Diamond Fields International Ltd. has closed its private placement announced in Stockwatch May 17, 2005, for gross proceeds, including an oversubscription of $500,000, of $2.5-million. At the closing on June 3, 2005, DFI issued a total of 10 million units at a price of 25 cents per unit, each unit consisting of one common share and one-half share purchase warrant, each whole warrant entitling the holder to purchase one additional common share in the capital stock of the company at a price of 40 cents per share on or before June 2, 2008, provided that in the event that the weighted average closing price of the company’s common shares on the Toronto Stock Exchange equals or exceeds $1.20 during any 20 consecutive trading days commencing 18 months after the date of issuance of the warrants, then the company may within 30 days of such an occurrence give notice in writing to the holders of the warrants that the warrants shall expire at 5 p.m. Vancouver time on the 20th business day following delivery of such notice unless exercised by the holders of the warrants prior to such time.
Also at the closing, the company issued to Haywood Securities Inc. a finder’s fee of 57,500 common shares at a deemed issue price of 25 cents per share, representing 5 per cent of the gross proceeds received by the company from certain subscribers.
The common shares forming part of the units, the common shares issued as a finder’s fee and any common shares issued on exercise of the warrants will be subject to a hold period under applicable Canadian securities laws expiring on Oct. 4, 2005, and will be subject to such other further restrictions on resale as may apply under applicable foreign securities laws.
Four of the directors and officers of the company together with Jean-Raymond Boulle participated in the private placement by purchasing, directly or indirectly, a total of 1.31 million units, representing approximately 13.1 per cent of the units issued under the private placement. Prior to the closing of the private placement, Mr. Boulle held, directly or indirectly, 13,318,772 common shares of the company, representing approximately 19.3 per cent of the company’s outstanding common shares. Following the closing of the private placement and the issuance of one million common shares pursuant to the private placement and 1.7 million common shares in consideration for the elimination of royalties as more particularly disclosed below, Mr. Boulle holds, directly or indirectly, 16,018,772 common shares of the company and warrants to purchase an additional 500,000 common shares, representing approximately 19.8 per cent and 2.7 per cent of the company’s outstanding common shares and warrants, respectively.
In connection with the private placement of units to the related parties, DFI relied 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 issued to the related parties under the private placement is 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.
A material change report under the rule was not filed prior to the closing of the private placement due to the fact that the final subscription details, including in relation to related parties, were not determined until shortly before the closing, and DFI, having determined such details and upon receiving approval of the transaction by its board of directors, wished to close the private placement on an expedited basis for valid business reasons. A material change report relating to the closing of the private placement will be filed as soon as practicable following the date hereof, and will be accessible under DFI’s profile in Stockwatch SEDAR files.
The funds raised in the private placement will provide the company with
working capital to finance its overhead and continuing exploration activities.
As noted above, the company also announces that it has received
regulatory acceptance to close and has issued 1.7 million common shares to a
company controlled by Mr. Boulle in consideration for the elimination of
certain royalties held by Mr. Boulle, which transaction was previously
announced in Stockwatch April 29, 2005. These shares also are subject to a hold period
under applicable Canadian securities laws expiring on Oct. 4, 2005, and
will be subject to such other further restrictions on resale as may apply
under applicable foreign securities laws. In connection with this transaction,
DFI relied on the exemptions from the formal valuation and minority
shareholder approval requirements of the rule on the basis that the fair
market value of the securities issued to the company controlled by Mr. Boulle
is less than 25 per cent of DFI’s market capitalization, as determined by all of the
directors of the company.
Diamond Fields also announces that it has successfully renegotiated its
debt obligations with Quest Capital Corp. and Spirit Resources
SARL, a company controlled by Mr. Boulle. In the case of
Quest, the parties have agreed, subject to certain conditions, to extend the
date of Quest’s loan of $1.95-million used to purchase the DF Discoverer
from June 30, 2005, to Nov. 30, 2005, for which a fee of 975,000 free-trading common shares of DFI is due to Quest. Mr. Boulle has graciously agreed
to provide the free-trading shares to Quest in exchange for delivery of
Quest’s restricted shares upon becoming free trading.
In addition, DFI has reached agreement with Spirit to extend the date on
which payments are due to resume on its loan to DFI for approximately $2-million (U.S.) to Nov. 30, 2005, unless DFI completes a further financing of
$4.5-million or more. Payments have been deferred on this loan with the
consent of the lender since November, 2004. In consideration for this one-year
deferral of payments on this debt, the company has agreed, subject to Toronto Stock Exchange
acceptance and necessary shareholder approval, to reduce the conversion price
on which the debt is convertible into shares of DFI to 25 cents.
Gregg J. Sedun, president and chief executive officer of Diamond Fields, stated:
“Restructuring our debt obligations, as well as completion of the recent
financing, were integral to the relaunching of the mv DF Discoverer and the
resumption of diamond production. The new financial arrangements with Quest
and Mr. Boulle are essential to give us the time necessary to resume our cash
flow from our diamond production.”
