Diamond Fields International Ltd., on Oct. 8, 2010, received Toronto Stock Exchange conditionally acceptance for a private placement of 7,234,461 units for gross proceeds of $1,229,858. Each unit comprises one common share and one-half transferable share purchase warrant, each whole warrant entitling the holder to purchase one additional share at 25 cents per share for a period of two years.
Of the $1,229,858 being raised, $451,357 was raised by the issuance of convertible debentures to two insiders of the company, one of whom is the company’s controlling shareholder. The conversion of the debentures is subject to receipt of disinterested shareholder approval. The debentures are for a two-year term, with 8-per-cent interest payable semi-annually, and will be convertible into units. The company will be seeking disinterested shareholder approval to the conversion of the debentures at its annual general meeting scheduled to be held on Dec. 6, 2010. If disinterested shareholder approval is not received, the debentures will be cancelled and the funds will be returned.
In accordance with the provisions of subscription agreements, on Oct. 19, 2010, the company issued the debentures (which are convertible into a total of 2,655,041 units, each unit comprising one share and one-half warrant, each whole warrant being exercisable into one common share at 25 cents per share on or before Oct. 18, 2012), together with 4,579,420 units at a price of 17 cents per unit, each unit consisting of one common share and one-half share purchase warrant, each whole warrant entitling the holder thereof to purchase one additional common share, exercisable from Oct. 19, 2010, until Oct. 18, 2012, at a price of 25 cents per share.
These shares, including any shares issued on conversion of the convertible debenture or on exercise of the warrants, will be subject to a hold period under applicable Canadian securities laws expiring on Feb. 20, 2011, and will be subject to such further restrictions on resale as may apply under applicable foreign securities laws.
Proceeds of the private placement will be applied toward advancing the company’s exploration projects and for general working capital.
Insiders and a related party have together directly and indirectly subscribed for a total of 3,155,041 units (inclusive of debentures convertible into 2,655,041 units) from the financing, and, accordingly, those related parties may acquire up to an additional 3,155,041 common shares in the capital stock of the company (excluding warrant shares) which will increase their pro rata shareholdings in the company. All of the independent directors of the company, acting in good faith, have determined that the fair market value of the securities being issued and the consideration paid is reasonable and, with the value of the related-party transaction being less than 25 per cent of the company’s market capitalization, is exempt from the formal valuation and minority shareholder approval requirements of the Ontario Securities Commission’s Rule 61-501.
