Key points
- The company could not file its annual audited financial statements for the year ended June 30, 2006, by the September 28, 2006 deadline required under National Instrument 51-102.
- Diamond Fields applied for a management cease trade order rather than an issuer cease trade order.
- PricewaterhouseCoopers LLP, the company’s new auditor since June 2006, is conducting its first audit of the financial statements.
- An issuer cease trade order could follow if the statements are not filed by November 28, 2006, though the company expects to file by October 12, 2006.
Diamond Fields International
Ltd. is filing this notice of default
pursuant to CSA Staff Notice 57-301, failure to file financial statements on
time — management cease trade orders, in respect of the company’s
inability to file its annual audited financial statements for the year ended
June 30, 2006, by the deadline of
Sept. 28, 2006, as required by National Instrument 51-102, continuous
disclosure obligations. In connection with the company’s inability to file the
annual financial statements on time, the company has applied to applicable
Canadian securities regulators requesting that a management cease trade order
(which restricts trading in the company’s securities by the company’s
insiders) be issued as opposed to an issuer cease trade order (which restricts
all trading in the company’s securities).
The company is unable to file the annual financial statements on time due
to the cumulative effect of the following factors:
Complicated technical issues relating to currency exchange matters,
intercompany reconciliations and income tax accounting issues, as
well as complex issues regarding financial instruments, were recently
identified by management in the course of the preparation of the
annual financial statements.
The company has encountered virus problems in its computer network,
which has delayed access to certain information required for the
preparation of the annual financial statements and resolution of
certain of the technical issues mentioned in the previous point.
The audit of the annual financial statements will be the first audit
of the company’s financial statements undertaken by the company’s new
auditor, PricewaterhouseCoopers LLP, which replaced the company’s
former auditor in June, 2006.
The proposed transaction with Moydow Mines International Inc. tied up
significant financial resources and personnel of the company, and as a
result of the termination of that transaction (please refer to the
company’s news in Stockwatch dated March 1, 2006, and Aug. 8, 2006, for
further details), the company was unable to use various personnel
and resources that were anticipated to be available to assist with
the preparation of the annual financial statements following the
completion of the transaction.
As a result of various changes in the position of chief financial
officer during the fiscal year ended June 30, 2006, including in
connection with the company’s office move from Vancouver to Cape
Town, South Africa, as well as in connection with the planned
completion of the Moydow transaction (discussed in the previous
item), there has been a lack of chief financial officer continuity during the relevant
period, which has caused various delays in relation to the preparation
of the annual financial statements.
- Complicated technical issues relating to currency exchange matters,
intercompany reconciliations and income tax accounting issues, as
well as complex issues regarding financial instruments, were recently
identified by management in the course of the preparation of the
annual financial statements.
- The company has encountered virus problems in its computer network,
which has delayed access to certain information required for the
preparation of the annual financial statements and resolution of
certain of the technical issues mentioned in the previous point.
- The audit of the annual financial statements will be the first audit
of the company’s financial statements undertaken by the company’s new
auditor, PricewaterhouseCoopers LLP, which replaced the company’s
former auditor in June, 2006.
- The proposed transaction with Moydow Mines International Inc. tied up
significant financial resources and personnel of the company, and as a
result of the termination of that transaction (please refer to the
company’s news in Stockwatch dated March 1, 2006, and Aug. 8, 2006, for
further details), the company was unable to use various personnel
and resources that were anticipated to be available to assist with
the preparation of the annual financial statements following the
completion of the transaction.
- As a result of various changes in the position of chief financial
officer during the fiscal year ended June 30, 2006, including in
connection with the company’s office move from Vancouver to Cape
Town, South Africa, as well as in connection with the planned
completion of the Moydow transaction (discussed in the previous
item), there has been a lack of chief financial officer continuity during the relevant
period, which has caused various delays in relation to the preparation
of the annual financial statements.
The company currently expects to file the annual financial statements by
Oct. 12, 2006.
Pursuant to 57-301, applicable Canadian securities commissions or
regulators may impose an issuer cease trade order against the company if the
annual financial statements are not filed by Nov. 28, 2006, being the date
that is two months following the date of the filing deadline for the annual
financial statements. In addition, an issuer cease trade order may be imposed
sooner if the company fails to file default status reports on time in
accordance with 57-301.
The company intends to satisfy the provisions of Appendix B to 57-301 by
filing a default status report in the prescribed form, as long as the company
remains in default of the financial statement filing requirement.
The company is not currently subject to any insolvency proceedings. If
the company provides any information to any of its creditors during the period
in which it is in default of filing the annual financial statements, the
company confirms that it will also file material change reports on SEDAR
containing such information.
As a result of the company’s inability to file the annual financial
statements on time, the company plans to proceed with its proposed rights
offering (as reported in Stockwatch on Sept. 1, 2006), following the date that the
annual financial statements have been filed. In addition, the company will
file its annual information form in respect of its fiscal year ended June 30,
2006, on the date that the company files its annual financial statements.
