Namibian Minerals has raised approximately $9.4-million (U.S.) from a private placement of securities which will enable it to commence the discharge of several subsidiary companies from provisional liquidation and to resume diamond mining operations off the Namibian coast. In addition, the company has entered into an agreement with the Leviev Group of Israel, which will invest $15-million (U.S.) into the company.
Namco’s chairman and chief executive officer, Alastair Holberton, said, “We are delighted to have secured financing to put our business back together, and to deploy the world’s most advanced production and exploration technology on our prospective Namibian concessions.”
Canaccord Capital Corporation has sold to investors outside Canada through Canaccord Capital (Europe) Limited 9.5 million special warrants for proceeds of $3.1-million (U.S.) and $6.3-million (U.S.) principal amount of 10-per-cent special notes with a term of two years, for gross proceeds of $9.4-million (U.S.). Each special warrant is exchangeable for one common share for no additional consideration. Similarly, special notes are exchangeable for a like principal amount of convertible debentures which are in turn convertible into common shares at 33 U.S. cents each. If a prospectus has not been filed by the company within 90 days to qualify the issuance of common shares and convertible debentures on exchange of the special warrants and special notes, an additional 10 per cent of the common shares otherwise issuable on exchange or conversion of the special warrants and convertible debentures will be issued, subject to shareholder approval. While the special notes and convertible debentures are outstanding, the holders can appoint two directors of the company. Both the special warrants and the special notes have a half warrant attached with each full warrant exercisable, subject to shareholder approval, over three years at 40 U.S. cents (50 Canadian cents) per share. In the case of the special notes, one-half warrant is granted for every 33 U.S. cents of principal amount of special note. Canaccord was paid a corporate finance fee of $280,000 (U.S.) payable in 850,000 shares of the corporation.
In addition, the Leviev Group has agreed to subscribe to $15-million (U.S.) of Namco’s common shares, with half warrants attached, subject to contract, shareholder, regulatory and stock exchange approval, as follows: 22.7 million shares at 33 U.S. cents per share for proceeds of $7.5-million (U.S.) with a one-half warrant per share purchase, exercisable at 40 U.S. cents per share and 15 million shares at 50 U.S. cents per share for proceeds of $7.5-million (U.S.), with a one-half warrant per share purchase, exercisable at 50 U.S. cents per share. The warrants will be exercisable over three years.
The Leviev Group, founded by Lev Leviev, is the world’s largest diamond manufacturer with diamond polishing plants, marketing agencies and other diamond activities around the world. The group’s annual turnover exceeds $1.5-billion (U.S.). Last year, the Leviev Group formed Ascorp, a joint venture with the Angolan government, which exclusively markets Angola’s legitimate diamond production, estimated at almost $1-billion (U.S.) per year.
Under the terms of the Namco agreement, the Leviev Group will acquire an exclusive 15-year marketing right to Namco’s production. The Leviev Group has agreed to buy all production at open market world prices with Namco retaining the right for independent pricing control via a price checking mechanism. The Leviev Group will become the controlling shareholder in the company, with an effective interest of approximately 31 per cent prior to the exercise of any warrants, and will appoint two board members in addition to the Canaccord appointments.
“This transaction is the first step in establishing a mutually beneficial relationship between the Leviev Group and Namco. They bring outstanding marketing expertise and financial resources, while Namco brings operating know-how, engineering excellence and its position in Namibia,” said Mr. Holbertson.
Arye Barboy, investment and development director of the Leviev Group, said, “The Leviev Group is delighted to become a major shareholder in Namco and is committed to its promising future in offshore diamond development.”
The new financing of approximately $25-million (U.S.) will allow the company to:
restart mining operations and exploration activities;
take its operating companies out of provisional liquidation;
rebuild the NamSSol mining system, damaged in January this year, while continuing to pursue its insurance claim;
reduce the company’s outstanding creditor position; and
provide working capital.
To further improve Namco’s financial position and in recognition of the disruption to production and cash flow from the loss of its NamSSol mining system, the company’s bankers have agreed to a capital repayment moratorium until the end of September and have committed to working with the company to reschedule its debt repayments at the end of September. The MV Ivan Prinsep, Namco’s least efficient and least productive vessel equipped with airlift technology, has been sold for approximately $4.4-million (U.S.) to reduce the company’s debt position. In addition, a group of creditors with claims valued at $6-million (U.S.) has agreed to a 12-month moratorium on repayment. Led by South African engineering companies, this initiative demonstrates Namco’s importance in the local industry and economy.
The company expects to resume mining operations in the coming weeks and will announce a revised operating plan shortly. On Friday afternoon, the vessel owners of MV Ya Toivo, Kovambo and Zacharias were paid outstanding charter fees, which should secure all vessels for future operation. It is expected that MV Ya Toivo, equipped with the new Nam 2 mining system, will be the first vessel back in operation. This vessel is by far the largest in Namco’s fleet and is expected to be the principal source of diamond production this year.
The Namibian Minister of Mines, the Jesaya Nyamu, has confirmed the good standing of Namco’s mining and exploration licences. Furthermore, he expressed his support for the Leviev Group’s involvement in Namco by stating, “We recognize Mr. Leviev’s worldwide reputation in diamond cutting and polishing, and we consider a strategic alliance would complement the development of the Namibian diamond industry.”
Mr. Holberton said: “The support and involvement of the Namibian government, the Leviev Group and other stakeholders is an endorsement of Namco’s success in developing unique technology to operate off the Namibian coast. We are now working on a recovery plan and look forward to resuming mining operations as soon as possible.”
The company will be sending a notice out shortly to fix the time and the date of the shareholders meeting to consider the matters described above which require shareholder approval. The meeting will be held on April 25, 2001.
