KIM Kimcor

    RNS Number : 4997J
  KimCor Diamonds plc
  03 December 2008
   



    KimCor Diamonds plc
    ("KimCor" or the "Company")

    Sale of operations to Belmont Mining Limited

    The Board of KimCor announces that the Company has today signed an agreement ("Share Sale Agreement") with Belmont Mining Limited
("Belmont") pursuant to which KimCor has agreed, subject to shareholder approval, to sell all of its existing diamond operations to Belmont 
(the "Transaction") by way of a sale of all of the shares in certain KimCor subsidiaries (the "Sale Shares").  

    Under the terms of the Share Sale Agreement, Belmont will pay the Company �500,000 in cash  and will assume all liabilities associated
with KimCor's South African and Tanzanian diamond and industrial operations. KimCor retains an option to re-acquire 30 per cent. of the Sale
Shares for nominal consideration should the Company's SMI4 tailings retreatment operation achieve a production target of 150,000 tonnes per
month prior to 1 June 2009. 

    The Share Sale Agreement is conditional on the Company's shareholders ("Shareholders") approving the Transaction at an extraordinary
general meeting ("EGM") and any other relevant regulatory approvals being obtained in connection with the Transaction.  

    The effect of the proposed Transaction will be to divest the Company of all of its trading activities and, as such, following completion
of the Transaction the Company will become an investing company pursuant to Rule 15 of the AIM Rules.  Therefore, the Company will submit to
Shareholders at the EGM an ordinary resolution seeking approval of the Company's proposed investing strategy, as set out below.  Following
the date of the EGM, the Company will have 12 months to implement its investing strategy or complete a reverse takeover.

    The proposed investing strategy will be to acquire minority or controlling interests in a number of privately-held or publically listed
resource projects in Africa. It is proposed that the projects in which the Company invests will not be limited to any single resource. The
existing directors of the Company, all of whom have experience in operating and investing in resource projects in Africa, will evaluate the
commercial merit of potential investments, utilising external advisers and experts where required.  

    A circular, setting out full details of the proposed Transaction and the Company's investing strategy, together with a notice of EGM,
will be posted to Shareholders shortly. A further announcement will be made at that time to notify shareholders that the circular has been
posted.  

    The losses before taxation of the Company's diamond operations for the year ended 30 June 2008 were approximately �10.05 million. On
completion of the Transaction, the approximate cash balance of the Company will be �0.3 million, which the Directors intend to retain in the
Company.  

    Melissa Sturgess has today resigned as Chairman of the Company with immediate effect.

    Speaking today in relation to the signing of the Share Sale Agreement, Martyn Churchouse, the Company's CEO, said: "With zero demand at
present for rough diamond production KimCor has no access to cash flow required to sustain operations.  Recourse to fundraising is currently
out of the question and even if possible, the Company would be unable to provide potential investors with any indication of when the market
for rough diamonds is likely to improve.  The agreement signed with Belmont allows KimCor to pass responsibility for all liabilities held by
the operating subsidiaries to a third party with immediate effect whilst retaining an option to re-acquire an equity stake at par value
assuming rough diamond sales recommence within a reasonable timeframe at price levels sufficient to maintain profitability". 


    Enquiries:

    KimCor Diamonds plc                                Tel: 020 3178 6179
    Martyn Churchouse

    Strand Partners                                          Tel: 020 7409 3494
    Simon Raggett
    Warren Pearce
    Victoria Milne-Taylor

    Bishopsgate Communications Ltd             Tel: 020 7562 3350
    Maxine Barnes
    Nick Rome




This information is provided by RNS
The company news service from the London Stock Exchange
 
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