Firestone Diamonds plc, the AIM-quoted diamond development company, says the Liqhobong Mining Development Company (Pty) Limited  (LMDC ) has entered into the Revised Mining Lease Agreement with the Lesotho Government, represented by the Minister of Mines, in relation to the development of the Liqhobong Diamond Mine. The company is owned 75 percent by Firestone and 25 percent is held by the Lesotho Government.

Firestone noted that the Revised Mining Lease Agreement represents an important milestone for Firestone and it looks forward to shortly commencing construction of the Main Treatment Plant and supporting infrastructure at the Liqhobong Diamond Mine. The Revised Mining Lease Agreement has been entered into for an initial period ending on 30 June 2021 and can be renewed for two further periods of 10 years each and a Placing Extension has been provided to allow sufficient time for the agreements in respect of  the Fundraising and Absa Debt Facility to be reviewed. Accordingly, admission of the Subscription Shares and the Placing Shares must now be by no later than 30 May 2014.

On the other hand, Firestone said The Open Offer has now closed.  The deadline for completion of the Offer Open conditions has been extended to 30 May 2014; and that the General Meeting to approve the issue of the New Ordinary Shares pursuant to the Fundraising is unaffected by the Placing Extension. Stuart Brown, Chief Executive Officer of Firestone, commented said the negotiations to strike a deal have been tense, but said he was pleased to announce that Firestone has concluded the terms for the Revised Mining Lease Agreement for the Liqhobong Diamond Mine, with our partners, the Lesotho Government.

“The negotiations have been extensive and we believe that the concluded agreement is positive for all parties. Importantly, the
Revised Mining Lease Agreement enables the Company to proceed with its Fundraising, a considerable private investment in Lesotho, and commence construction of the Main Treatment Plant and supporting infrastructure at Liqhobong,” he said.  “The Revised Mining Lease Agreement provides a framework by which Firestone and the Lesotho Government can realise its combined strategy and vision of building and commissioning the Main Treatment Plant at the Liqhobong Diamond Mine to benefit all stakeholders.”

Updated Fundraising Timetable

Following entering into the Revised Mining Lease Agreement, Firestone is seeking to finalise the agreements in relation to the Fundraising and the Absa Debt Facility as detailed in the circular sent to Shareholders on 11 April 2014 (the “Circular”). However, as the Absa Debt Facility, Subscription Agreements and the Mezzanine Facility Agreement are conditional on, inter alia, entering into the Revised Mining Lease Agreement, the Placing Agreement has been amended to allow sufficient time for these agreements to be reviewed and finalised, such that the satisfaction and/or waiver of all conditions precedent contained in the Absa Debt Facility, Subscription Agreements and the Mezzanine Facility Agreement and admission of the Subscription Shares and the Placing Shares must now be by no later than 30 May 2014 (the “Placing Extension”).

 
As a result of the Placing Extension, subject to, inter alia, Shareholder approval of Resolutions 1 and 2, Admission is now expected to be on or before 30 May 2014 and the Share Capital Reorganisation will not occur until after Admission. The opportunity for Qualifying Shareholders to participate in the Open Offer closed on 25 April 2014 and the results of the Open Offer will be announced today.  The Open Offer is conditional, inter alia, upon the satisfaction and/or waiver of all the conditions precedent contained in the Placing Agreement (other than relating to Admission) and admission of the Open Offer Shares to AIM by 30 April 2014.

As completion of the Placing Agreement has been extended to 30 May 2014, the Company has, in accordance with the terms of the Open Offer as detailed in the Circular, decided to extend the date for satisfaction (or where applicable waiver) of the Open Offer conditions to 8.00 a.m. on 30 May 2014.  In the event, that the conditions are not satisfied by such time the Open Offer will not proceed and in such circumstances application monies will be returned at the applicant’s risk.