Diamond Fields International has been informed by Jean-Raymond Boulle, its largest shareholder, that he intends to oppose the re-election of the incumbent independent board of directors at the annual general meeting scheduled for Nov. 21, 2002. Mr. Boulle and a group of his long-time friends and business associates (the Boulle group) have filed a dissident proxy circular indicating that they wish to replace all of the incumbent independent directors with members of the Boulle group.
The board of directors is surprised and extremely disappointed by this opportunistic, capricious and totally unwarranted attack, which appears to be motivated solely by Mr. Boulle’s desire to abuse his position as the company’s largest shareholder and neuter the independence of the board. As part of his ambush agenda, Mr. Boulle is alleging that the company is in default of its obligations under a convertible promissory note and has purported to accelerate payment. The company denies that it is in default and believes that Mr. Boulle has ulterior motives.
Mr. Boulle refuses to communicate with members of the board and senior management despite repeated invitations to do so. As such, the board has no idea what legitimate concerns, if any, Mr. Boulle harbours concerning the company’s current governance, business strategy and performance. The dissident proxy circular issued by the Boulle group sheds no light on why Mr. Boulle thinks that the incumbent independent board of directors should be replaced nor as to Mr. Boulle’s plans for the company, if any, should he succeed in taking control.
The board of directors is, and always has been, committed to serving the best interests of all shareholders. The board is proud of its independence and believes that it is the key ingredient of good corporate governance. Shareholders should draw their own conclusions as to how independent a board of directors consisting of members of the Boulle group would be and the extent to which the interests of all shareholders would continue to be served.
The board has a plan for creating the conditions necessary to enable the company to become a competitive, low-cost, diamond mining enterprise. This plan was implemented in late 2000 following the completion of a successful feasibility study. The company commenced mining operations with the DFI-Trans Hex joint venture in May, 2001, and shortly thereafter commenced its efforts to secure financing for the purchase of its own mining vessel. Until the joint venture was terminated in July, 2002, production exceeded 39,000 carats and the company enjoyed operating profits in every quarter. Despite the setback from Trans Hex’s termination of the joint venture, for which the company is seeking legal redress in the South African courts, the company’s plan to purchase its own vessel remains on track. In September, 2002, the company entered into an agreement to purchase a vessel, which will become, after conversion, the company’s first fully owned and operated diamond mining vessel. On Nov. 1, 2002, the Overseas Private Investment Corp., a U.S. governmental agency, confirmed its commitment to finance the conversion of the vessel. The financing is for $15-million (U.S.) of which $10-million (U.S.) can be drawn down immediately upon the completion of documentation and working capital requirements. The company is also in advanced discussions with mining contractors to resume mining operations at the company’s Luderitz concessions.
The Boulle group has no discernible plan for the company. If it has a plan, it prefers, for reasons known only to itself, to keep it secret. Again, shareholders should ask themselves how well their interests are likely to be served by the Boulle group.
The board of directors urges all independent shareholders to support the board in opposing the efforts of the Boulle group to gain control of the company in the pursuit of its own interests.
WARNING: The company relies upon litigation protection for “forward-looking” statements.
