Johannesburg, South Africa — MININGREVIEW.COM — 06 July 2009 – African-focused diamond explorer BRC DiamondCore Limited has entered into a heads of agreement with KIG Mining Plc “’ a publicly-traded gold and diamond exploration company “’ in terms of which KIG has agreed to purchase BRC’s alluvial diamond projects in South Africa, but a liquidation order against BRC may prevent this transaction from taking place.
The assets involved are the Silverstreams, De Kalk, Muishoek, Sanddrift and Uitdraal projects, together with the processing plant, mining fleet and equipment which are associated with these projects. These assets are held by BRC through its South African subsidiaries.
The applications for the urgent liquidation of Diamond Core Resources and Diamond Core Technical Services were brought before the court on April 17 because of outstanding debt of around R9 million. The matter was decided on Friday.
TSX- and JSE-listed BRC told the market on Friday it had agreed to sell its alluvial diamond assets to KIG, leaving BRC with prospective kimberlite projects in South Africa and its remaining diamond assets in the Democratic Republic of Congo (DRC). However, the judge might rescind the transaction now that final liquidation has been granted for the South African subsidiary.
The purchase price for the agreement with KIG is US$10.7 million (R85 million), which would be paid as follows:
- US$2.0 million (R16 million) in cash to be paid to BRC
- 18 million ordinary shares of KIG to be issued to BRC at a price of US$0.478 per share, or US$8.6 million (R69 million) in the aggregate, and
- US$100 000 (R800 000) to be paid by KIG directly to existing creditors to facilitate the resumption of operations at the Silverstreams project.
KIG intends to resume operations at the Silverstreams project, using staff previously employed at this operation, and a plan for the transition of the project into production will be assisted by BRC over the next two to four weeks. KIG will be responsible for providing the working capital to resume such operations.
BRC has stated that it intends to use the proceeds from the sale of the purchased assets to settle the South African creditors, but it is not yet clear whether the outcome of the liquidation application may adversely affect the ability to complete the sale to KIG.