Diamond Fields International Ltd. has negotiated a private placement with investors for a total of $5-million by the issuance of 25 million units at a price of 20 cents per unit, each unit consisting of one common share and one transferable share purchase warrant, each warrant entitling the holder to purchase one additional common share, exercisable on or before June 2, 2008, at an exercise price of 40 cents per share. The private placement is subject to acceptance by the Toronto Stock Exchange.
As required by the rules of the Toronto Stock Exchange, shareholder approval to the participation in the private placement by the company’s largest shareholder, Jean-Raymond Boulle, is being sought at the company’s upcoming annual general meeting, as the issuance of shares to Mr. Boulle, together with his current shareholdings and shares that may be issued on conversion of an outstanding promissory note, may result in Mr. Boulle and/or companies controlled by him owning more than 20 per cent of the issued and outstanding shares of the company, constituting a control position.
Also as required under TSX rules, shareholder approval must be obtained for private placements of a total number of shares issuable being greater than 25 per cent of the number of shares outstanding (on a non-diluted basis) prior to the date of closing of a private placement, if the price per security is less than the market price. The company’s private placement is being offered at a discount from the current market price, and the shares to be issued pursuant to the private placement may exceed the number permitted by the 25 per cent rule, depending on the number of shares issued pursuant to the private placement and the number of shares outstanding at the closing of the private placement. Accordingly, the company has arranged to obtain shareholder approval at the AGM for the private placement, as required by the TSX.
The company will pay finders’ fees to agreed parties in connection with the private placement, which will be payable in cash and/or shares, as well as compensation warrants, as the case may be, in accordance with the policies of the Toronto Stock Exchange.
Proceeds will be used toward paying down outstanding debt, maintaining and advancing the company’s exploration projects, and for general working capital.
Certain of the insiders of the company, together with Mr. Boulle and/or companies controlled by him, may participate in the private placement by purchasing, directly or indirectly, units from the private placement for up to $1-million. Please refer to DFI’s annual information form and management proxy materials, which have recently been filed on SEDAR in Stockwatch, for particulars regarding percentage ownerships held by insiders of the company. In connection with the private placement of units to the related parties, DFI is relying on the exemptions from the formal valuation and minority shareholder approval requirements of Rule 61-501 of the Ontario Securities Commission, on the basis that the fair market value of the securities to be issued to the related parties under the private placement will be less than 25 per cent of DFI’s market capitalization, as determined by all of the directors of the company, excluding the directors that are related parties.
