RECOMMENDED CASH OFFER BY GEM DIAMONDS LIMITED FOR BDI MINING CORP

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11 Apr 2007

Not for release, publication or distribution, in whole or in part, in, into or from Australia, New Zealand, Canada or Japan or any Restricted Jurisdiction.

Summary

Gem Diamonds Limited (LSE: GEMD) ("Gem Diamonds") and BDI Mining Corp (AIM: BMG) ("BDI Mining") are pleased to announce today that they have reached agreement on the terms of a recommended cash offer by Gem Diamonds for all the issued and to be issued share capital of BDI Mining.

Offer Highlights

  • Cash offer of 37 pence for each BDI Mining Share
  • Offer provides BDI Mining Shareholders with an 8.8 per cent. premium to BDI Mining's closing share price on 10 April 2007 and values all BDI Mining's issued and to be issued share capital at approximately £41.9 million
  • Offer unanimously recommended by the BDI Mining Directors
  • Irrevocable undertakings and letters of intent to accept the Offer received in respect of, in aggregate, 61,842,657 BDI Mining Shares, representing approximately 59.6 per cent. of BDI Mining's issued share capital, including from all the BDI Mining Directors
  • Transaction adds to Gem Diamonds' portfolio an 80 per cent. holding in Cempaka, a high gem quality producing alluvial diamond mine in Indonesia, with potential for significant production increase
  • Core management of BDI Mining to join Gem Diamonds and to continue the development of the Cempaka mine
  • Gem Diamonds will review strategic options for BDI Mining's Woodlark Gold Project
Commenting on the Offer, Clifford Elphick, Chairman and CEO of Gem Diamonds, said:

"We are pleased to have reached agreement with the BDI Mining Directors and that they have unanimously recommended Gem Diamonds' Offer to their Shareholders. We believe that Gem Diamonds' expertise in alluvial diamond mining, together with our intention to undertake additional investment in the Cempaka mine, will significantly enhance the operational performance of Cempaka.

Cempaka provides Gem Diamonds with an opportunity to diversify geographically whilst retaining its focus on high quality diamond production and positions Gem Diamonds as a company with global ambitions.We look forward to working with the management of BDI Mining, the Government of Indonesia and the regional government of Kalimantan to fulfil Cempaka's potential."

Commenting on the Offer, Lee Spencer, Managing Director of BDI Mining, said:

"We welcome Gem Diamonds' Offer for BDI Mining which we believe fairly values BDI Mining and provides certainty to Shareholders. We have successfully commissioned and operated the Cempaka mine since March 2005. We have recently conducted exploratory work and, given the encouraging results, we have plans to increase the production capacity at Cempaka. Gem Diamonds provides both complementary technical skills and additional capacity for investment at a time of technical and implementation risk for BDI Mining. I am looking forward to working with Gem Diamonds to realise the vision of Indonesia becoming a significant producer of diamonds".

There will be a conference call for investors and analysts at 11.00 a.m. (London time) on 11 April 2007. It can be accessed by dialling +44 (0) 1452 587 356. The presentation to be used in connection with the conference call can be downloaded from www.gemdiamonds.com.

Notes to Editors:

  1. Information relating to Gem Diamonds

    Gem Diamonds is a diamond mining company with a balanced portfolio of a producing mine, development projects and long-term prospects, located across central and southern Africa. Established in July 2005, Gem Diamonds is pursuing an accelerated growth strategy and aims to become one of the world's leading diamond producers. Gem Diamonds currently has one producing kimberlite mine, Letšeng, in Lesotho, and four development projects in the Democratic Republic of Congo and one in the Central African Republic. Recently Gem Diamonds confirmed a co-operation agreement with Angolan partners that provides an option to invest in the Chiri kimberlite concession in Angola.

    In February 2007, Gem Diamonds listed on the London Stock Exchange and raised in excess of US$600 million to fund development of its existing growth assets in the Democratic Republic of Congo and Central African Republic as well as to pursue additional growth opportunities.


  2. Information relating to BDI Mining

    BDI Mining is a diamond and gold mining company which owns a producing alluvial diamond mine and a gold development project. BDI Mining, through its indirect wholly owned subsidiary AMMC, owns 80 per cent. of PTGC, which holds the mining rights to the Cempaka diamond mine in Indonesia. The remaining 20 per cent. in PTGC is held by ANTAM, an Indonesian state mining company. BDI Mining also indirectly owns 100 per cent. of the Woodlark Gold Project in Papua New Guinea through a wholly owned subsidiary.

    Cempaka is an alluvial diamond mine located in south-east Kalimantan, Indonesia. The alluvial diamond deposits at Cempaka are located in two concealed palaeochannels: the Danau Seran palaeochannel which has produced more than 70,000 carats; and the Cempaka palaeochannel consisting of large volumes of diamondiferous palaeochannel gravels. The Cempaka diamond mine is covered by the COW with a total contiguous area of over 8,000 hectares. The COW allows for a 30 year mine life beginning in 2003.

    The Woodlark Gold Project is located in Papua New Guinea and has a JORC compliant resource (including measured, indicated and inferred resources) which exceeds 1 million ounces.

    The book value of the gross assets of BDI Mining as at 31 December 2006 was US$21,729,764. In the 12 months ended 31 December 2006, BDI Mining recorded an operating loss of US$4,577,876.

    This summary should be read in conjunction with, and is subject to, the full text of the following announcement. Appendix III of this announcement contains the sources and bases of certain information used in this summary and in the following announcement. Appendix IV of this announcement contains definitions of certain terms used in this summary and the following announcement. The Offer Document and the Form of Acceptance will be posted to BDI Mining Shareholders (other than to persons with addresses in any Restricted Jurisdiction) as soon as practicable and, in any event, within twenty-eight days of this announcement.

Enquiries:
Gem Diamonds

Stephen Wetherall
Tel: +27 82 418 8735
Angela Parr
Tel: +27 83 578 3885

Strata Capital

Oliver Corner, (Financial Adviser to Gem Diamonds)
Tel: +44 (0) 20 7399 1102

JPMorgan Cazenove

Ian Hannam
Jonathan Walker

Neil Passmore, (Corporate Brokers to Gem Diamonds)
Tel: + 44 (0) 20 7588 2828

BDI Mining

Martin Horgan
Tel: +44 (0) 20 7016 5106

Reg Spencer
Tel: +61 (0) 448812128

Ruegg & Co

Brett Miller (Financial Adviser to BDI Mining)
Tel: +44 (0) 20 7584 3663

Strata Capital UK LLP, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Gem Diamonds and no one else in connection with the Offer and this announcement and will not be responsible to anyone other than Gem Diamonds for providing the protections afforded to clients of Strata Capital UK LLP or for providing advice in connection with the Offer or this announcement or any matter referred to herein.

JPMorgan Cazenove Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for Gem Diamonds and no one else in connection with the Offer and this announcement and will not be responsible to anyone other than Gem Diamonds for providing the protections afforded to clients of JPMorgan Cazenove Limited or for providing advice in connection with the Offer or this announcement or any matter referred to herein.

Ruegg & Co Limited, which is authorised and regulated in the United Kingdom by the Financial Services Authority, is acting exclusively for BDI Mining and no one else in connection with the Offer and this announcement and will not be responsible to anyone other than BDI Mining for providing the protections afforded to clients of Ruegg & Co Limited or for providing advice in connection with the Offer or this announcement or any matter referred to herein.

This announcement is for informational purposes only and does not constitute an offer to sell or invitation to purchase any securities or the solicitation of any vote for approval in any jurisdiction, nor shall there be any sale, issue or transfer of the securities referred to in this announcement in any jurisdiction in contravention of applicable law. The Offer will be made solely by the Offer Document and the Form of Acceptance accompanying the Offer Document, which will contain the full terms and conditions of the Offer, including details of how the Offer may be accepted.

This announcement has been prepared for the purpose of complying with English law 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 of jurisdictions outside the United Kingdom. The release, publication or distribution of this announcement in certain jurisdictions may be restricted by law. Persons who are not resident in the United Kingdom or who are subject to other jurisdictions should inform themselves of, and observe, any applicable requirements.

The Offer will not be made, directly or indirectly, in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and the Offer is not capable of acceptance from or within a Restricted Jurisdiction. Accordingly, copies of this announcement and all documents relating to the Offer are not being, and must not be, directly or indirectly, mailed or otherwise forwarded, distributed or sent in, into or from a Restricted Jurisdiction where to do so would violate the laws in that jurisdiction, and persons receiving this announcement and all documents relating to the Offer (including custodians, nominees and trustees) must not mail or otherwise distribute or send them in, into or from such jurisdictions as doing so may invalidate any purported acceptance of the Offer. The availability of the Offer to BDI Mining Shareholders who are not resident in the United Kingdom may be affected by the laws of the relevant jurisdictions in which they are resident. Persons who are not resident in the United Kingdom should inform themselves of, and observe, any applicable requirements.

In accordance with normal UK market practice, Gem Diamonds or its nominees or brokers (acting as agents) may from time to time make certain purchases of, or arrangements to purchase, BDI Mining Shares outside the United States, other than pursuant to the Offer, before or during the period in which the Offer remains open for acceptance. These purchases may occur either in the open market at prevailing prices or in private transactions at negotiated prices. Any information about such purchases will be disclosed as required in the UK.

This announcement includes certain "forward-looking statements". These statements are based on the current expectations of the management of Gem Diamonds and BDI Mining and are naturally subject to uncertainty and changes in circumstances. The forward-looking statements contained herein may include statements about the expected effects on Gem Diamonds or BDI Mining of the Offer, the expected timing and scope of the Offer, strategic options and all other statements in this announcement other than historical facts. Forward-looking statements include, without limitation, statements typically containing words such as "intends", "expects", "anticipates", "targets", "estimates" and words of similar import. By their nature, forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by such forward-looking statements. These factors include, but are not limited to, the satisfaction of the conditions to the Offer, as well as additional factors, such as changes in economic conditions, changes in the level of capital investment, success of business and operating initiatives and restructuring objectives, customers' strategies and stability, changes in the regulatory environment, fluctuations in interest and exchange rates, the outcome of litigation, government actions and natural phenomena such as floods, earthquakes and hurricanes. Other unknown or unpredictable factors could cause Page 4.

Actual results to differ materially from those in the forward-looking statements. Neither Gem Diamonds nor BDI Mining undertake any obligation to update publicly or revise forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent legally required.