DIAMOND FIELDS ELIMINATES ROYALTY OBLIGATIONS
Diamond Fields International Ltd. (DFI) has reached agreements with Jean-Raymond Boulle, and companies controlled by Mr. Boulle, for the cancellation of all of its outstanding royalty obligations held by a company controlled by Mr. Boulle. This transaction will facilitate DFI’s efforts to secure a joint venture partner for its Greenland nickel project.
Pursuant to an agreement dated April 27, 2005, among DFI, Mr. Boulle and companies controlled by Mr. Boulle, the parties have agreed that all outstanding gross overriding royalties granted to a company controlled by Mr. Boulle in respect of proceeds received from production in Madagascar, Sierra Leone, Angola, the Democratic Republic of the Congo, Russia, Algeria and certain areas of Greenland will be eliminated in consideration for the payment to Mr. Boulle, directly or indirectly, of a total of 1.7 million common shares of DFI.
DFI has also decided to discontinue its diamond exploration programs in Sierra Leone and Madagascar, which it acquired from Mr. Boulle and companies controlled by Mr. Boulle. Consistent with the terms of the acquisition agreement, as reported in Stockwatch on July 31, 2003, DFI will return its remaining exploration interests in Sierra Leone along with related assets including diamond laboratories in Sierra Leone and Madagascar and two diamonds. In the quarter ended Sept. 30, 2004, DFI recorded a provision for impairment of $796,791 (U.S.) against the value of its Sierra Leone and Madagascar exploration properties.
Gregg Sedun, president and chief executive officer of Diamond Fields, said: “Under previous agreements with Mr. Boulle, DFI was able to acquire an international portfolio of exploration projects at no upfront cost other than the royalties. Eliminating these royalties now is necessary to complete a joint venture on our nickel properties in Greenland and possibly in Madagascar, and also removes a barrier to future exploration across a wide area of Africa.”
The transactions are subject to all necessary regulatory approvals and the acceptance of the Toronto Stock Exchange. By virtue of his share ownership in DFI, Mr. Boulle is an insider of the company. DFI has arranged for an independent valuation of the royalties to be eliminated in consideration for the DFI shares as described above. The transactions may close before 21 days following the filing of the material change report respecting this announcement, if management determines it is necessary or desirable for sound business reasons.
DFI has also decided that, based on results to date, it has decided not to pursue further exploration on its Ogna nickel project in Norway and has disposed of the property.
