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DiamondCorp halts formal sale process

Johannesburg - Southern African diamond mining, development and exploration company DiamondCorp [JSE:DMC] announced on Monday that, with respect to corporate activities and financing initiatives as well as mining operations at the Lace diamond mine, the board has decided to terminate the "formal sale process" with immediate effect.

The board will continue to examine alternative means of enhancing shareholder value in the normal course of business.

In October the company said it will explore opportunities such as a merger with or offer for the group or a sale of the group's businesses, in parallel with its discussions to secure additional funding.

The company announced that it was launching a strategic review in response to initial expressions of interest from potential acquirers. The company commenced a "formal sale process" as the most appropriate framework under which to conduct its strategic review.

The company said it has now conducted a review of various strategic options and has entered into discussions with a number of third parties and received certain indicative proposals and/or approaches, including in relation to the acquisition of DiamondCorp and various financing options.

In particular, the company successfully concluded the financing facility with Rasmala - totalling £700 000 - to satisfy the company's immediate funding requirements. Such approaches included an early stage non-binding indicative cash proposal at a substantial premium to the share price at the time, which remained subject to, inter alia, amendment and due diligence.

The board considers that the approaches it has received from third parties are opportunistic in nature and significantly undervalues the company as well as unable to be completed in a sufficient period of time in light of the company's financing objectives.

The board says the Lace asset, irrespective of start up delays, still contains an estimated 9.39 million carats of diamonds with an in-ground value in excess of $1.5bn based on the $164/ct base case and grade and tonnage estimates.

As a result of the termination of the formal sale process, the Company is no longer in an offer period.

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