdown request to RCF for US$5.0 million, with
the remaining US$10.0 million to be drawn in minimum tranches of
US$2.0 million and in increments of US$1.0 million before 30 June
2018.
In consideration for the amendments, the Company will pay RCF an
arrangement fee of US$0.3 million to be satisfied by the issue of
556,680 Ordinary Shares. In addition, RCF has agreed to waive the
US$75,000 establishment fee previously payable to RCF on initial
drawdown of the Standby Facility.
All other terms of the Standby Facility will remain the same, as
detailed in the announcement and circular of 24 April 2015. The
Standby Facility will still be structured by way of the Company
issuing up to US$15.0 million principal amount of secured quoted
US$1,000 denomination Eurobonds with an interest rate of 8.0 per
cent. per annum (the "Series B Bonds"). Pursuant to the bond
subscription agreement governing the Series B Bonds, which has been
amended to reflect the amendments to the Standby Facility, the
Company has been granted put options by RCF to require RCF to
purchase any or all of the Series B Bonds at a price of US$1,000
per Series B Bond up to a maximum of US$15.0 million (the "Series B
Options").
The Series B Bonds will be listed on the Cayman Islands Stock
Exchange. Following the exercise of the Series B Options in respect
of the first US$5.0 million of Series B Bonds, the Company has
applied for the listing and admission of the Series B Bonds to the
Cayman Islands Stock Exchange and will be freely transferable.
On the exercise of a Series B Option, the Company will also
issue warrants to RCF ("Warrants") (that can only be exercised by
way of a redemption of the Series B Bonds) in order to facilitate a
potential conversion of the principal and accrued interest of the
Series B Bonds, at the sole discretion of the warrantholder, into
new Ordinary Shares on their redemption. Under the terms of the
warrant instrument, the exercise price shall be determined at the
time of issue of each tranche of Series B Bonds and shall be the
lower of: (a) an amount equal to a 10.0 % premium to the volume
weighted average price of an existing Ordinary Share calculated
over the 30 day period immediately prior to the issue of the
relevant tranche of Series B Bonds; and (b) 37.5 pence.
The redemption terms of the Series B Bonds remain the same,
expect that the final redemption date shall now be no later than 36
months following the first exercise of a Series B Option, being 21
June 2020.
Related party transaction
RCF is a substantial shareholder as defined in the AIM Rules, in
that they currently have an interest in more than 10.0 per cent. of
the Company's issued share capital.
Accordingly, the amendments to the terms of the Standby Facility
and the associated issue of the Ordinary Shares to RCF constitutes
a related party transaction in accordance with Rule 13 of the AIM
Rules.
The Directors (apart from Mr Keith Johnson, who is RCF's nominee
on the Board and therefore not deemed to be independent) consider,
having consulted with the Company's nominated adviser, Strand
Hanson, that the terms of the amendments to the Standby Facility
and the associated issue of Ordinary Shares to RCF are fair and
reasonable insofar as its shareholders are concerned.
Admission and total voting rights
Application has been made to the London Stock Exchange plc for
the 556,680 new Ordinary Shares to be issued to RCF as part of the
amendments to the Standby Facility to be admitted to trading on AIM
("Admission"). Admission and dealings in the new Ordinary Shares is
expected to commence at 8.00 a.m. on 29 June 2017. On Admission,
the Company will have 317,471,892 Ordinary Shares in issue.
The Company does not currently hold any Ordinary Shares in
treasury. Accordingly, the above figure of 317,471,892 may be used
by shareholders as the denominator for the calculations by which
they will determine if they are required to notify their interest
in, or a change in their interest in, the share capital of the
Company under the Financial Conduct Authority's Disclosure Guidance
and Transparency Rules.
Following the issue of the new Ordinary Shares, RCF will be
interested in 75,684,082 Ordinary Shares respectively, representing
approximately 23.84 per cent. of the Company's issued ordinary
share capital.
City Code
As set out in the announcement and circular dated 24 April 2015,
and Under Rule 9 of the City Code (to which the Company is
subject), any person who acquires, whether by a series of
transactions over a period of time or not, an interest in shares of
a company which (when taken together with shares in which any
person(s) acting in concert with him are interested) carry 30 per
cent. or more of the voting rights of that company, or any person,
together with persons acting in concert with him, who is interested
in shares which, in aggregate, carry not less than 30 per cent. of
the voting rights of a company but does not hold shares carrying
more than 50 per cent. of such voting rights and such person, or
any other person acting in concert with him, acquires an interest
in any other shares which increases the percentage of shares
carrying voting rights in which he is interested, such person will
normally be required to make an offer to the holders of shares in
that company to acquire all of the shares in that company not held
by him or persons acting in concert with him. Such an offer would
have to be made in cash, or be accompanied by a cash alternative,
at not less than the highest price paid for any interest in shares
by that person or by any person acting in concert with him within
the 12 months prior to the announcement of such offer.
Following Admission, RCF will be interested in 75,684,082
Ordinary Shares (equal to 23.84 per cent. of the Company's then
issued ordinary share capital). RCF also holds warrants to
subscribe for 24,393,218 Ordinary Shares at an exercise price of
37.5 pence which were issued in 2014 as part of the then financing
(the "2014 Warrants"). If RCF exercised its 2014 Warrants in full,
RCF would, assuming the Company has not issued any further Ordinary
Shares and RCF has not disposed of any Ordinary Shares, be
interested in approximately 29.27 per cent. of the Company's then
enlarged issued share capital.
The number of new Ordinary Shares to be issued on exercise of
the Warrants cannot be calculated as at the date of this
announcement as it will be determined by reference to the
redemption amount of the Series B Bonds (being equal to the
principal amount and accrued interest calculated at the time of
exercise of the Warrants), the exercise price (calculated at the
time of issue of each tranche of Series B Bonds) and the 20-day
average exchange rate of the GBP:US$ currency exchange rate at the
time of issue of each tranche of Series B Bonds.
Accordingly, assuming the Company exercises the Series B Options
in full and RCF subsequently elects to exercise both the 2014
Warrants and Warrants in full and that, save as set out in this
paragraph, RCF retains its holding in Ordinary Shares and the
Company does not issue any further Ordinary Shares, the resulting
issue of the new Ordinary Shares upon such exercise of such
warrants by RCF would likely result in RCF's shareholding (together
with shares in which any person(s) deemed by the Panel to be acting
in concert (as defined in the City Code) with it are interested)
being equal to or greater than 30.0% of the Company's then enlarged
issued share capital, and pursuant to Rule 9 of the City Code, RCF
would then be obliged to make a mandatory offer in cash (or
accompanied by a cash alternative) for the entire issued Ordinary
Share capital not held by it (or any person(s) deemed by the Panel
to be acting in concert with it) at the highest price paid by RCF
(or any person(s) deemed by the Panel to be acting in concert with
it) for any interest in Ordinary Shares acquired in the previous 12
months.
It is at RCF's sole discretion in relation to the Series B Bonds
(or any other warrantholder, to the extent that the Warrants have
been transferred) as to whether it elects to exercise the Warrants
and if the Warrants are not exercised, the Company will accordingly
redeem the Series B Bonds for cash at the Maturity Date.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
Background information on Firestone
Firestone is an international diamond mining company with
operations focused in Lesotho. Firestone is currently in the
process of commencing production at the Liqhobong Diamond Mine in
Lesotho. Liqhobong is owned 75% by Firestone and 25% by the
Government of Lesotho.
Lesotho is emerging as one of Africa's significant new diamond
producers, hosting Gem Diamonds' Letseng Mine, Firestone's
Liqhobong Mine and Namakwa Diamonds' Kao Mine.
For more information please visit:
www.firestonediamonds.com.
**ENDS**
This information is provided by RNS
The company news service from the London Stock Exchange
END
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