Offer by Lucara Diamond Corp

 

TIDMAFD 
 
RNS Number : 7621T 
African Diamonds PLC 
04 October 2010 
 
 
 
 
 
 
4th October 2010 
 
African Diamonds copper-fastens AK6 mine development, sheds risk and relaunches 
exploration vehicle 
 
 
-      Lucara to acquire African Diamonds (AFD), valuing AFD at $82 million Cdn. 
-      Consideration of .80 of a Lucara share and 1 share in Botswana 
Exploration plc for every 1 share in African Diamonds. 
-      Botswana Exploration is a new company with cash, exploration 
opportunities in Botswana, and advanced stage licence applications in Zimbabwe 
and Cameroon. 
-      Botswana Exploration will seek listings on AIM and the Botswana Stock 
Exchange. 
-      Post transaction, AFD shareholders will hold 26.57% of Lucara.  Lucara 
has a 75% stake in the Mothae Diamond Mine in Lesotho and will own 100% of AK6. 
-      The transaction requires 75% approval at a Special Meeting of 
shareholders. 
-      The African Diamonds board unanimously recommend the proposal. 
 
African Diamonds (AFD) is pleased to announce that it has entered into an 
implementation agreement with Lucara Diamond Corp. (Lucara) pursuant to which 
Lucara will acquire all of the issued share capital of AFD by way of a Scheme of 
Arrangement. 
The consideration is .80 of a Lucara share plus 1share in Botswana Exploration 
plc for every 1 share in AFD.  This will give AFD shareholders 26.57% of Lucara 
which will own 100% of AK6.  Botswana Exploration will hold all of the interests 
of AFD apart from AK6.  These interests include cash, currently at US $2.9 
million, exploration ground in Botswana, including AK8, AK9 and BK5, advanced 
stage diamonds licence applications in the Marange  area of Zimbabwe and licence 
applications in Cameroon and indirect exposure to diamond plays in West Africa 
and the DRC. 
Lucara's shares are listed on the TSX-V and the intent is to list in Botswana. 
The current market capitalisation of Lucara is $180 million Cdn. 
Botswana Exploration will seek admission to AIM and a listing on the Botswana 
Stock Exchange at the conclusion of the deal.  Using the Lucara price and 
Canadian dollar exchange rate at the close of business on October 1st and 
imputing a director's valuation to Botswana Exploration of 7p per AFD share, the 
offer values each AFD share at 51p.   AFD currently has 100.4 million shares 
issued and outstanding, giving the transaction a total value of $82 million Cdn. 
 This is a premium of 27% on October 1st closing price. 
Lucara, as well as owning 60% of AK6 has a 75% interest in the Mothae diamond 
project in Lesotho.  Mothae is a high diamond value, large stone kimberlite 
located 6.5km from the Letseng diamond mine in Lesotho.  100,000 tonnes out of a 
700,000 tonnes bulk sampling programme have so far been processed.  Lucara 
report that diamonds from the previous bulk sampling campaign suggest a similar 
diamond population to Letseng. 
 The transaction will be implemented by way of a scheme of arrangement in 
accordance with Part 26 of the UK Companies Act of 2006. 
A circular containing the terms of the Scheme of Arrangement is expected to be 
posted to the AFD shareholders by October 31st.   The detailed terms of the 
transaction will be set out in the circular, which once posted to shareholders, 
will also be available on AFD's website at www.afdiamonds.com.  All shareholders 
are urged to read the circular once it becomes available as it will contain 
additional important information concerning the transaction.  The implementation 
agreement contains customary non-solicitation provisions. 
The board of AFD unanimously recommend the proposal.  Each director has entered 
into irrevocable arrangements to vote their shares in favour of the proposal. 
Subject to Lucara's right to match any offer, the board of AFD may terminate the 
arrangement in favour of an unsolicited superior offer upon payment of a US $1 
million break fee to Lucara. 
John Teeling, Chairman, commented.  "The logic of this deal is compelling. 
Marrying AFD and Lucara will create a $240 million Cdn emerging diamond producer 
controlling 2 new kimberlite diamond mines.  The new company, with strong 
financial backing, will be perfectly poised to exploit an expected gap in 
diamond supply. 
AFD shareholders win in three ways, they will hold an indirect stake in AK6 - 
the 26.57% holding in Lucara is close to the stake in AK6 held prior to the 
DeBeers takeout, they get 26.57% of the Lucara interest in the high diamond 
value Mothae mine in Lesotho and they will get 100% of Botswana Exploration, 
which will be an AIM/Botswana listed vehicle, holding all of the current AFD 
exploration interests. 
The track record of the Lundin Group, the backers of Lucara, in building 
shareholder value is outstanding.  The objective of the Lundin Group is to use 
Lucara to build a mid tier diamond producer.  The board of AFD endorse and 
support this strategy. 
The shareholders established AFD in 2001 as an early stage diamond prospector 
and they will return to this with the creation of Botswana Exploration.   With 
some cash, good ground in Botswana and exciting opportunities in Zimbabwe and 
Cameroon, this vehicle has great potential." 
 Further information: 
African Diamonds Plc 
John Teeling                                             Tel: [phone] 
James AH Campbell                                 Tel: [phone] 
Finn Cap 
Matthew Robinson, Corporate Finance   Tel: [phone] 
Henrik Persson, Corporate Finance        Tel: [phone] 
Joanna Weaving, Corporate Broking       Tel: [phone] 
College Hill 
Nick Elwes                                                Tel: [phone] 
2020 
 
 
                               www.afdiamonds.com 
 
 
 
NOTE ON LUCARA 
Lucara is a publicly traded reporting issuer based in Vancouver, Canada, with an 
approximate market capitalization of $180 million Cdn.   Lucara currently has 
Cdn$47 million in cash and cash equivalents on hand. 
Lucara's exploration and development consultants are highly regarded in the 
diamond mining industry and Lucara possesses the in-house technical and 
management team required to establish Lucara as a significant diamond producer 
in Africa. 
Lucara is a member of the Lundin Group of Companies, an internationally 
recognised group of 12 publicly traded natural resource companies.  The Lundin 
Group of Companies was founded Adolf H. Lundin and today is led by his sons, 
Lukas and Ian Lundin.  The Lundin family have long been leaders in identifying 
superior investment opportunities in the natural resource sector and have 
produced consistent long-term results.  In the process, they have developed a 
loyal following among capital markets participants. 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 OFBUGGWUUUPUGPW