Standby Guarantee Agreement for Proposed Rights Offering

Sep 1, 2006 | 2006, Corporate News

Cape Town, September 1, 2006 – Diamond Fields International Ltd. (DFI:TSX) (“DFI” or the “Company”) is pleased to announce that it has entered into a standby guarantee agreement with Spirit Resources SARL (“Spirit”) in relation to a proposed rights offering of the Company pursuant to which the Company will, subject to receipt of all necessary regulatory approvals, offer to distribute to the Company’s shareholders on a pro rata basis and at no charge, transferable rights to purchase up to 28,000,559 common shares of the Company at a price of $0.09 per share for gross proceeds of up to $2,520,050 (representing up to approximately 24.7% of the Company’s outstanding shares). Pursuant to the standby guarantee agreement, Spirit has agreed to participate in the proposed rights offering by purchasing up to $2,000,000 of the offering through exercising its basic subscription privilege, additional subscription privilege and by purchasing additional shares on a stand-by commitment basis if necessary. Spirit has also advanced to the Company $500,000 to be applied towards Spirit’s participation in the rights offering. Under the agreement, DFI is entitled to employ such funds for its general corporate purposes and the advance will, pending closing of the rights offering, constitute a non-interest bearing loan from Spirit to DFI.

Spirit is controlled by Jean-Raymond Boulle, who is the Company’s largest shareholder currently beneficially owning, directly or indirectly, approximately 16% of the Company’s issued and outstanding common shares. None of Spirit, Jean-Raymond Boulle or any affiliated company will receive any consideration from DFI for Spirit’s covenant to participate in the rights offering pursuant to the standby guarantee agreement. The standby guarantee agreement has been accepted by the Toronto Stock Exchange.

Further details on the proposed rights offering will be provided by the Company in due course and will be contained in a rights offering circular to be mailed to shareholders as of a record date to be set by DFI’s Board of Directors. The rights offering remains subject to applicable Canadian securities laws and stock exchange rules, including completion and approval of all necessary filings with applicable Canadian securities regulatory authorities and the Toronto Stock Exchange.

The Company anticipates that the proceeds of the rights offering will be used for completion of the Company’s mining vessel dry docking, upgrade and maintenance program, continuation of the Liberian diamond and gold exploration projects and for general working capital and administrative expenses.

Roger Daniel, President and CEO commented: “We are delighted that by means of the commitment to the proposed rights offering through the standby guarantee agreement, our largest shareholder is showing significant support and recognizing potential value in the Company’s assets and business plan.”

“Roger J. Daniel”
Roger J. Daniel, President and CEO

For further information, contact Roger Daniel or Randal Cullen at +27 21 425 1990

Forward-Looking Statements:
Statements in this release that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors identified in Diamond Fields’ periodic filings with Canadian Securities Regulators. Such forward-looking information represents management’s best judgment based on information currently available. No forward-looking statement can be guaranteed and actual future results may vary materially. Diamond Fields does not assume the obligation to update any forward-looking statement.

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