On
Nov. 22, 2012, the Toronto Stock Exchange conditionally
accepted a private placement by the issuance of convertible debentures
in the total amount of $650,000 to two
insiders of Diamond Fields International Ltd., one of whom is the company’s controlling
shareholder. The issuance of the debentures was
subject to receipt of disinterested shareholder approval, which was
obtained at the company’s annual general meeting held Dec. 20,
2012.
In accordance with the provisions of subscription agreements, on Jan.
7, 2013, the company issued the debentures, which are for a two-year
term maturing Jan. 7, 2015, with 8-per-cent interest payable semi-annually.
The debentures are convertible into a total of 28,888,889 units at a conversion price of 2.25 cents per unit. Each unit is
composed of one common share and one share purchase warrant, each warrant entitling the holder to acquire one
additional common share on or before Jan. 7,
2015, at a price of 3.15 cents per warrant share.
Any shares that may be issued on conversion of the debentures or on
exercise of the warrants will be subject to a hold period under
applicable Canadian securities laws expiring on May 8, 2013, 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.
The insiders, who are accordingly related parties under applicable
Canadian securities laws, may acquire up to an additional 28,888,889
common shares in the capital stock of the company if they convert the
debentures (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, as the value of
the related party transaction is less than 25 per cent of the company’s market
capitalization, the transaction is exempt from the formal valuation and
minority shareholder approval requirements of Multilateral Instrument
61-101 — Protection of Minority Security Holders in Special Transactions.
