Executive Summary
Cape Diamonds plc, which was established in March 2004 to capitalise upon the opportunity to acquire diamond assets in the RSA, has acquired a 74.4 per cent. interest in the Elandslaagte Project, with the balance of the interest being held by Wheatfields, a BEE shareholder. The Project comprises an existing mining operation based on a diamondiferous kimberlite pipe system. Since 1896 approximately 30,000 carats of diamonds have been extracted from the Elandslaagte mine. Historically, individual diamonds recovered have ranged in size up to 400 carats. The average realised value of the diamonds recovered since July 2004 has exceeded $500 per carat. Since July 2004, the Company has invested in developing the infrastructure and open pit operation at the mine and evaluating the Project. As a result of this funding limited production has been possible. Since July 2004 over 2,000 carats of diamonds have been recovered with individual stones ranging in size up to 50 carats. The Placing to raise 11.9 million, net of expenses, is being undertaken in order to provide the additional capital required to pay creditors, to make the final payments due under the Elandslaagte Agreement, to bring the mine to commercial production and in particular, to invest in mine development and dense medium separation plants to increase both the volumes of material treated and diamond recoveries and for the provision of working capital. In addition, the Selling Shareholders are placing an aggregate of 1,200,000 Sale Shares under the Shareholder Placing. The Company will not receive any of the proceeds of the sale of Sale Shares, all of which (net of expenses and stamp duty) will be paid to the Selling Shareholders.
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