Capital Raising

RNS Number : 8877P

Gem Diamonds Limited

01 April 2009

 



THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART IN, INTO OR FROM THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF SUCH JURISDICTION

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT SUBSCRIBE FOR OR PURCHASE ANY NEW SHARES OR NEW DEPOSITARY INTERESTS REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION IN THE PROSPECTUS TO BE PUBLISHED BY THE COMPANY IN DUE COURSE IN CONNECTION WITH THE PLACING (THE 'PROSPECTUS'). COPIES OF THE PROSPECTUS WILL BE AVAILABLE, FOLLOWING PUBLICATION, FROM THE COMPANY'S REGISTERED OFFICE AND FROM 2 EATON GATE, LONDON, SW1W 9BJ, BEING THE COMPANY'S PRINCIPAL PLACE OF BUSINESS IN THE UK. 

1 April 2009 



GEM DIAMONDS LIMITED

('Gem Diamonds' or the 'Company')

PROPOSED PLACING 

Gem Diamonds today announces a placing of up to 75 million New Shares at the Issue Price of 100 pence per New Share to raise gross proceeds of £75 million (approximately U.S.$107 million). 

• 68 million New Shares have already been firmly placed with existing Shareholders and new investors. 

• The remaining 7 million New Shares are available to be firmly placed during the course of today with existing Shareholders only who are invited to participate in the Placing by JPMC as sole bookrunner. Books are expected to close during the course of the day.

• The Issue Price represents a discount of 33% to the Closing Price of 149 pence per existing Ordinary Share on 31 March 2009. 

• The New Shares are expected to represent approximately 54% of Gem Diamonds' issued Ordinary Shares immediately following Admission of the New Shares.

• The New Shares are being placed subject to Shareholder approval at a meeting of Shareholders to be convened for on or around 20 April 2009.

The first quarter of 2009 has seen the trading conditions experienced in late 2008 persist. Management has taken action to respond to these current challenging operating conditions, including placing the Group's operations at Cempaka and the Ellendale 4 pipe on care and maintenance, and is continuing with initiatives to reduce operating and central costs. 

Against the background of the current difficult trading conditions, the Group will require additional funds in order to meet the obligations of Kimberley to repay its Société Générale loan of approximately A$30 million (approximately U.S.$21 million), and finance the posting of the associated substitute Kimberley environmental bonds of approximately A$6.4 million (approximately U.S.$4.5 million) and to repay the outstanding Convertible Bonds which become due in October 2009 as well as repaying Kimberley trade creditors.

It is against this background that the Directors are proposing to raise equity capital by way of the Placing to meet those obligations and create a suitable capital structure. The Directors believe that the reduction in financial indebtedness will also create a stronger position from which to develop future strategic options. The balance of the net proceeds will be used to fund the Group's working capital requirements.

Clifford Elphick, Chief Executive Gem Diamonds commented:

'The Group, along with the diamond industry as a whole, has experienced unprecedented trading conditions in recent months. Gem Diamonds' Board took decisive action by cutting non-essential expenditure and focusing on its core producing assets.

This rapid response to the market conditions is expected to save the company approximately US$129 million this year. Additionally, we have today announced a capital raising of up to US$107 million (of which $97m has already been placed). These funds will help to ensure that we are well placed to survive this economic downturn and emerge ready to exploit the opportunities when the upturn arrives.

Against the backdrop of the current economic climate, the success of this capital raising is testament to the quality of our assets, which produce some of the highest quality diamonds in the world. Our key fundamentals are robust and the Board believes the long term outlook for diamond prices remains positive.'

Shareholders and investors are also referred to the announcement of the Group's audited annual results for the year ended 31 December 2008 released on RNS today, Wednesday 1 April 2009. 

ENQUIRIES

Gem Diamonds Limited	Tel: [phone]
Clifford Elphick, Chief Executive Officer
Glenn Turner, Chief Legal and Commercial Officer
Investor Relations Enquiries
Richard Chetwode, Investor Relations Manager	Mob: [phone]
Media Enquiries
Angela Parr, Corporate Affairs Manager	Mob: [phone]
J.P. Morgan Cazenove	Tel: [phone]
Ian Hannam
Patrick Magee
Neil Passmore
Media Enquiries:
Pelham PR	Tel: [phone]
James Henderson
Candice Sgroi

ABOUT GEM DIAMONDS

Gem Diamonds is a global diamond mining business comprising a portfolio of producing kimberlite and lamproite mines, development projects and long-term prospects located across central and southern Africa, Australia and Indonesia. The Group focuses on the higher value gem quality segment of the rough diamond market. The Group currently has two producing mines, Letseng, in Lesotho and Ellendale, in Western Australia.

  Recent developments and current trading

During 2008, market conditions for the sale of diamonds were highly variable. During the first eight months of 2008, economic conditions were relatively stable in the Group's markets. Demand for diamonds was robust and diamond prices continued to grow, especially for large high quality diamonds with record prices achieved on sales of rough and polished diamonds. Over the two years up to September 2008, diamond prices significantly outperformed most asset classes and commodities despite the emerging global economic crisis. However, in the latter four months of the year, rough diamond prices declined significantly.

The Directors consider this principally to be the result of a series of related factors:

• the global financial crisis deepened during the course of the year and placed liquidity constraints on the banking sector;

• this in turn severely curtailed financial liquidity in the diamond pipeline, most notably in the already highly indebted trading and manufacturing businesses, restricting the capacity of these businesses to grow inventory; and

• furthermore, the actual and anticipated reduction in consumer demand created concerns in the trading and manufacturing businesses that large amounts of diamond jewellery inventory in retail stores on consignment would be returned, further reducing their already limited demand.

During 2008, the Group generated revenue of U.S.$296.9 million from the sale of rough diamonds recovered at Letšeng, Ellendale and Cempaka as well as polished diamond sales in the course of its beneficiation trials. Relative to 2007 rough diamond prices achieved across the Group's producing mines increased in 2008 by between 7 and 34%, notwithstanding the rapid decline in diamond prices by up to 70% between the first and fourth quarters of 2008.

Throughout this period, Gem Diamonds sought new ways to market its production more effectively: an offtake agreement for the high quality yellow diamond production from Ellendale was entered into; Ellendale white and commercial quality diamonds were sold by electronic auction; and direct sales avenues were sought.

In line with the changing economic environment, costs associated with mining and recovering diamonds increased significantly in the early part of 2008 and subsequently declined to relatively low levels where they presently remain. Despite U.S. dollar weakness, and conversely a strengthening in the operating currencies of most diamond mines earlier in the year, the U.S. dollar rebounded strongly in the latter part of 2008 reducing input costs for Letšeng in 2008 and going forward. Similarly from their peak in July 2008, subsequently declining oil prices have resulted in lower fuel associated costs. Combined, these influences are expected to depress operating costs for the near to medium term. 

Due to the weaker trading environment experienced across the Group's operations, in accordance with the Group's accounting policies, the carrying value of many of the Group's assets were impaired as at 31 December 2008. Kimberley's principal asset is the Ellendale mine, where mining has taken place on two lamproite pipes, the Ellendale 4 and the Ellendale 9 pipes. Due to its lower revenue per tonne mined profile, mining of the Ellendale 4 pipe ceased in February 2009 and the pipe was placed on care and maintenance. Current pricing levels, together with estimated mining costs at Ellendale, resulted in the Group making impairments in respect of the Ellendale mine of U.S.$242.9 million. In January 2009, the Cempaka mine was placed on care and maintenance. The Directors consider it unlikely that diamond prices will recover sufficiently in the short to medium-term such that Cempaka could return to operation. As such, the full value of the Group's assets at Cempaka was impaired, resulting in a charge of U.S.$95.3 million. At the time of the Group's operational review in November 2008, all alluvial exploration projects in the DRC and the CAR were placed on care and maintenance. The Directors therefore considered it appropriate to impair the full value of the assets at these operations, resulting in an impairment charge of U.S.$208.3 million.

Overall impairments to Group operations at the end of 2008 amounted to U.S.$546.5 million.

Trading conditions experienced in late 2008 persisted during the first quarter of 2009. In January 2009 diamond prices achieved in sales of Letšeng, Cempaka and the lower quality Ellendale diamonds were lower than in 2008. However, prices obtained at the February/March 2009 tender of Letšeng diamonds increased by 9.7% relative to the January 2009 tender. 

Ellendale's high quality diamond sales remained stable during the first quarter of 2009 largely due to the existence of an offtake agreement with a high end jewellery retailer with a global retail network. Although this arrangement ended in February 2009, the relationship has continued and the parties have recently signed a non-binding heads of terms in respect of an offtake agreement. The agreement the parties intend to enter into covers production from the Ellendale 9 pipe which at current prices represents approximately 80 to 90% by value of the pipe's planned production.

Management actions

Gem Diamonds' management has responded swiftly and proactively to the current challenging operating conditions and an uncertain near-term outlook to strengthen the Group's financial position through a series of ongoing measures. These measures have been considered against the background of the dramatic drop in rough diamond prices across the industry in the last four months of 2008 and January 2009 and management's expectations in relation to demand and pricing trends going forward. The measures implemented and being taken include:

• suspending unprofitable operations, including:

• placing the Cempaka mine on care and maintenance in January 2009 which is expected to reduce monthly operating cash costs by approximately U.S.$240,000 per month in 2009; and

• placing the Ellendale mine's lower revenue Ellendale 4 pipe on care and maintenance in February 2009, which is expected to reduce monthly operating cash costs by approximately U.S.$3.9 million per month in 2009;

• suspending investment in development and exploration projects across central and southern Africa, including operations in the DRC (where its alluvial exploration operations were put on care and maintenance in November 2008), the CAR (where its operations were put on care and maintenance in November 2008) and Botswana. Collectively these measures are expected to reduce operating and capital expenditure across these territories by U.S.$22.1 million in 2009;

• further reducing operating expenses through restructurings, productivity improvements and commencement of lower cost supply, the financial benefits of which are not yet quantifiable;

• a significant reduction in central costs attributable to the Company and its services subsidiary GDTS where annual cash expenditure for 2009 is budgeted at approximately U.S.$13.5 million compared to U.S.$18.1 million expended in 2008;

• a substantial reduction in discretionary, sustaining and expansionary capital expenditure at the operating mines. An ongoing review of all capital expenditure projects at Letšeng and Ellendale has identified a number of capital expenditure deferrals or reductions for 2009, reducing anticipated capital expenditure for 2009 to approximately U.S.$17.2 million, a 63% reduction relative to comparable expenditure in 2008; and

• from 1 April 2009, reducing the salaries of Executive Directors by 10% compared to 2008 levels. No bonuses or share awards were made in respect of 2008. Furthermore, the Chairman's and Non-Executive Directors' fees have been reduced by 25% from 1 April 2009.

As a result of these cost-saving measures, the Directors believe that the total operating and capital cash expenditures of the Group will be approximately U.S.$16.6 million per month for 2009 from the beginning of the second quarter of 2009 onwards.

In addition, such measures implemented and which might be implemented include entering into discussions for and implementing offtake agreements (by which buyers would commit to purchase specified quantities of diamonds of particular carats and quality at predetermined prices) at levels that can sustain operations. The Company has recently signed non-binding heads of terms with a high end jewellery retailer with whom it has current offtake arrangements with a view to concluding a long-term offtake agreement in respect of Ellendale's fancy yellow diamond production. Various parties have expressed a firm interest in concluding an offtake agreement in respect of all or part of the Letšeng production at prices which would ensure the profitability of the Letšeng mine with periodic price adjustment mechanisms.

The Company has in the past considered such expressions of interest and expects to give consideration to any future expressions of interest in concluding any offtake agreement in respect of Letšeng production but no decisions have been made by the Board in respect of entering into any such agreement.

Prospects and strategy

Gem Diamonds Limited's strategic intent remains to be one of the world's leading diamond companies with a specific focus towards higher value gem quality diamonds. Principally through Letšeng and Ellendale, the Group has moved a long way to implementing that strategy in the rough diamond market. Over the medium to longer term, development of the Group's cutting and polishing business to beneficiate only high quality diamonds will see this strategy being pursued in the polished diamond market as and when market conditions allow.

The Directors continue to believe that the medium to long term trend of increased demand for diamonds remains positive due to the globalisation of the diamond engagement ring concept, the increase in high net worth individuals' relative portion of global wealth as well as the economic growth and urbanisation of emerging BRIC economies. The Directors are of the opinion that the long-term positive outlook for diamonds is further underpinned by what most of the main producers and market commentators recognise as a long-term supply-demand imbalance. Recent falls in demand for diamonds and consequently prices have prompted a response from the supply side, with the larger producers, notably De Beers and Alrosa, making major production cuts and significantly reducing trading levels. Funding constraints are inhibiting smaller producers from continuing to run now loss-making operations for any extended period thereby reducing the supply from these operations. Rapid reductions in higher cost production, ongoing curtailments in exploration expenditure and the deferral or cancellation of numerous growth projects are all likely to limit the extent to which diamond inventories are built-up and will contribute to greater supply-side constraints. The Directors believe that combined with the long-term positive supply-demand trends, these circumstances should result in higher average diamond prices over the long-term than are currently being experienced.

The Directors believe that there will continue to be an element of de-stocking in the cutting centres and the global economic downturn will result in possible bankruptcies in the cutting centres. The Directors believe that a reduced supply of diamonds, together with continued levels of demand for retail jewellery, will result in prices for larger diamonds stabilising at or around current levels in the short to medium-term. WWW Diamond Forecasts Limited forecasts that rough diamond prices in the fine large category (the majority of Letšeng's production) in 2009 will be 39.6% below 2008 levels and diamond prices for 2010 will be 11.0% below 2009 levels. The Directors consider the long-term outlook for diamond prices to remain positive.

The Directors believe that the Group is well placed to benefit from an improved industry environment. In particular:

• Gem Diamonds' Executive Directors and Senior Management have considerable combined experience in all major aspects of diamond mining, from prospecting and evaluating projects and prospects through to production, as well as identifying and executing transactions in the diamond mining sector and in integrating acquisitions and working with joint venture partners to extract optimal value from an asset;

• its Letšeng mine, which has historically produced large quality diamonds, including four of the top 20 largest diamonds publicly recorded, has a total resource across its two kimberlite pipes of 239 million tonnes and, on the basis of the current mine plan, an indicated life of mine of approximately 33 years. The mine now operates two plants, processing ore from two independent ore bodies, which combined significantly reduces production risk;

• the Directors believe its Ellendale mine is a leading producer of fancy and vivid yellow diamonds. This sub-sector of the diamond market has experienced relatively higher growth in demand in particular from the Far East where a diamond's colour is of cultural significance; and

• the Group has a number of kimberlite development projects in Africa, in particular, in Botswana, where the Company owns Gope Exploration, the holder of a retention licence over the well-defined Gope deposit. 

Having regard to the recent changes in the diamond market, the Directors intend to pursue a short-term plan with the aim of ensuring the Group weathers the current downturn and is well positioned when the market strengthens. This will include:

• continuing to mine and develop its higher margin operations at the Letšeng and Ellendale mines;

• conserving cash in the short-term through reduced expenditure on exploration and resource development as well as central costs and cut backs on all non-essential capital expenditure; and

• positioning Gem Diamonds to emerge from the current downturn in a position of strength.

The Company recognises the importance of creating value for Shareholders and it is the Board's intention to return capital to Shareholders, by means the Board considers appropriate, in the medium to longer term as conditions and the Group's development permit.

Details of the Placing

Placees will subscribe for the New Shares at an Issue Price of 100 pence per New Share. The Placing comprises in aggregate up to 75 million New Shares (representing approximately 119% of Gem Diamonds' existing issued Ordinary Shares) and will therefore raise approximately £75 million (before expenses). 68 million New Shares have already been firmly placed with existing Shareholders and new investors. The New Shares will represent approximately 54% of the Company's issued Ordinary Shares following Admission.

The Issue Price at which the New Shares will be issued to Placees of 100 pence per New Share represents a 33% discount to the Closing Price of 149 pence per Ordinary Share on 31 March 2009 (the last business day before the announcement of the Placing)

The issue of the New Shares to Placees under the Placing has been partially underwritten by J.P. Morgan Cazenove, subject to certain conditions as set out in the Placing and Underwriting Agreement. The Directors believe the Placing discount and size together create an opportunity for new shareholders to be able to gain a material ownership exposure to Gem Diamonds in a single step, and in so doing add to a supportive investor base from which to pursue the Company's continued development. Lansdowne Partners Limited, an existing significant Shareholder, has agreed to participate in the Placing and thereby increase its investment in the Company. 

All the New Shares have been or will today be conditionally placed with Placees by J.P. Morgan Cazenove at the Issue Price of 100 pence per New Share raising approximately £75 million (before expenses). The Placing is conditional upon, amongst other things, fulfilment of the following conditions:

(a) the passing without material amendment (or with such amendments as J.P. Morgan Cazenove and the Company may agree) of the Resolutions at the General Meeting;

(b) the Placing and Underwriting Agreement not having been terminated in accordance with its terms prior to Admission; and

(c) Admission becoming effective.

The New Shares will, when issued and fully paid, rank pari passu in all respects with the existing issued Ordinary Shares, including the right to receive all dividends or other distributions declared, made or paid after the date of their issue. The New Shares will be in registered form and capable of being held in certificated form or uncertificated form in the form of Depository Interests in CREST. 

The participation of Lansdowne Partners Limited, a related party by virtue of being a substantial shareholder of the Company for the purposes of the Listing Rules, in the Placing, will, subject to final allocations, be classed as a related party transaction and therefore subject to shareholder vote.

Applications will be made for the New Shares to be admitted to listing on the Official List and to trading on the London Stock Exchange's Main Market. It is expected that Admission will become effective and dealings in the New Shares will commence at 8.00 a.m. on 22 April 2009.

The Placing is conditional, amongst other things, on Shareholder approval, which will be sought at a General Meeting expected to be convened for 10.30 a.m. on 20 April 2009. A notice convening the General Meeting at which the Resolutions are to be proposed will be set out at the end of the Circular, which is expected to be posted on 2 April 2009.

The Company has received irrevocable undertakings from GDHL to vote in favour of the Resolutions in respect of 9,325,000 Ordinary Shares, representing approximately 14.8% of the Company's issued Ordinary Shares. Clifford Elphick is interested in these Ordinary Shares by virtue of his interest as a potential beneficiary in a discretionary trust which has an interest in these Ordinary Shares.

Use of proceeds

The Company is proposing to raise £68 million (net of expenses) in the Placing.

The net proceeds of the Placing will enable the Company to repay existing debt and fund working capital for the principal operations of the Group. 

Out of the net proceeds received, the Company will repay the U.S.$16.5 million that will become due on the maturity date for the Bonds including the associated coupon of U.S.$0.5 million, which arises in October 2009, as well as the outstanding loan of approximately A$30 million (approximately U.S.$21 million) from Société Générale to Kimberley which, in accordance with the terms of the waiver granted by Société Générale to the Company and Kimberley as described under 'Recent developments and current trading' above, is repayable within two business days of completion of the Placing. In addition, Kimberley is currently required to post an environmental bond of approximately A$6.4 million (approximately U.S. $4.5) with the State of Western Australia in order to remain in compliance with the relevant regulatory environmental provisions. The substitute bonding arrangements, currently secured by Société Générale up to a total facility of A$10 million (U.S.$7.0 million), will also be financed out of the net proceeds of the Placing within two business days of completion.

The balance of the net proceeds of the Placing will be used to fund the Group's working capital requirements including to pay, as and when required to do so, Kimberley's outstanding trade payables, of which approximately A$16.5 million (U.S.$11.5 million) was due and payable as at 31 March 2009.

As a result, net debt is expected to reduce to zero following completion of the Placing and such payments and repayments having been made.

The Group's management will continue to focus on taking action with a view to ensuring that Gem Diamonds business remains cash positive and financially robust, including, where necessary, further reductions in capital expenditure and operating costs, the suspension, closure or disposal of unprofitable or higher cost operations and the optimisation of working capital.

The Group continues to operate cash generative operations at Letšeng and Ellendale, with long-term growth potential and leading positions in each of their markets. The Directors believe the Group's prospects to be positive because of the actions the Group has undertaken or intends to take in the near term, including introducing measures to optimise cash and enhance the Group's financial condition.

The Directors believe that the Placing amongst other measures taken by the Group's management should position the Group to emerge from the current downturn with a strengthened balance sheet and an enhanced platform from which, at the appropriate time, to take advantage of the medium to long-term positive supply-demand dynamics the Directors believe exist and to initiate the next stage of the Group's growth.

General Meeting

A notice convening a General Meeting of the Company to be held at the offices of J.P. Morgan Cazenove, 20 Moorgate, London EC2R 6DA, at 10.30 a.m. (London time) on 20 April 2009 will be included in the Circular which will be sent to Shareholders and Depositary Interest Holders together with a Form of Proxy (for holders of Ordinary Shares) and a Form of Direction (for holders of Depositary Interests) to be used in connection with the General Meeting. The purpose of the General Meeting is to seek Shareholders' approval of the Resolutions set out in the Notice of General Meeting. It is expected that the Circular will be posted on 2 April 2009.

The General Meeting will consider Resolutions to seek approval for the increase in the number of authorised shares, the authority to allot shares, the disapplication of pre-emption rights, the approval of the Placing, the approval of the related party transaction with Lansdowne Partners, and the waiver of a mandatory bid requirement if J.P. Morgan Cazenove as a result of underwriting the Placing acquires 30% or more of the total voting rights in the Company.

Importance of the Resolutions and risks relating to the Placing

The Placing is conditional on all of the Resolutions being approved at the General Meeting. If the Resolutions are not approved at the General Meeting, the Company will be unable to complete the Placing.

In light of the circumstances described under 'Recent developments and current trading', 'Prospects and strategy', 'Details of the Placing'; and 'Use of Proceeds', the Group will require additional funds in order to meet its obligations as they fall due. In particular, the Group will be required to redeem its outstanding Bonds (amounting to approximately U.S.$16.5 million due in October 2009); to repay the Société Générale loan in the amount of A$30 million (approximately U.S.$21 million), which will (unless Kimberley, the Company and Société Générale have agreed amendments to the Société Générale Facility Agreement in relation to the covenants in respect of which waivers have been obtained, and Kimberley rolls over amounts drawn down under the Facility) arise on 1 May 2009; to finance the posting of the substitute Kimberley environmental bonds (currently amounting to approximately A$6.4 million (approximately U.S.$4.5 million)) due in September 2009; and to pay outstanding amounts owing to trade creditors of Kimberley. Failure to post the Kimberley environmental bonds may result in the cancellation of the Ellendale mining lease. It is against this background that the Directors are proposing to raise equity capital by way of the Placing to fund those obligations and to create a suitable capital structure to strengthen the position of the Group's key operations in order to survive a prolonged economic downturn. The Directors believe that the reduction in financial indebtedness will also create a stronger position from which to develop future strategic options.

In the absence of receipt of proceeds under the Placing, the Group has limited options available to it to enable it to be in a position to repay or pay when due the amounts referred to above. The ability of Kimberley unilaterally to rollover amounts drawn down under the Société Générale facility would depend upon the parties agreeing amendments to the Société Générale Facility Agreement in relation to the covenants in respect of which waivers have been obtained, so as to enable compliance by Kimberley with such covenants going forward, in light of the recent placing on to care and maintenance of the Ellendale 4 pipe. The Company could seek to extend the repayment dates of the Bonds and in respect of the amounts drawn down under the Société Générale Facility Agreement although, in the current economic and financial environment, the Directors believe that the cost of any such extension, even if available, would be expensive and most likely would result in the imposition of significantly more onerous obligations on the Group than those that currently apply. If the Company is unable to extend the repayment dates of the Bonds or in respect of the amounts drawn down under the Société Générale Facility Agreement, it may be able to access alternative funds, whether in the debt or equity capital markets or by other third party borrowings, for the purposes of repaying the Bonds and the amounts drawn down under the Société Générale Facility Agreement and posting the Kimberley environmental bonds. The costs incurred in raising such alternative funds, and the obligations required to be assumed thereby, could have a material adverse effect on the Company. Any such increased cost of funding and/or onerous obligations arising from having to negotiate an extension of the repayment dates of the Bonds and/or in respect of the amounts drawn down under the Société Générale Facility Agreement or obtaining access to such alternative funding could have a material adverse impact on the Group's financial position and results of operations as a result of which its business and financial condition may suffer, its ability to access funding may be further limited, its costs of funding may increase and the price of Ordinary Shares may decline. Any such measures which are to be taken in circumstances were the Placing not to be completed may, in addition, be less effective in reducing the Group's gearing, which may adversely affect the ability of the Group to develop its assets and businesses in the future.

A further alternative available to the Group would be to enter into other offtake agreements for, in particular the Letšeng production (pursuant to which a buyer would commit to purchasing a specified volume of diamonds of particular grades at specific prices for an agreed period). This offtake arrangement would be in addition to the offtake agreement intended to be entered into in respect of Ellendale production. While the Board recognises the benefits of such arrangements, to enter into offtake agreements under financial duress would limit the Company's ability to negotiate an optimum price, the result of which could to restrict upside value in these assets as and when the market price for diamonds rises. 

The Directors have a limited level of confidence in the Group's ability to rollover its existing debt facilities or to enter into new financing arrangements on terms that are favourable to the Group. However, the Directors have a higher level of confidence that the Group would be able to secure further offtake arrangements

The failure to complete the Placing would require the Company to implement alternative strategies in order to be in a position to satisfy its obligations, the effect of which could be damaging to the Group and its prospects. There is also no certainty that any such alternative strategies would be implemented in such a way, and within the timescales imposed by the current repayment date applicable to the Société Générale Facility Agreement, as to enable the Group to continue to operate its principal operations on the current basis, which would result in a material adverse effect on the value of the Shares.

The Directors have concluded that these circumstances represent a material uncertainty that casts significant doubt upon the Group's and the Company's ability to continue as a going concern. Nevertheless, after making enquiries, and considering the uncertainties described above, the Directors have a reasonable expectation that the Group and the Company will have adequate financial resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the annual report and accounts of the Company. In the event that the Placing is unsuccessful and the Directors are unable to implement successfully one or more of the alternative steps described above the Group may not be able to continue its operations in the current form and therefore the Company may not be able to continue as a going concern, that is, meet its liabilities as they fall due, and accordingly may face the risk of insolvency, proceedings in respect of which might be commenced at any time following any failure by the Company to satisfy when due its financial obligations, including in respect of its guarantee of Kimberley's obligations to Société Générale as described above and in respect of the outstanding Bonds.

It is for these reasons that the Company is proposing the Placing and is seeking Shareholder approval of the Resolutions at the General Meeting.

In setting the Issue Price, the Directors have considered the price at which the New Shares need to be offered to investors to ensure the success of the Placing and to raise very significant equity compared with the current market capitalisation of the Company. The Directors believe that the Issue Price, and the discount it bears to the recent trading price of the Ordinary Shares, are appropriate.

Working capital

The Directors are of the opinion that, taking into account the net proceeds of the Placing and the bank and other facilities available to the Group, the Group has sufficient working capital for its present requirements, that is, for at least 12 months from the date of this announcement.

Irrevocable undertakings

So far as the Directors are aware, as at 31 March 2009 (being the latest practicable date prior to the publication of this announcement) GDHL beneficially owned 9,325,000 Ordinary Shares, or approximately 14.8% of the issued Ordinary Shares and is the largest shareholder of the Company.

The Company has received an irrevocable undertaking from GDHL, which has confirmed to the Company that it is fully supportive of the Placing and will vote in favour of the Resolutions. GDHL's irrevocable undertaking to vote in favour of the Resolutions is given in respect of its entire shareholding in the Company.

Roger Davis, Mike Salamon and Alan Ashworth have confirmed that they intend to participate in the Placing pro-rata to their current shareholdings which represent in aggregate approximately 1.2% of the Company's existing issued Ordinary Shares and hence their investments would amount to £0.9 million. Lord Renwick, Gavin Beevers and Richard Williams have confirmed that they intend to offer to subscribe for £60,000, £40,000 and £20,000 of New Shares under the Placing respectively. Accordingly, the total intended participation of the Directors amounts to £1.0 million.

  Dividend Policy and Returns to Shareholders

Since incorporation, the Company has not paid or declared any dividends, favouring instead reinvestments of profits into the Group's growth. The Directors do not anticipate changing the Company's dividend policy in the near to medium-term. The Directors will reconsider the Company's dividend policy as the Company advances the development of its operations. The Directors envisage that, at such time, the Company's dividend policy will be determined, and depend on, the results of the Company's operations, its financial condition, cash requirements, future prospects, profits available for distribution and other factors deemed to be relevant at the time.

The Company recognises the importance of creating value for Shareholders and it is the Board's intention to return capital to Shareholders, by means the Board considers appropriate, in the medium to longer term as conditions and the Group's development permit.

Société Générale Facility

The terms of the Société Générale Facility Agreement require Kimberley to obtain the prior written consent of Société Générale to place all or any part of the Project (as defined in the Société Générale Facility Agreement and which includes the Ellendale 4 operation) on a care and maintenance programme. Although discussions were held between Kimberley and Société Générale prior to the placing of the Ellendale 4 pipe on a care and maintenance programme, Kimberley had not received prior written consent from Société Générale. Société Générale has, however, subsequently provided Kimberley with an unconditional waiver in respect of such consent not having been obtained pursuant to the Société Générale Facility Agreement on the terms described below.

Kimberley is also required to submit to Société Générale quarterly certificates of compliance with respect to certain covenants contained in the Société Générale Facility Agreement. Due to the recent reduction in diamond prices achieved on Kimberley's diamonds and the placement of the Ellendale 4 pipe onto care and maintenance, cash flows into Kimberley have been significantly reduced and, accordingly, the ability of Kimberley to comply with all of such covenants has been adversely affected. The Company and Kimberley have held discussions with Société Générale in relation to covenant compliance and Société Générale has provided, on the terms described below, waivers in respect of non-compliance with the affected covenants in respect of each of the six month periods ended 31 December 2008 and 31 March 2009. 

The principal amounts owing to Société Générale under the Facility Agreement represent drawings under a 364 day revolving credit facility comprised in the Facility Agreement, originally advanced for a six month funding period commencing on 29 September 2008 with the Company being entitled, subject, inter alia, to there being no default under the Facility Agreement and the representations and warranties given by Kimberley and the Company under the Facility Agreement being true at the time of any such rollover, to rollover such drawn down amount for further funding periods ending not later than 25 September 2009. 

Following the granting of the waivers referred to above, Kimberley rolled over the drawn down amount under the Facility Agreement on the basis that the funding period in respect of such rollover should end on 1 May 2009 and, accordingly (and in the absence of the Placing), unless any further rollover occurs in respect of a funding period ending after that date and prior to the facility ceasing to be available in September 2009, Kimberley will become required to repay the amount currently drawn down (approximately A$30 million (approximately U.S.$21 million)) on 1 May 2009. In addition, prior to the facilities under the Facility Agreement finally ceasing to be available, which will be in September 2009, Kimberley will be required to finance the posting of the substitute Kimberley environmental bonds (currently amounting to approximately A$6.4 million (approximately U.S. $4.5 million). 

As part of the agreements reached between Kimberley, the Company and Société Générale in relation to the waivers referred to above, in light of the continuing circumstances which resulted in such waivers being sought and obtained, Kimberley, the Company and Société Générale have agreed to use reasonable endeavours to agree an amendment to the Facility Agreement in respect of the relevant covenants to reflect such circumstances on or before 1 May 2009. The parties have also agreed that the next period by reference to which the waived covenants will be measured will end on 30 April 2009, with the certificate of compliance required to be delivered by 8 May 2009. The Company has also agreed to maintain at all times unencumbered cash balances in bank accounts of the Group in an amount of U.S.$25 million (or its equivalent in other currencies), of which U.S.$10 million (or its equivalent in other currencies) is required to be maintained in bank accounts of the Company; and to the cancellation of undrawn commitments under the facility 

The holders of the Convertible Bonds have agreed to waive the cross default under the terms of the Convertible Bonds arising as a result of the defaults which have arisen under the Société Générale Facility Agreement.

Bonds

As at 31 March 2009, U.S.$16.2 of the Bonds remain outstanding. The exchange price of each of the Bonds will be adjusted to take account of the Placing. Holders of Bonds will be notified of the details of the adjustments in due course. The effect of such adjustments will be to increase the number of Ordinary Shares to which each holder of Bonds will be entitled on conversion of the Bonds.

Employee Share Option Plans

In accordance with the rules of the Gem Diamonds Employee Share Option Plan and the Executive Share Growth Plan, whether adjustments to the terms of outstanding options and awards to take account of the Placing are made and, if made, the nature of any such adjustments, is at the discretion of the Board. The Board has determined that no such adjustments will be made and the Company will notify participants in due course.

Expected Timetable of Principal Events

Each of the times and dates in the table below is indicative only and may be subject to change.

Latest time and date for receipt of Forms of Direction (for use by depository interest holders)	10.30 a.m. on 17 April 2009
Latest time and date for receipt of Forms of Proxy (for use by shareholders)	10.30 a.m. on 18 April 2009
General Meeting	10.30 a.m. on 20 April 2009
Admission and commencement of dealings in New Shares on the London Stock Exchange	8.00 a.m. on 22 April 2009
New Depositary Interests credited to CREST stock accounts	8.00 a.m. on 22 April 2009
Despatch of definitive share certificates for the New Shares in certificated form	on or around 29 April 2009

Summary of risk factors

Shareholders should carefully consider the following key risks:

• The profitability and economic viability of the Group's operations is highly dependent on diamond prices

• The curtailment of production and of resource development by the Group may result in increased costs being incurred by the Group in the short-term and may result in the Group foregoing or deferring the receipt of the benefits of any future rises in diamond prices

• The diamond industry is affected by consumer demand for luxury goods and the perception of diamonds

• The Group's business requires substantial capital expenditure to maintain production levels over the long-term

• The business of mining diamonds involves a number of risks and hazards, not all of which are fully covered by insurance

• The volume and grade of the diamondiferous ore the Group recovers may not conform to current expectations

• The Group depends on its key personnel. If the Group is unable to attract and retain key personnel, its business may be materially and adversely affected

• The majority of the Group's cashflow is currently derived from one mine

• Kimberley has recently experienced difficulties in settling amounts owed to trade creditors on a timely basis

• The Group's revenue is subject to currency and exchange rate fluctuations

• The Group is dependent on external contractors for elements of its mining and exploration activities

• The Group is reliant on a number of third parties for the supply of materials to support its operations

• The Group's current operations, projects and prospects are located in remote areas and the Group's production and developmental capability relies on the infrastructure being adequate and remaining available

• The Group's joint venture arrangements may not be successful

• The Group's activities are subject to environmental regulations

• The Group's operations are subject to the risk of theft

• The Group's operations are dependent on mining and other licences

• The Group's mining titles may be subject to challenge

• Some of the Group's operations and assets are located in areas of potential political, regulatory and economic instability

• The legal systems to which a number of the Group's operations and assets are subject are less developed than in more established economies

• Australian native title land claims may have a material adverse effect on the Group's results of operations

• Certain of the Group's operations are situated in areas with poor local health conditions

• The possible non-completion of the Placing

• The New Shares and New Depositary Interests are subject to exchange rate risk and exchange controls

• The Placing generally will give rise to dilution for Shareholders

• The price of the Ordinary Shares is subject to possible volatility

• The City Code does not apply to the Company

IMPORTANT INFORMATION ON THE PLACING FOR INVITED PLACEES ONLY

Members of the public are not eligible to take part in the Placing. This Announcement is for information purposes only and is directed at existing Shareholders who are also either: (A) persons in Member States of the European Economic Area who are Qualified Investors; or (B) in the United Kingdom, Qualified Investors who are persons who (i) have professional experience in matters relating to investments falling within Article 19(1) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the 'Order'); (ii) are persons falling within Articles 49(2)(A) to (D) ('High Net Worth Companies, unincorporated associations, etc') of the Order or (iii) are persons to whom it may otherwise be lawfully communicated (all such persons together being referred to as 'Relevant Persons'). 

This Announcement must not be acted on or relied on by persons who are not Relevant Persons. Any investment or investment activity to which this Announcement relates is available only to Relevant Persons and will be engaged in only with Relevant Persons. This Announcement does not itself constitute an offer for sale or subscription of any securities in the Company.  

J.P. Morgan Cazenove may invite Relevant Persons to participate in the Placing as Placees by making an oral offer to subscribe for New Shares. Any such invited Placees will thereafter be sent a Placing Letter by J.P. Morgan Cazenove. By signing and returning the letter of confirmation attached to such a Placing Letter the Placee will be committing to subscribe on the terms and conditions, and be providing the representations, warranties, acknowledgements, and undertakings contained in that Placing Letter. In particular each such Placee will thereby represent, warrant and acknowledge that it is a Relevant Person and undertake that it will acquire, hold, manage or dispose of any New Shares that are allocated to it for the purposes of its business.

In addition, Placees located in certain jurisdictions will be required to execute investor letters in a form provided.

FURTHER INFORMATION

This announcement  does not constitute or form part of any offer or invitation to purchase, otherwise acquire, subscribe for, sell, otherwise dispose of or issue, or any solicitation of any offer to sell, otherwise dispose of, issue, purchase, otherwise acquire or subscribe for, any security.

This announcement is an advertisement and does not constitute a prospectus or prospectus equivalent document. Nothing in this announcement should be interpreted as a term or condition of the Placing. Any decision to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of any New Shares must be made only on the basis of the information contained in and incorporated by reference into the Prospectus. Copies of the Prospectus will be available on publication from Gem Diamonds' registered office and from 2 Eaton Gate, London SW1W 9BJ, being the Company's principal place of business in the UK.

J.P. Morgan Cazenove is authorised and regulated by the Financial Services Authority in the UK and is acting for Gem Diamonds and no one else in connection with the Placing. J.P. Morgan Cazenove will not be responsible to anyone (including Placees) other than the Company for providing the protections afforded to its clients or for providing advice in relation to the Placing or any other matters referred to in this announcement. 

Apart from the responsibilities and liabilities, if any, which may be imposed on J.P. Morgan Cazenove by the FSMA, J.P. Morgan Cazenove accepts no responsibility whatsoever and makes no representation or warranty, express or implied, for the contents of  this announcement, including its accuracy, completeness or verification or for any other statement made or purported to be made by it, or on its behalf, in connection with  Gem Diamonds or the Placing and nothing in  this announcement  is, or shall be relied upon as, a promise or representation in this respect, whether as to the past or future. J.P. Morgan Cazenove accordingly disclaims to the fullest extent permitted by law all and any responsibility and liability whether arising in tort, contract or otherwise (save as referred to above) which it might otherwise have in respect of this announcement or any such statement.

J.P. Morgan Cazenove and/or its affiliates provide various investment banking, commercial banking and financial advisory services from time to time to Gem Diamonds. 

No person has been authorised to give any information or to make any representations other than those contained in this announcement and, if given or made, such information or representations must not be relied on as having been authorised by Gem Diamonds or J.P. Morgan Cazenove. Subject to the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules, the issue of this announcement shall not, in any circumstances, create any implication that there has been no change in the affairs of Gem Diamonds since the date of this announcement or that the information in it is correct as at any subsequent date.

The information contained herein is restricted and is not for release, publication or distribution, directly or indirectly, in whole or in part in, into or from the United States, Canada, Australia, Japan, South Africa or Switzerland or any other jurisdiction where to do so would constitute a violation of the relevant laws of such jurisdiction.   The New Shares have not been and will not be registered under the securities laws of such jurisdictions and may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered, directly or indirectly, within such jurisdictions except pursuant to an exemption from and in compliance with any applicable securities laws.

The distribution of this announcement, the Circular, the Prospectus and/or the transfer or offering of New Shares into jurisdictions other than the United Kingdom is or may be restricted by law. Persons into whose possession this announcement or any such document comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction. 

This announcement and the information contained herein is not an offer of securities for sale or solicitation to buy any securities in the United States. This announcement and the information contained herein is not for distribution in or into the United States. The New Shares have not been and will not be registered under the U.S. Securities Act or with any securities regulatory authority of any State or other jurisdiction. The New Shares may not be offered, sold, taken up, exercised, resold, renounced, transferred or delivered within the United States except in certain transactions exempt from, or not subject to, the registration requirements of the Securities Act. There will be no public offer of the New Shares in the United States.

No statement in this announcement is intended as a profit forecast or a profit estimate and no statement in this announcement should be interpreted to mean that earnings per Ordinary Share for the current or future financial years would necessarily match or exceed the historical published earnings per Ordinary Share. 

Prices and values of, and income from, securities may go down as well as up and an investor may not get back the amount invested. It should be noted that past performance is no guide to future performance. Persons needing advice should consult an independent financial adviser.

Unless otherwise indicated in this announcement, the financial information contained in this announcement has been presented in US dollars. In addition, solely for convenience, this announcement contains translations of relevant currencies to US dollars. These translations should not be construed as representations that the relevant currency could be converted into US dollars at the rate used or at any other rate, and translations into US dollar amounts that have been calculated at 31st March 2009, being the latest practicable date prior to the publication of this announcement, may not correspond to the US dollar amounts shown in the historic or future financial statements of  Gem Diamonds in respect of which different exchange rates may have been, or may be, used.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside of the United Kingdom. 

The address of J.P. Morgan Cazenove is 20 Moorgate, London, EC2R 6DA, United Kingdom. 

Cautionary note regarding forward-looking statements

This announcement includes statements that are, or may be deemed to be, 'forward-looking statements'. These forward-looking statements can be identified by the use of forward-looking terminology, including the terms 'believes', 'estimates', 'anticipates', 'expects', 'intends', 'plans', 'goal', 'target', 'aim', 'may', 'will', 'would', 'could' or 'should' or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this announcement and include statements regarding the intentions, beliefs or current expectations of the Directors or, Gem Diamonds or concerning, amongst other things, the results of operations, financial condition, liquidity, prospects, growth, strategies and dividend policy of Gem Diamonds and the industries in which the Group operates.

By their nature, forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond Gem Diamonds' ability to control or predict. Forward-looking statements are not guarantees of future performance. Gem Diamonds' actual results of operations, financial condition, liquidity, dividend policy and the development of the industries in which the Group operates may differ materially from the impression created by the forward-looking statements contained in this announcement. In addition, even if the results of operations, financial condition, liquidity and dividend policy of the Group and the development of the industries in which the Group operates, are consistent with the forward-looking statements contained in this announcement, those results or developments may not be indicative of results or developments in subsequent periods. Important factors that could cause these differences include, but are not limited to: general economic and business conditions; commodity price volatility; industry trends; competition; the availability of debt and other financing on acceptable terms; changes in government and other regulation, including in relation to the environment, health and safety and taxation, labour relations and work stoppages; changes in political and economic stability; and currency fluctuations (US$/Lesotho Maloti, US$/ZAR, US$/A$ exchange rates).

You are advised to read this announcement  and, once available  the Circular, the Prospectus and the information incorporated by reference therein, in their entirety for a further discussion of the factors that could affect Gem Diamonds' future performance and the industries in which the Group operates. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur.

Other than in accordance with their legal or regulatory obligations (including under the Listing Rules, the Prospectus Rules and the Disclosure and Transparency Rules), neither  Gem Diamonds nor J.P. Morgan Cazenove undertakes any obligation to update or revise publicly any forward-looking statement, whether as a result of new information, future events or otherwise.

DEFINITIONS 

In this Announcement, the following expressions have the following meaning unless the context otherwise requires:

Admission	the admission of the New Shares to the Official List becoming effective in accordance with the Listing Rules and the admission of such shares to trading on the London Stock Exchange's main market for listed securities becoming effective in accordance with the Admission and Disclosure Standards
Admission and Disclosure Standards	the Admission and Disclosure Standards of the London Stock Exchange containing, among other things, the admission requirements to be observed by companies seeking admission to trading on the London Stock Exchange's main market for listed securities
Articles of Association or Articles	the articles of association of the Company as amended from time to time
Aus$ or A$	the lawful currency of Australia
Board or Board of Directors	the board of directors of the Company
Bonds	the convertible bonds issued by the Company due 2009
Business Day	a day (excluding Saturdays and Sundays or public holidays in England and Wales) on which banks generally are open for business in London for the transaction of normal business
CAR	the Central African Republic
Cempaka	the Cempaka diamond mine in Kalimantan, Indonesia
certificated or in certificated form	where a share or other security is not in uncertificated form
Circular	the circular to Shareholders issued by the Company in connection with the Placing and including the Notice of General Meeting
Closing Price	the closing middle-market price of an Ordinary Share as derived from the Daily Official List of the London Stock Exchange
Company	Gem Diamonds Limited
CREST	the relevant system, as defined in the CREST Regulations (in respect of which Euroclear UK is the operator as defined in the CREST Regulations)
CREST Regulations	the Uncertificated Securities Regulations 2001 (SI 2001 No. 3755) as amended
Depositary	Capita IRG Trustees Limited of The Registry, 34 Beckenham Road, Beckenham, Kent, BR3 4TU, United Kingdom
Depositary Interests	the dematerialised depositary interests in respect of the Ordinary Shares issued or to be issued by the Depositary
Depositary Interest Holder	a holder of Depositary Interests
Directors	the Executive Directors and Non-Executive directors of the Company
Disclosure and Transparency Rules	the rules relating to the disclosure of information made in accordance with Section 73A(3) of FSMA
DRC	the Democratic Republic of Congo
Ellendale	the Ellendale diamond mine in Western Australia
ESOP	the employee share option plan approved by the Company on 1 February 2007
Euroclear UK	Euroclear UK & Ireland Limited, operator of CREST
Executive Directors	the executive directors of the Company
Financial Services Authority or FSA	the Financial Services Authority of the United Kingdom
Form of Direction	the form of direction to be used by Depositary Interest Holders in connection with the General Meeting
Form of Proxy	the form of proxy to be used by holders of Ordinary Shares in connection with the General Meeting
FSMA	the Financial Services and Markets Act 2000, as amended
GDHL	Gem Diamond Holdings Limited, a company incorporated in the British Virgin Islands with number 677108 and whose registered office is at Harbour House, Waterfront Drive, P.O. Box 2221, Road Town, Tortola, British Virgin Islands
GDTS	Gem Diamonds Technical Services (SA) (Pty) Limited of Executive City, Cnr. Cross Street and Charmaine Avenue, President Ridge, Randburg, South Africa
Gem Diamonds Limited	Gem Diamonds Limited, a company incorporated in the British Virgin Islands and registered with IBC number 669758
General Meeting	the general meeting of Gem Diamonds Limited to be held at the offices of J.P. Morgan Cazenove, 20 Moorgate, London EC2R 6DA at 10.30am (London time) on 20 April 2009, notice of which will be set out in the Circular to shareholders or any adjournment of such general meeting
Group or Gem Diamonds	the Company and its subsidiaries and subsidiary undertakings
Issue Price	100 pence per New Share
J.P. Morgan Cazenove	J.P. Morgan Cazenove Limited of 20 Moorgate, London EC2R 6DA, United Kingdom
Kimberley	Kimberley Diamond Company NL, a company incorporated in Australia
Letšeng	the Letšeng diamond mine in Lesotho
Listing Rules	the Listing Rules made by the FSA under Part VI of the FSMA
London Stock Exchange	London Stock Exchange plc
Memorandum of Association	the memorandum of association of the Company as amended from time to time
New Depositary Interests	the Depositary Interests to be issued by the Depositary pursuant to the Placing
New Shares	up to 75 million new Ordinary Shares to be issued by the Company pursuant to the Placing
Non-executive Directors	the non-executive directors of the Company
Notice of General Meeting or Notice	the notice of the General Meeting set out in the Circular
Official List	the Official List of the Financial Services Authority
Ordinary Shares	ordinary shares of U.S.$0.01 par value each in the capital of the Company
Overseas Shareholders	Shareholders with registered addresses outside the United Kingdom or who are citizens or residents of countries outside the United Kingdom
Part VI Rules	the rules contained in Part VI of the FSMA
Placees	those persons who have agreed to, or shall agree to, subscribe for the New Shares on the terms of the Placing Letters.
Placing	the subscription by the Placees for the New Shares on the terms of the Placing Letters
Placing and Underwriting Agreement	the placing and underwriting agreement dated 1 April 2009 between the Company and J.P. Morgan Cazenove relating to the Placing
Placing Letters	the letters sent by J.P. Morgan Cazenove to the Placees in relation to the Placing and the letters of confirmation sent from the Placees to J.P. Morgan Cazenove to confirm their irrevocable acceptance of participation in the Placing
pounds sterling or £	the lawful currency of the United Kingdom
Prospectus	the prospectus relating to the Company and the Placing prepared in accordance with the Listing Rules and the Prospectus Rules
Prospectus Rules	the Prospectus Rules published by the FSA under Section 73A of the FSMA
Resolutions	the resolutions to be proposed at the General Meeting in connection with the Placing, notice of which is set out in the Circular to Shareholders
Shareholder	a holder of Ordinary Shares and/or, as the context may require, a holder of Depositary Interests
Société Générale Facility Agreement	the agreement entered into between, among others, Kimberley, the Company and Société Générale Australia Branch on 25 September 2008
uncertificated or in uncertificated form	recorded on the relevant register of the share or security concerned as being held in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST
United Kingdom or UK	the United Kingdom of Great Britain and Northern Ireland
United States or U.S.	the United States of America, its territories and possessions, any state of the United States and the District of Columbia
U.S. dollars or $	the lawful currency of the United States
U.S. Securities Act	the United States Securities Act 1933

 

END

 

 

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