Key points
- The company will issue 19,891,375 shares at 20 cents each to raise $3,132,500 (U.S.) from existing shareholders and management.
- Diamond will also settle $117,500 (U.S.) of debt owed to two insiders through 746,125 shares at 20 cents per share.
- Moydow has an exclusive option to acquire the Wuo Land 2 licence, contiguous to Labola, for $500,000 (U.S.) plus a 1-per-cent net smelter royalty on gold up to $2-million (U.S.).
- The new licence adds 243 square kilometres, giving the project a 30-kilometre strike length of identified mineralization, with drilling set to start in the second quarter of 2022.
Diamond Fields Resources Inc. has entered into agreements to raise $3,132,500 (U.S.) through the issuance of 19,891,375 shares at 20 cents per share. In addition, the company has entered into agreements to settle an aggregate of $117,500 (U.S.) of debt owed to two insiders of the company in consideration for the issuance of 746,125 shares at 20 cents per share.
Diamond is also pleased to announce that Moydow Holdings Ltd., the company to be acquired by Diamond pursuant to the transaction announced on Aug. 25, 2021, has entered into an agreement to acquire an additional exploration licence contiguous to the Labola project referred to in the transaction press release.
Commenting on the announcement, John McGloin, chief executive officer of Diamond, said: “The scale of opportunity presented by the potential of the Labola project is underlined by the strong support of our existing shareholders and the commitment of our management team. This endorsement is an important step towards the completion of the Moydow acquisition.
“We intend to start drilling at the Labola project in the second quarter of 2022 and will be updating shareholders as this work proceeds. Drilling to date has only covered a small part of the identified deposit and the next phase of exploration will focus on areas of known mineralization with the aim of expanding the current resource.
“We are progressing with the steps required to seek conditional approval from the exchange and deliver an information circular to shareholders ahead of a vote to approve the acquisition of Moydow in the second quarter.”
Fundraising details
The company will raise $3,132,500 (U.S.) issuance of 19,891,375 shares at 20 cents per share, a premium to the last closing price of the Diamond shares. Participants in the new financing include:
Jean Raymond Boulle (through Spirit Resources SARL) — $500,000 (U.S.);Brian Kiernan, executive chairman of Moydow Holdings — $1-million (U.S.);Diamond directors and officers — Al Gourley, Bertrand Boulle and David Reading (directors), Mr. McGloin (director and CEO) and Jean L. Charles (chief financial officer) — $182,500 (U.S.) in aggregate;Existing Diamond shareholders — $700,000 (U.S.).
- Jean Raymond Boulle (through Spirit Resources SARL) — $500,000 (U.S.);
- Brian Kiernan, executive chairman of Moydow Holdings — $1-million (U.S.);
- Diamond directors and officers — Al Gourley, Bertrand Boulle and David Reading (directors), Mr. McGloin (director and CEO) and Jean L. Charles (chief financial officer) — $182,500 (U.S.) in aggregate;
- Existing Diamond shareholders — $700,000 (U.S.).
Mr. McGloin and Mr. Charles have also agreed to settle an aggregate of $117,500 (U.S.) of debt through the issuance of 746,125 shares at 20 cents per share.
The new financing is conditional upon completion of the proposed acquisition of Moydow as announced in the transaction press release. The transaction is subject to approval by the TSX Venture Exchange, required shareholder approvals and completion of satisfactory confirmatory due diligence by Diamond.
Additional licence area
The footprint of the Labola project has been extended by an additional 243 square kilometres following Moydow’s acquisition of an option over an exploration licence (Wuo Land 2) contiguous to the existing licence area. Importantly the company now has control of a full 30-kilometre strike length of identified mineralization surrounding Moydow’s original Labola project.
The Moydow option is exclusive and can be exercised through the payment of $500,000 (U.S.) with the licence holder retaining a net smelter royalty of 1 per cent on all gold produced up to a total aggregate payment of $2-million (U.S.). The $500,000 (U.S.) is payable in tranches with $200,000 (U.S.) due upon satisfaction of all the requirements of an escrow agreement to hold the Wuo Land 2 licence being satisfied, $150,000 (U.S.) within 12 months of the Wuo Land 2 closing date and $150,000 (U.S.) within 18 months of the Wuo Land 2 closing date.
Labola project exploration
The Labola project lies in the Banfora Birimian greenstone belt, one of the three major mineralized belts in western Burkina Faso.
Gold mineralization at a the Labola project is spatially associated with sulphides and quartz sericite alteration. Historical geophysics (IP (induced polarization) and EM (electromagnetic)) surveys have helped define a 30-kilometre mineralized corridor. Within this corridor, historical and recent mapping and sampling, combined with the widespread activity of artisanal miners, has identified seven structures with mapped extents of 15 kilometres (km) to 25 km. The recent drilling undertaken by Moydow has concentrated on only a small portion of this belt, toward the northern end of the central western and eastern structures. Drill testing has covered only between 6 per cent and 25 per cent of the mapped strike length of these three structures and rarely to depths of more than 100 metres (m). The current resource, which was prepared in accordance with National Instrument 43-101, was based upon validated historical and recent drilling.
The objective of the next phase of exploration work is to infill and extend the previous drill pattern on areas of known mineralization to expand the current resource. Additionally, the next phase will test the tenor and continuity of some of the other structures that have been identified through the company’s mapping and sampling campaign and are currently being exploited at surface by artisanal gold panners.
Preliminary metallurgical test work was conducted by previous operators High River Gold Mines Ltd. and Taurus Gold Ltd. This work suggested that the gold present in the licence area was treatable by conventional cyanide leaching. Recoveries were seen to be 90 per cent to 98 per cent in the oxide zone and 82 per cent to 93 per cent in the transitional and sulphide zone. During the exploration work undertaken by Moydow, LeachWell accelerated cyanide leach testing was used alongside fire assay analysis of drill samples and the results have provided further indication that the gold mineralization is essentially free milling in line with historical and regional metallurgical results. A wider metallurgical test program to confirm these results will be implemented as the Labola project advances.
Moydow transaction update
The Moydow transaction is expected to close during the second quarter of 2022.
As set out in the transaction press release, Mr. Kiernan, Spirit and Panthera Resources PLC, held warrants to subscribe for up to 70,000 Moydow shares each at a price of $3.50 (U.S.) per share until Dec. 31, 2021, that would have been converted to shares in Diamond. However, the Moydow warrants expired unexercised.
Beravina zircon project
Following the expiry of its co-operation agreement with TMH Acquisition Co., Diamond is considering its options with regards to the Beravina zircon project. Zircon prices are currently buoyant with major producers reporting strong demand that is expected to continue in the short to medium term. Beravina has an inferred mineral resource estimate of 1.5 million tonnes grading 22.7 per cent zircon (ZrSiO4 (zirconium silicate)) (equivalent to 15.3 per cent ZrO2 (zirconium dioxide)) as set out in the technical report filed by the company on Jan. 29, 2019.
Exercise of options
A director, of the company has exercised 700,000 Diamond share options with an exercise price of 14.5 cents.
Insider debt settlements and insider private placements
The insider debt settlements and insider private placements are exempt from the valuation and minority shareholder approval requirements of Multilateral Instrument 61-101 by virtue of the exemptions contained in sections 5.5(a) and 5.7(1)(a) of MI 61-101 in that the fair market value of the consideration for the securities of the company to be issued to insiders does not exceed 25 per cent of its market capitalization.
Early warning reports
In connection with the transaction and the new financing, Mr. Kiernan will acquire a total of 65,638,465 common shares of Diamond, representing approximately 36.8 per cent of the to be issued and outstanding common shares of the company after giving effect to the transaction and the new financing. Mr. Kiernan is acquiring the common shares of Diamond as part of the transaction and for investment purposes. Depending on market and other conditions, Mr. Kiernan may from time to time in the future increase or decrease his ownership, control or direction over Diamond securities as circumstances warrant (noting, as described in the transaction press release, that he has agreed to a 30-month hold period for the shares he receives as consideration under the share exchange agreement).
As of the date hereof, Spirit holds 64,161,990 common shares of Diamond, representing approximately 80 per cent of the issued and outstanding common shares of Diamond. In connection with the transaction and the new financing, Spirit will acquire a total of 6,833,607 common shares of Diamond, for a total shareholding of 70,995,597, representing approximately 39.8 per cent of the to be issued and outstanding common shares of the company after giving effect to the transaction and the new financing. Spirit is acquiring the common shares of Diamond for investment purposes. Depending on market and other conditions, Spirit may from time to time in the future increase or decrease its ownership, control or direction over Diamond securities as circumstances warrant.
In satisfaction of the requirements of National Instrument 62-104 (Take-Over Bids And Issuer Bids) and National Instrument 62-103 (The Early Warning System and Related Take-Over Bid and Insider Reporting Issues), an early warning report in respect of acquisition of common shares of Diamond by Mr. Kiernan and Spirit will be filed under the company’s SEDAR profile.
Qualified person
David J. Reading, MSc, FIMM, a director of Diamond and a qualified person as defined under Canadian National Instrument 43-101 (Standards of Disclosure for Mineral Projects), has prepared or supervised the preparation of, or approved, as applicable, the technical information contained in this press release. Mr. Reading has over 40 years of experience in the mining industry covering all stages of mine development, including exploration, feasibility, financing, construction and operations. He has an MSc in economic geology and is a fellow of the Institute of Materials, Minerals and Mining and of the Society of Economic Geologists.
About Diamond Fields Resources Inc.
Diamond is a TSX Venture Exchange-listed exploration and mine development company with assets in Madagascar and Namibia. In Madagascar, Diamond is developing the Beravina project, an advanced high-grade hard-rock zircon exploration prospect located in the west of the country, approximately 220 km east of the port of Maintirano and close to a state road. Diamond acquired Beravina from Pala Investments and Austral Resources in 2016. In Namibia, the company owns several offshore diamond mining licences, including the ML 111 concession which has a 10-year mining licence, effective until Dec. 4, 2025. In 2018 and early 2019, mining undertaken by a contractor on the company’s ML 111 licence area produced two parcels of rough diamonds totalling 47,318.41 carats.
