Firestone Diamonds (FDI)

 

LSE:FDI: Firm Placing, Placing and Open Offer, etc

Firestone Diamonds

01 Dec 2017 07:01:01

Firestone Diamonds

RNS Number : 1029Y
Firestone Diamonds PLC
01 December 2017
 

This announcement contains inside information for the purposes of article 7 of Regulation 596/2014.

THIS ANNOUNCEMENT AND THE INFORMATION CONTAINED HEREIN IS RESTRICTED AND IS NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, THE REPUBLIC OF SOUTH AFRICA, THE REPUBLIC OF IRELAND, NEW ZEALAND OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION OR DISTRIBUTION WOULD BE UNLAWFUL.

1 December 2017

 

Firestone Diamonds plc
("Firestone" or the "Company") (AIM: FDI)

Proposed Firm Placing, Placing and Open Offer to raise up to £18.5 million (US$25 million)
Revised mining plan
Restructuring of debt facility

Firestone Diamonds plc, the AIM-quoted diamond mining company, today announces a potential fundraising of £18.5 million (US$25 million) before expenses comprising a Firm Placing and a Placing, subject to clawback under an Open Offer, in each case through the issue of New Ordinary Shares at an issue price of 10 pence per New Ordinary Share (the "Issue Price") in order, inter alia, to fund on-going operations at the Liqhobong Diamond Mine (the "Fundraising").

In addition, the Company also announces that it has:

·              formulated a revised mine plan to better cater for the current lower-than-expected diamond sale results in order to ensure the Company can mine sustainably should the lower average diamond values being achieved persist; and

·              reached agreement in principle with its lender, ABSA Bank Limited ("ABSA"), conditionally upon completion of the Fundraising and approval of both commercial and political risk insurance by the Export Credit Insurance Corporation of South Africa ("ECIC"), to, inter alia, defer capital repayments under the ABSA Debt Facility for a period of 18 months from 1 January 2018 to 30 June 2019 and extend the final maturity date by 30 months to December 2023.

It is expected that details of the Fundraising and the expected timetable of principal events will be announced later today (the "Fundraising Results Announcement").

A circular setting out details of the proposed Fundraising and giving notice of a General Meeting to approve these proposals (the "Circular") will be sent to Shareholders shortly following release of the Fundraising Results Announcement and will also be available in due course on the Company's website: www.firestonediamonds.com.

Highlights of the PROPOSED Fundraising

·              Proposed Fundraising of £18.5 million (US$25 million) through a Firm Placing, Placing and Open Offer at the Issue Price.  The Open Offer will provide Qualifying Shareholders with an opportunity to participate in the proposed issue of New Ordinary Shares at the Issue Price.

·              The Issue Price represents a discount of 49.4 per cent. to the Closing Price on 30 November 2017.

·              Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will occur on or around 21 December 2017.

·              The Fundraising is conditional, inter alia, on the passing of the Resolutions at the General Meeting.

 

Stuart Brown, Chief Executive Officer of Firestone, said:

"The 2017 financial year was successful. We achieved a number of milestones, including: the successful completion of the construction of the new mine at Liqhobong in Lesotho, the ramp up of our production and the continued exceptional safety performance of zero lost time injuries throughout the project over the past 3 years. However, the weaker than expected diamond market together with our lower than anticipated recovery of higher value diamonds has put pressure on our cash reserves and meant that we have had to raise additional equity and restructure our debt in order to be able to adopt a revised mining plan which seeks to maximise cash flow in the shorter term while we address the issues affecting value recovered.  We believe the Liqhobong Mine remains a quality asset with the potential to deliver attractive returns as the diamond market recovers and the production footprint becomes more representative over the medium term and potential efficiencies are further improved.

I'd like to thank our major shareholders and ABSA for their ongoing support and commitment."

Background to and reasons for the Fundraising and use of proceeds

Firestone is a diamond mining company with operations focused in Lesotho. Firestone commenced production at the Liqhobong Diamond Mine in Lesotho in October 2016. Liqhobong is owned 75 per cent. by Firestone and 25 per cent. by the Government of Lesotho. Lesotho is emerging as one of Africa's significant new diamond producers, hosting Gem Diamonds' Letseng Mine, Firestone's Liqhobong Diamond Mine and Namakwa Diamond's Kao Mine.

As announced on 29 September 2017, the Company has achieved lower than expected diamond prices in its sales for the last two quarters. Notwithstanding an improvement in the average diamond value received at the most recent sale on 9 October 2017 of US$83 per carat, the Liqhobong Diamond Mine is still being affected by the combination of lower than expected occurrence of larger, better quality diamonds and on-going subdued market conditions for the lower quality diamonds.

The Liqhobong Diamond Mine is in the early stages of production.  A degree of variability is to be expected during this period, particularly as mining operations are yet to access all of the areas of the ore body in a proportionate way. Since commencing operations in October 2016, around 0.6 million carats have been sold at an average value of US$82 per carat. This compares to the Company's updated definitive feasibility study in 2013 which was based on an estimated average base case value of US$107 per carat.

It was also announced on 29 September 2017 that the Company would require additional financing as well as a restructuring of its near-term debt obligations should it continue to achieve the current levels of diamond pricing. The Company has had productive discussions with its lender ABSA and its major Shareholders, the conclusion of which has been that the Fundraising, in conjunction with the amendments to the ABSA Debt Facility, is the best way to protect the interests of all stakeholders whilst enabling the Company, in the short term, to transition to a nine-year mine plan with higher near-term cash generation.

The revised mine plan will be focused in the near term on mining and treating ore over the whole ore body to obtain a more representative footprint than has been possible to date, as well as increasing the opportunity for the recovery of large gem stones which, by nature, are typically scarce and unpredictable. In the medium term, the Company will also be able to retain the flexibility to revert to the original 14-year plan should diamond prices recover materially.

The Fundraising, in conjunction with the amendments to the ABSA Debt Facility, is being undertaken in order to provide additional working capital to insulate the Company against any on-going weakness in the diamond market and any sustained under-recovery of larger, higher quality diamonds whilst, at the same time, allowing it to develop to a point where Liqhobong's long term potential is better understood. Using a low-case diamond price assumption of US$75 per carat, the Directors anticipate that including the net proceeds of the Fundraising and the 18 month standstill on the ABSA Debt Facility capital repayments, Liqhobong will be cash flow break even after servicing all interest on the ABSA Debt Facility, working costs and stay in business capital as well as the necessary small corporate overhead.

The net proceeds of the Fundraising will be used:

·              to fund mining activities and to provide sufficient headroom while diamond market prices remain subdued, thereby enabling the Company to achieve its objective of better understanding the true potential of the ore body;

·              to service the December 2017 capital repayment of US$5.2 million under the ABSA Debt Facility;

·              to fund the debt service reserve account of the Group with US$4.6 million in respect of the interest due under the ABSA Debt Facility during the standstill period; and

·              for other general on-going working capital expenditure.

The Company will continue to review, on an on-going basis, the quality of stones recovered and realised diamond values. The Directors believe that by adopting the shorter nine-year mine plan, with the benefit of the flexibility of reverting to the longer 14-year plan, the Company will be best positioned to operate on a sustainable basis should the lower average diamond values persist with the optionality of taking advantage of the longer life of mine should the average diamond values received increase or should there be an improvement in market conditions.

REVISED MINE PLAN

The Company has formulated a revised nine-year mine plan in conjunction with its technical advisers which it believes will deliver the best returns in the medium term at low risk whilst at the same time offering optionality of taking advantage of the longer life of mine should the average diamond values increase or should there be an improvement in market conditions. Should this occur, the Company will be able to revert to the original 14-year mine plan. The revised plan is over a shorter nine-year period and involves the stripping of 76.0 million fewer waste tonnes. The Directors believe, following completion of the Fundraise and the amendment to the ABSA Debt Facility, Liqhobong will be cash generative at an operational level using the revised plan. Furthermore, over the following 18 months the mining in the pit will cover a far more representative area of the ore, which the Directors expect to improve the likelihood of recovering higher quality stones and, in turn, provide a truer representation of diamond quality and pricing than has been possible from the production at Liqhobong to date.

Item

Unit

Existing mining plan (2015)

Revised mining plan (2017)

Difference

Ore mined/treated

mt

50.9

32.9

(18.0)

Waste mined

mt

105.0

29.0

(76.0)

Total mined

mt

155.9

61.9

(94.0)

Average strip ratio

Waste/ore

2.1

0.9

(1.2)

Plant capacity

mtpa

3.6

3.6

-

In-situ grade

cpht

27.3

23.5

(3.8)

Average annual production

mcts pa

1.0

0.9

(0.1)

Opex cost

ZAR/t treated

192.9

175.5

(17.4)

Opex cost

US$/t treated

14.5

13.0

(1.5)

Steady state operating exp.

US$/carat

53.2

55.2

2.0

Royalty

%

7%

5%

(2%)

Diamond price escalation (real)

%

3%

3%

-

Total carats

Million

13.9

7.7

(6.2)

Life of open pit mine

Years

14

9

(5)

 

illustrative examples

Year-end cash position following completion of the Fundraising

The following table sets out illustrative examples of the Company's year-end cash position following completion of the Fundraising and amendment to the ABSA Debt Facility based on a US$75, US$80 and US$90 per carat diamond price and a number of other assumptions, the key ones of which are summarised below.

US$ per carat diamond price

Cash position at year end (US$m)

 

FY18

FY19

FY20

FY21

FY22

FY23

FY24

FY25

FY26

FY27

US$75

11

12

13

12

12

10

17

38

67

80

US$80

13

18

24

29

33

35

45

70

104

118

US$90

18

31

47

61

75

84

102

135

178

196

The key assumptions to the illustrative examples above are:

·              US$ per carat diamond prices adjusted for real price inflation of 3 per cent. per annum;

·              Liqhobong operating assumptions consistent with the revised mine plan;

·              ZAR:US$ exchange rate of ZAR13.50:US$1;

·              maintenance capex of US$2 million in FY2018, c.US$1 million for FY2019 to FY 2026;

·              US$25 million capital raise and 18 month debt standstill (capital repayment) from 1 January 2018 to 30 June 2019;

·              opening cash balance of US$4.3 million on 1 October 2017;

·              additional net aggregate working capital inflows (dependent on timing of sales etc.) for FY18 to FY27 of c.US$2 million; and

·              only repayment of the ABSA Debt Facility modelled (i.e. excludes repayment of the Series A Bonds and the Series B Bonds).

Revised mine plan NPV

The following table sets out the indicative NPV of Liqhobong following completion of the Fundraising and amendment to the ABSA Debt Facility based on a US$75, US$80, US$90, US$100, US$110 and US$120 per carat diamond price and a number of other assumptions, the key ones of which are summarised below.

US$ per carat diamond price

US$75

US$80

US$90

US$100

US$110

US$120

NPV (US$m)

114

141

195

240

284

328

The key assumptions to the indicative NPV of Liqhobong above are:

·              US$ per carat diamond prices adjusted for real price inflation of 3 per cent. per annum;

·              Liqhobong operating assumptions consistent with the revised mine plan; and

·              NPV before the repayment of the ABSA Debt Facility, the Series A Bonds and the Series B Bonds.

The information used to prepare the illustrative examples above has been compiled from a number of sources.  The illustrative examples have not been audited and are based on a number of assumptions (including the key assumptions set out above). The illustrative examples do not constitute profit forecasts and the Company's actual cash position at year-end and/or NPV will be based on a number of factors, including future diamond price and exchange rates, which, if different from the assumptions above would result in the Company's actual cash position at year-end and/or NPV being materially different from the tables set out above.

Trading update

The Liqhobong Diamond Mine

Liqhobong construction was largely completed on-time and on-budget in October 2016 without a single lost time injury. Plant commissioning and ramp up activities were completed in June 2017 and steady state commercial production was reached at the end of June 2017. 365,891 carats were recovered during FY 2017, whilst diamond sales for the financial year saw 310,376 carats sold, generating total sale proceeds of US$27.8 million, achieving an average value of US$90 per carat. The Company has now reached over five million man-hours worked whilst maintaining its record of zero lost time injuries.

Of the 2,878,952 tonnes treated for the twelve months to 30 September 2017, 80 per cent. came from the lower grade K2 material in the pit with some dilution, seven per cent. came from the K4 material also with some dilution, 13 per cent. came from K5 and coming from historic mixed stockpiles used during the initial commissioning stages.

Summary of sales and diamond market update*


Q3 FY 2017

Q4 FY 2017

Q1 FY 2018

Q2 FY 2018

Carats sold

127,590 cts

182,786 cts

195,330 cts

69,193 cts

Total sales

US$13.7m

US$14.1m

US$13.5m

US$5.7m

Average value

US$107/ct

US$77/ct

US$69/ct

US$83/ct

*Two sales per quarter except Q2 FY 2018 (one sale).

As reported in the 29 September 2017 operational update, the Company believes that the widely reported November 2016 Indian de-monetisation programme continues to impact diamond pricing, in particular in the market for smaller stones that comprise the bulk of the run-of-mine goods sold in the Company's sales to date. The initial impact of the de-monetisation was a drop in prices as a result of demand reduction, which has been exacerbated by an oversupply of goods that has since kept pricing at depressed levels.

It was encouraging that the Company's October 2017 sale saw an improvement in pricing for both finer sized stones and larger stones and included the sale of a 133 carat gem-quality light yellow diamond (the largest diamond recovered at Liqhobong to date).

Near-term headwinds aside, the Directors believe that the long-term fundamentals of the diamond sector remain strong.

SUMMARY OF THE GROUP'S FINANCING ARRANGEMENTS

The ABSA Debt Facility

As announced on 11 April 2014, ABSA granted the Group a project debt finance facility of up to US$82.4 million for the construction and commissioning of Liqhobong. The terms of the ABSA Debt Facility included a total term of 6.5 years, with an 18 month draw down period for construction and with the repayment of capital occurring in the final 4.5 years of the loan term.

ABSA has agreed, in principle, to: (i) an 18 month debt standstill on capital repayments for the period from 1 January 2018 to 30 June 2019; and (ii) an extension of the final maturity date by 30 months to December 2023. The financial covenants and definition of financial completion in the ABSA Debt Facility would also be revised to reflect the revised mine plan and remaining life of the facility and the cash sweep would be increased from 40 per cent. to 50 per cent. after provision for sufficient working capital. A credit review will be held in twelve months' time to assess actual performance against expectations and consider additional restructuring actions if necessary. ABSA will also have the ability to call a credit review before December 2018 or to declare default in the event of average diamond values for three consecutive sales being below US$70 per carat, which is below the base case value of US$75 per carat adopted by ABSA for measurement during the standstill period.  The Company also expects an increase of between 0.25 per cent. and 0.5 per cent. in the margin rates payable, together with a potential increase in the ECIC premium (depending on the outcome of the ECIC review). These amendments are conditional, inter alia, on:

·           approval of both commercial and political risk insurance by the ECIC;

·           the Company raising at least US$20 million pursuant to the Fundraising;

·           the Company's debt service reserve account to be expanded to cover 18 months' interest during the standstill period; and

·           other customary conditions standard for facilities of this nature including documentation and the signing of material contracts.

An illustrative comparison of the scheduled capital repayment profiles of the existing and proposed ABSA Debt Facility are set out in the table below.


FY18

FY19

FY20

FY21

FY22

FY23

FY24

Existing ABSA Debt Facility (US$m)

19.5

22.1

20.3

15.9

-

-

-

Proposed ABSA Debt Facility (US$m)

9.9

1.9

10.2

14.0

21.2

11.5

9.0

The Company believes that good progress is being made in relation to satisfying the conditions precedent for such amendments.

The Series A Bonds

As previously announced on 26 May 2014, the Company entered into the Mezzanine Facility whereby US$15.0 million was agreed to be provided by each of Pacific Road and RCF (US$30.0 million in aggregate). The Mezzanine Facility has an interest rate of 8.0 per cent. per annum payable quarterly in arrears. All interest payments are payable in cash save that the Group may, at its discretion, provided that no event of default is subsisting and no requirement under Rule 9 of the Takeover Code to make a mandatory offer would be triggered, elect to satisfy such payment by way of the issue of new Ordinary Shares at an issue price equal to the 20 day VWAP of an Ordinary Share.  The Mezzanine Facility is repayable on 20 August 2022.

On 24 April 2015 it was announced that the Mezzanine Facility was being restructured by way of an issue of quoted Eurobonds and, accordingly, the Company issued US$30.0 million principal amount of Series A Bonds. The Series A Bonds have the same commercial terms (described in the Company's circular to Shareholders dated 24 April 2015) as the Mezzanine Facility.

As at the date of this announcement, the Company has issued 5,936,792 new Ordinary Shares and 5,341,480 new Ordinary Shares to RCF and Pacific Road respectively to satisfy the payment of interest under the Series A Bonds and it is currently the Directors intention to continue to issue Ordinary Shares to satisfy such interest payments.

As part of the funding package provided by RCF and Pacific Road, each received 2014 Warrants entitling each of them to subscribe for 24,393,218 new Ordinary Shares.

The Series B Bonds

As previously announced, under the terms of the ABSA Debt Facility, the Company was required to secure a separate standby debt facility to fund any potential cost over-runs or delays in respect of the Liqhobong Diamond Mine, to remain in place until the mine achieved technical and financial completion. RCF agreed to provide this facility by agreeing to subscribe for Series B Bonds.

Following the amendment and restatement of the Series B Bonds announced on 22 June 2017, the Company was granted put options by RCF to require RCF to purchase any or all of the Series B Bonds at a price of US$1,000 per Series B Bond in minimum drawdowns of US$2.0 million (and thereafter in US$1.0 million increments), up to a maximum of US$15.0 million.

As at the date of this announcement the Company has issued US$7.0 million Series B Bonds to RCF with a further US$8.0 million of Series B Bonds available.

In order to facilitate the ability of the holder of the Series B Bonds to elect to receive new Ordinary Shares, as opposed to cash, on the redemption of the Series B Bonds by the Company, the Company agreed that, upon the issue of a Series B Bond, the Company will also issue RCF with Series B Warrants. The Series B Warrants are attached to the Series B Bonds and, on redemption of the Series B Bonds by the Company, RCF (or any third party to whom the Series B Bonds have been transferred) may exercise the Series B Warrants such that they will receive such number of new Ordinary Shares as is equal to the applicable redemption amount divided by the applicable exercise price, as opposed to the applicable redemption amount in cash.

Further details of the Series B Bonds and the Series B Warrants are contained in the Company's circular to Shareholders dated 24 April 2015 and its announcement dated 22 June 2017.

Details of the FUNDRAISING

The Company proposes to raise £18.5 million (US$25 million) before expenses by the issue of up to 147,888,528 New Ordinary Shares by way of the Firm Placing and a further 36,954,356 New Ordinary Shares by way of the Placing, subject to clawback under the Open Offer, each at an Issue Price of 10 pence per New Ordinary Share. The New Ordinary Shares are expected to represent 36.6 per cent. of the Enlarged Issued Share Capital. Macquarie, as agent of the Company, has agreed to use its reasonable endeavours to conditionally place the Firm Placing Shares and the Placing Shares at the Issue Price pursuant to the Placing and Open Offer Agreement. The Fundraising is not underwritten.

Qualifying Shareholders will be offered the right to subscribe for Open Offer Shares in accordance with the terms of the Open Offer. Qualifying Shareholders will not be offered the right to subscribe for the Firm Placing Shares.

The Board considers the Firm Placing and the Placing and Open Offer to be an appropriate fundraising structure, providing certainty of funds to complete the plans outlined above whilst providing existing Shareholders with the opportunity to participate in the Fundraising through the Open Offer.

All elements of the Fundraising will have the same Issue Price. The Issue Price of 10 pence per New Ordinary Share represents a 49.4 per cent. discount to the Closing Price of 19.75 pence per Existing Ordinary Share on 30 November 2017 (being the latest practicable date prior to the publication of this Announcement). The Issue Price has been set by the Directors following their assessment of market conditions and following discussions with major Shareholders. The Directors are in agreement that the level of discount and method of issue are appropriate to secure the investment necessary.

Firm Placing

Macquarie, as agent for the Company and pursuant to the Placing and Open Offer Agreement, has agreed to use its reasonable endeavours to conditionally place the Firm Placing Shares at the Issue Price. The Firm Placing Shares will be placed with institutional and other investors. The Firm Placing Shares will not be subject to clawback. 

Placing and Open Offer

The Directors recognise the importance of pre-emption rights to Shareholders and consequently Open Offer Shares will be offered to existing Shareholders by way of the Open Offer. The Open Offer will provide Qualifying Shareholders with an opportunity to participate in the Fundraising by subscribing for their respective Basic Entitlements and Excess Entitlements.

As part of the Placing and Open Offer, Macquarie as agent for the Company and pursuant to the Placing and Open Offer Agreement has agreed to use its reasonable endeavours to conditionally place the Placing Shares at the Issue Price.

Subject to the fulfilment of the conditions set out below and in the Circular to be published in due course, Qualifying Shareholders will be given the opportunity to subscribe for Open Offer Shares under the Open Offer at the Issue Price, payable in full on application and free of all expenses, pro rata to their existing shareholdings. The Excess Application Facility will enable Qualifying Shareholders, provided that they take up their Basic Entitlements in full, to apply for Excess Entitlements.

If you have sold or otherwise transferred all of your Existing Ordinary Shares after the ex-entitlement Date, you will not be entitled to participate in the Open Offer.

The Open Offer is not a rights issue. Qualifying CREST Shareholders should note that, although the Open Offer Entitlements will be admitted to CREST and be enabled for settlement, applications in respect of entitlements under the Open Offer may only be made by the Qualifying Shareholder originally entitled or by a person entitled by virtue of a bona fide market claim raised by Euroclear's Claims Processing Unit. Qualifying Non-CREST Shareholders should note that the Application Form is not a negotiable document and cannot be traded. Qualifying Shareholders should be aware that under the Open Offer, unlike in a rights issue, any New Ordinary Shares not applied for will not be sold in the market or placed for the benefit of Qualifying Shareholders who do not apply under the Open Offer, but will be placed with Placees pursuant to the Placing and Open Offer Agreement, and the net proceeds will be retained, for the benefit of the Company. 

Further details of the Open Offer and the terms and conditions on which the Open Offer will be made, including the procedure for application and payment, will be contained in the Fundraising Results Announcement and the Circular and for Qualifying Non-CREST Shareholders on the accompanying Application Form.

To enable the Company to benefit from applicable exemptions to the requirement under the Prospectus Rules to prepare a prospectus in connection with the Open Offer, a maximum of 36,954,356 Open Offer Shares, representing a total consideration of approximately £3.7 million will be made available to Qualifying Shareholders under the Open Offer. The Open Offer is restricted to Qualifying Shareholders in order to enable the Company to benefit from exemptions from securities law requirements in certain jurisdictions outside the United Kingdom.

Basis of allocation under the Fundraising

The Placing may be scaled back at the Company's absolute discretion in order to satisfy valid applications by Qualifying Shareholders under the Open Offer. The Open Offer is being made on a pre-emptive basis to Qualifying Shareholders. Any New Ordinary Shares that are available under the Open Offer and are not taken up by Qualifying Shareholders pursuant to their Open Offer Entitlements will be reallocated to the Placing.

The number of Placing Shares to be clawed back from Placees to satisfy valid applications by Qualifying Shareholders under the Open Offer will be calculated pro rata to each Placee's commitment to subscribe for Placing Shares.

Other information relating to the Fundraising

Each of the placing of the Firm Placing Shares, the Placing Shares and the issue of the Open Offer Shares is conditional, inter alia, upon Admission becoming effective by no later than 8.00 a.m. on 21 December 2017 (or such later time and/or date as Macquarie and the Company may agree being no later than 8.00 a.m. on 29 December 2017). The Placing is conditional on completion of the Open Offer.

The Open Offer is subject to the satisfaction, amongst other matters, of the following conditions on or before 21 December 2017 (or such time and date being no later than 8.00 a.m. on 29 December 2017, as the Company may decide):

·                       Admission becoming effective by 8.00 a.m. on 21 December 2017 (or such later time or date not being later than 8.00 a.m. on 29 December 2017 as the Company may decide);

·                       the Placing and Open Offer Agreement becoming unconditional in all respects and not having been terminated in accordance with its terms; and

·                       the Resolutions having been duly passed without amendment at the General Meeting and the Resolutions becoming unconditional.

In the event that the Open Offer does not become unconditional by 8.00 a.m. on 21 December 2017 (or such later time and date as the Company may decide being no later than 8.00 a.m. on 29 December 2017), the Open Offer will lapse and application monies will be returned by post to the Applicant(s) at the Applicant's risk and without interest, to the address set out in the Application Form, within 14 days thereafter.

The New Ordinary Shares will, when issued and fully paid, rank pari passu in all respects with the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of Admission.

Settlement and dealings

Application will be made to the London Stock Exchange for the New Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that dealings will commence at 8.00 a.m. on 21 December 2017.

Overseas Shareholders

Certain Overseas Shareholders may not be permitted to subscribe for Open Offer Shares pursuant to the Open Offer and should refer to the Circular when published in due course.

General Meeting

The Company will convene a General Meeting in due course for the purpose of considering and, if thought fit, passing the Resolutions in order to approve the Fundraising.

 

For more information contact:

Firestone Diamonds plc

Stuart Brown

+44 (0)20 8741 7810

Macquarie Capital (Europe) Limited (Nomad and Broker)

Nick Stamp
Nicholas Harland

+44 (0)20 3037 2000

Tavistock (Public and Investor Relations)

Simon Hudson
Jos Simson
Barney Hayward

+44 (0)20 7920 3150

+44 (0)7966 477 256

 

IMPORTANT INFORMATION

Neither this announcement nor any copy of it may be taken or transmitted, published or distributed, directly or indirectly, into the United States, Australia, Canada, Japan or South Africa or to any persons in any of those jurisdictions or any other jurisdiction where to do so would constitute a violation of the relevant securities laws of such jurisdiction. Any failure to comply with this restriction may constitute a violation of United States, Australian, Canadian, Japanese or South African securities laws. The distribution of this announcement in other jurisdictions may be restricted by law and persons into whose possession this announcement comes should inform themselves about, and observe any such restrictions.

This announcement does not constitute, or form part of, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for any Ordinary Shares or other securities in the United States (including its territories and possessions, any state of the United States and the District of Colombia (the United States or US)), Australia, Canada, Japan or South Africa or in any jurisdiction to whom or in which such offer or solicitation is unlawful.

The Fundraising and the distribution of this announcement and other information in connection with the Fundraising in certain jurisdictions may be restricted by law and persons into whose possession this announcement, any document or other information referred to herein, comes should inform themselves about and observe any such restriction. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.

In particular, the securities of the Company (including the New Ordinary Shares) have not been and will not be registered under the US Securities Act of 1933, as amended (the "Securities Act"), or under the securities laws or with any securities regulatory authority of any state or other jurisdiction of the United States, and accordingly the New Ordinary Shares may not be offered, sold, pledged or transferred, directly or indirectly, in, into or within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and the securities laws of any relevant state or jurisdiction of the United States. There is no intention to register any portion of the offering in the United States or to conduct a public offering of securities in the United States.

The New Ordinary Shares have not been approved or disapproved by the US Securities and Exchange Commission, any state securities commission or other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Fundraising or the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the United States.

Macquarie Capital (Europe) Limited ("Macquarie") is authorised and regulated in the United Kingdom by the FCA, is acting as nominated adviser, sole bookrunner and broker to the Company in respect of the Fundraising. Macquarie is acting for the Company and for no-one else in connection with the Fundraising, and will not be treating any other person as its client, in relation thereto and will not be responsible for providing the regulatory protections afforded to its customers nor for providing advice in connection with the Fundraising or any other matters referred to herein and apart from the responsibilities and liabilities (if any) imposed on Macquarie by Financial Services and Markets Act 2000 (as amended) ("FSMA"), any liability therefor is expressly disclaimed. Any other person should seek their own independent legal, investment and tax advice as they see fit.

FORWARD LOOKING STATEMENTS

This announcement contains (or may contain) certain forward-looking statements with respect to certain of the Company's plans and its current goals and expectations relating to its future financial condition and performance and which involve a number of risks and uncertainties. The Company cautions readers that no forward-looking statement is a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statements. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements sometimes use words such as "aim", "anticipate", "target", "expect", "estimate", "intend", "plan", "goal", "believe", "predict" or other words of similar meaning. Examples of forward-looking statements include, amongst others, statements regarding or which make assumptions in respect of the planned use of the proceeds for the Fundraising, the Group's liquidity position, the future performance of the Group, future interest rates and currency controls, the Group's future financial position, plans and objectives for future operations and any other statements that are not historical fact. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances, including, but not limited to, economic and business conditions, the effects of continued volatility in credit markets, market-related risks such as changes in interest rates and foreign exchanges rates, the policies and actions of governmental and regulatory authorities, changes in legislation, the further development of standards and interpretations under IFRS applicable to past, current and future periods, evolving practices with regard to the interpretation and application of standards under IFRS, the outcome of pending and future litigation or regulatory investigations, the success of future acquisitions and other strategic transactions and the impact of competition. A number of these factors are beyond the Company's control. As a result, the Company's actual future results may differ materially from the plans, goals, and expectations set forth in the Company's forward-looking statements. Any forward-looking statements made in this announcement by or on behalf of the Company speak only as of the date they are made. These forward looking statements reflect the Company's judgement at the date of this announcement and are not intended to give any assurance as to future results. Except as required by the FCA, the London Stock Exchange, the AIM Rules or applicable law, the Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained in this announcement to reflect any changes in the Company's expectations with regard thereto or any changes in events, conditions or circumstances on which any such statement is based.

References

All times referred to in this announcement are, unless otherwise stated, references to UK time.

All references in this announcement to "£", "pence" or "p" are to the lawful currency of the UK, references to "US$" are to the lawful currency of the United States and references to "ZAR" are to the lawful currency of the Republic of South Africa.

 

APPENDIX I

RISK FACTORS

An investment in the New Ordinary Shares is subject to a number of risks. Before making an investment decision with respect to the New Ordinary Shares, prospective investors should carefully consider the risks associated with an investment in the Company, the Company's business and the industry in which the Company operates, in addition to all of the other information set out in this announcement and, once published, the Circular and, in particular, those risks described below.

If any of the circumstances identified in the risk factors were to materialise, the Company's business, financial condition, results of operations and future prospects could be adversely affected and investors may lose all or part of their investment. Certain risks of which the Directors are aware at the date of this announcement and which they consider material to prospective investors are set out in the risk factors below. Additional risk factors which the Directors consider may be relevant to the Company's business can be found in the Company's re-admission document dated 13 August 2010. However, further risks and uncertainties relating to the Company which are not currently known to the Directors, or that the Directors do not currently deem material, may also have an adverse effect on the Company's business, financial condition, results of operations and future prospects. If this occurs, the price of the Ordinary Shares may decline and investors may lose all or part of their investment.

An investment in the Company may not be suitable for all potential investors. Potential investors are therefore strongly recommended to consult an independent financial adviser authorised under FSMA and who specialises in advising upon the acquisition of shares and other securities before making a decision to invest

Operational and Industry Risks

Exploration, Development and Mining Risks

The successful exploration, development and mining of diamonds is subject to a number of risks and hazards which even a combination of careful evaluation, experience and knowledge may not eliminate. These risks include environmental hazards, industrial accidents, fires, the encountering of unusual or unexpected geological formations, pit side wall failures, flooding, earthquakes, damage to diamonds during the mining and/or processing phase of operations and periodic interruptions of utilities due to inclement or hazardous weather conditions (for example, heavy snowfall). These occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, reduced production and delays in mining, asset write-downs, monetary losses and possible legal liability.

Estimates of Reserves and Resources

The estimation of the Group's resources and reserves and their anticipated production profiles comply with standard evaluation methods generally used in the international mining industry. In respect of these estimates, no assurance can be given that the anticipated revenues, tonnages and grades will be achieved, that the indicated level of recovery will be realised or that the kimberlitic resources can be mined or processed profitably. Actual resources may not conform to expectations and the volume and grade of ore recovered may be below the estimated levels. There can be no assurance that recoveries in small-scale laboratory tests will be duplicated in larger-scale tests under on-site conditions or during production. Reserve data are not indicative of future results of operations. If the Group's actual reserves and resources are less than current estimates, the Group's results or operations or financial position may be materially and adversely affected.

Diamond Market Risks

The business of the Group is focused on the exploration and mining of diamonds. The marketability of diamonds is affected by and dependent on numerous factors beyond the control of the Group, the precise effects of which cannot be accurately predicted. These factors include market fluctuations, general economic activity, action taken by other diamond companies or nations where diamonds are mined, the supply of rough diamonds to the market, consumer demand for polished diamonds and the availability and pricing of other substitute material (including synthetic diamonds), government regulation relating to taxation, royalties, production levels, imports and exports, land tenure and land use, mining licences, health and safety and the environment.

Depending on demand and pricing within the diamond market, the Group may determine that it is not economically feasible to continue production which could have an adverse impact on the Group's business, results of operations and financial condition. In such circumstances the Group may curtail or suspend some or all of its production activities.

Title and Licenses

The Group requires a number of licenses, leases, approvals, permits and regulatory consents, in respect of its operations as well as work and environment permits (collectively, "Authorisations"). The Group has obtained all Authorisations, which are material to the mining of the Liqhobong Diamond Mine. The political, legal and regulatory regime within Lesotho is still developing and there can be no assurance that the Group has or will have every necessary or desirable Authorisation required at any one time to conduct the Group's operations. Any delays in being awarded the relevant Authorisations may affect the Group's financial position. Furthermore, there is a risk that such Authorisations could be terminated, revoked, withdrawn, suspended, unavailable for renewal following expiry or become commercially unviable. Whilst the Group has investigated its title to and rights over interests in and relating to its mining assets and rights, this should not be construed as a guarantee of the Group's title to such assets. The Group's assets may be subject to prior unregistered agreements or transfers that have not been recorded or detected through title research and title may be affected by undetected defects. There can be no assurance that title to some of the Group's assets will not be challenged or impugned.

Single Principal Asset

The Liqhobong Diamond Mine is the Group's main asset and is the Group's main source of revenue. In the event that the Liqhobong Diamond Mine is unable to maintain a steady-state of production, whether due to operational failings or force majeure events, then a reduction in targets or the suspension of operations at the Liqhobong Diamond Mine could have a material adverse effect on the financial position of the Group. In particular, it could result in the Group defaulting on the repayment of the Eurobonds and/or the ABSA Debt Facility.

Availability of and access to infrastructure

The Group's mining, processing, development and exploration activities depend on adequate infrastructure, including reliable roads, power sources and water supplies. Any failure or unavailability of the infrastructure on which the Group's operations rely could adversely affect the production output from its mines or impact its exploration activities or the development of a mine or a project. If the infrastructure used by the Group is affected, it could have a material adverse effect on the Group's business, results or operations or financial condition.

Risk of theft

The Group has established security systems, procedures and arrangements in place across the extraction, processing and diamond recovery chain. Despite the best efforts of management, there can be no guarantee that there will be no occurrences of theft of diamonds from the Group's operations. Whilst the Group maintains insurance against such theft in an amount it considers to be adequate, in certain circumstances its insurance may not cover or be adequate to cover any such theft, in which case the Group could incur significant costs that could materially and adversely affect its results of operations.

Management Risks

The Group's business is highly dependent on the chief executive and the senior management team. There can be no certainty that the services of such key personnel will continue to be available to the Group as competition for such personnel is intense in the mining industry. Factors critical to retaining the Group's present staff and attracting and recruiting additional qualified personnel include, inter alia, the Group's ability to provide these individuals with competitive compensation arrangements. If the Group is not successful in retaining or attracting qualified individuals in key management and operational positions, its business may be adversely affected.

Competition

The diamond mining business is highly competitive in all its phases. The Group competes with numerous other companies, several of which have greater financial, technical and other resources than the Group, for the acquisition of assets as well as the recruitment and retention of qualified employees and other personnel.

Insurance Risks

Although the Board believes the Group carries adequate insurance with respect to its activities in accordance with industry practice, in certain circumstances its insurance may not cover or be adequate to cover the consequences of such events. Furthermore, insurance fully covering many environmental risks including potential liability for pollution or other hazards as a result of the containment of waste water (or "slimes") is not generally available to the Group or to other companies in the mining industry. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition, results or operations of the Group.

Litigation Risks

While the Group is not party to any material litigation, there can be no guarantee that current or future actions of the Group will not result in such litigation. Due to the inherent uncertainty of the litigation process, there can be no assurance that the resolution of any such particular legal proceedings will not have a material effect on the Group's financial position or results of operations.

On 13 November 2017 the Company received a letter from The Department of Corruption and Economic Offences in Maseru, Lesotho requesting information relating to the award of a long term mining contract by LMDC. The Board, having reviewed the tendering process in detail and taken legal advice on the matter, is confident that the process was conducted in an open and transparent fashion and in compliance with all relevant laws and the relevant Liqhobong mining contract. The Company is in the process of responding to all requests for information in full.

Work Force Risks

Much of the work undertaken in relation to the Liqhobong Diamond Mine is dependent on locally sourced employees. The Directors believe that the Group has good relationships with its employees but work slow-downs, stoppages or other labour related developments or disputes involving employees could potentially result in a delay or decrease in production going forward which in turn could impact the Group's financial performance and condition.

The success of the Group's operations also depends on its ability to hire sufficient skilled and qualified people locally. The Group may struggle to recruit and retain engineers, consultants and other important members of the workforce due to shortages of labour, or of skilled workers, or the unavailability or over commitment of consultants, which may cause delays to production.

Environmental Risks

The Group's operations are subject to environmental regulation. Such regulation covers a wide variety of matters, including, without limitation, prevention of waste, pollution and protection of the environment, labour regulations and worker safety. Environmental legislation and permitting are likely to evolve in a manner which will require stricter standards and enforcement, increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their directors and employees.

Economic, Financial and Political Risks

Currency Risks, Exchange Rate Fluctuations and Exchange Control Regulations

The Company is exposed to a number of different currency risks between the South African Rand, Lesotho Maloti, US$, Sterling and Botswana Pula. The Group values and sells its diamonds in US$ and then converts the proceeds to Sterling, Maloti and Pula as required. As the Group reports in US$, reported revenue is affected by changes in exchange rates between the above currencies. The Group's expenses in Botswana, South Africa, the UK and Lesotho are incurred in Pula, Rand, Sterling and Maloti respectively. The value of the Maloti is set on a 1:1 basis to the Rand. A significant fluctuation in the operating currencies or the US$ could have a material adverse effect on the business, financial position and result of operations in the Group.

Whilst at present the Group is not adversely affected by strict controls on access to foreign currency and the repatriation of funds, any change in foreign exchange regulations in the jurisdictions in which the Group operates could have a material adverse effect on its business and operations, and there can be no assurance that exchange control restrictions will not be reintroduced in certain countries in which the Group operates.

Economic Risk

In common with other early stage emerging market economies, many African countries (where all of the Group's assets are located) are dependent on sale proceeds from primary commodity production which are subject to fluctuations in world commodity prices. In general, these economies have also experienced devaluations, high inflation and high interest rates. All these economic risks may from time to time adversely affect the Group's operations. Historically, commodity prices (including diamonds) have displayed wide ranges and are affected by the numerous factors over which the Company does not have any control. These include world production levels, international economic trends, expectations for inflation, speculative activity, consumption patterns and global or regional political events.

Geopolitical Risk

Lesotho is a small nation bordered on all sides by the Republic of South Africa and is reliant on its larger neighbour for the supply of food, fuel, and goods and services. Consequently, economic and political events in the Republic of South Africa may have an adverse effect on Lesotho's economy, political system, infrastructure and population which may subsequently have an adverse effect on the Company's operations and financial position.

Political Risk

Democratic political processes have been restored in Lesotho since 1998 and the country has undergone several parliamentary elections under the restored political system. However, there remains a level of volatility to the parliamentary process which could undermine the democratic system of government in Lesotho. Lesotho is still developing the legal framework required to support a market economy. The following risk factors relating to the legal systems of Lesotho creates uncertainties with respect to the Group, many of which uncertainties do not exist in countries with more developed market economies: (i) inconsistencies between and among governmental, ministerial and local orders, decisions, resolutions and other acts; (ii) conflicting local, regional and federal rules and regulations; (iii) the lack of judicial and administrative guidance on interpreting legislation; (iv) laws and government and administrative decisions and certain transactions consummated pursuant to them have in the past been challenged in the Courts and such challenges may occur in the future; (v) substantial gaps in the regulatory structure due to delay or absence of implementing legislation; (vi) a high degree of discretion on the part of governmental authorities, which could result in arbitrary actions such as suspension or termination of licences; and (vii) poorly developed bankruptcy procedures that are subject to abuse. Furthermore, several fundamental laws have only recently become effective. The recent nature of much legislation, the lack of consensus about the scope, content and pace of economic and political reform and the rapid evolution of the legal systems in ways that may not always coincide with market developments place the enforceability and underlying constitutionality of laws in doubt and results in ambiguities, inconsistencies, anomalies and uncertainties. In addition, legislation often contemplates implementing regulations which have not yet been promulgated, leaving substantial gaps in the regulatory infrastructure. Due to the inconsistency of legislation, the same provisions of the law may be applied differently by different local authorities and state bodies. Although the decisions and actions of these authorities and state bodies can be challenged in the Courts, the uncertainty as to how the law will be applied by different local authorities and state bodies may have adverse consequences for the Group. All of these weaknesses could have a material adverse effect on the Group's financial position, prospects and the value of the Shares and may prevent the Group from effectively and efficiently carrying out its business strategy and could affect the Group's ability to enforce its legal rights in Lesotho, including rights under its contracts, or to defend against claims by others in Lesotho Courts.

Acts of God and contagious diseases

Acts of God such as natural disasters and outbreaks of highly contagious diseases are beyond the control of the Group and may adversely affect the economy, infrastructure and livelihood of people in the countries in which the Group is operating or proposing to operate and other parts of the world. The Group's business and profitability may be adversely affected should such acts of God and/or outbreaks occur and/or continue.

Crime and corruption

The political and economic changes in Lesotho in recent years have resulted in significant dislocations of authority. The local press and international press have reported levels of corruption including the bribing of, or by, officials for the purpose of initiating investigations by government agencies. Press reports have also described instances in which government officials have engaged in selective investigations and prosecutions to further the interests of the government and individual officials or business groups. Demands of corrupt officials (including the initiation of investigations into certain aspects of the Group's business (including procurement) or claims that the Group or its management or its beneficial owners have been involved in corruption or illegal activities or biased articles and negative publicity could adversely affect the Group's ability to conduct its business. Parts of the Lesotho economic system continue to suffer from corruption. The Group may have to cease or alter certain activities or business activities as a result of criminal threats or activities or face delays as a result of selective investigations/prosecutions. Legal rights may be difficult to enforce in the face of organised crime or corruption. Prospective counterparties to the Group may seek to structure transactions in an irregular fashion, to evade fiscal or legal requirements. They may also deliberately conceal information from the Group and its advisers or provide inaccurate or misleading information which may have a material adverse effect on the Group.

Additional compliance costs and sanctions

Regulatory authorities exercise considerable discretion in matters of enforcement and interpretation of applicable laws, regulations and standards, the issuance and renewal of any applicable licences, permits, approvals and authorisations and in monitoring licencees' compliance with the terms thereof. Failure to comply with existing laws and regulations or the findings of government inspections may result in the imposition of fines or penalties or more severe sanctions including the suspension, amendment or termination of any applicable licences, permits, approvals and authorisations or in requirements to cease certain business activities, or in criminal and administrative penalties. Moreover, an agreement made or transaction executed in violation of a law may be invalidated and unwound by a Court decision. Any such decisions, requirements or sanctions, or any increase in governmental regulation could increase the Group's costs of operation and materially adversely affect the financial position or prospects of the Group.

Risk relating to the Fundraising

Existing debt obligations

As at the date of this document, the Group's debt obligations consist of the US$82.4 million ABSA Debt Facility, US$30 million of Series A Bonds and US$7 million of Series B Bonds. As more particularly described at paragraph 6.1 of Part 1 of this document, ABSA has agreed, in principle, to make certain amendments to the ABSA Debt Facility. The extent and terms of the Group's leverage has important consequences for Shareholders. For example: (i) the Group is required to dedicate a substantial portion of its cash flow from operations over the life of mine to required payments on indebtedness, thereby reducing the availability of cash flow for working capital, capital expenditures, other general corporate activities and distributions to equity holders; (ii) the existing indebtedness makes the Group vulnerable to the impact of economic downturns and adverse developments in its business; and (iii) it will be an event of default under the revised ABSA Debt Facility if any three of the Group's consecutive diamond sales achieve less than an average value of US$70 per carat (which is below the Company's current low-case diamond price assumption of US$75 per carat).  The Group's ability to make scheduled payments on, or to refinance, its obligations or to meet the existing and/or revised financial covenant tests with respect to its indebtedness will depend on its financial and operating performance, which in turn will be affected by general economic conditions and by financial, competitive, regulatory and other factors (such as prevailing US$ per carat diamond price and the ZAR:US$ exchange rate) which are beyond the Group's control. Furthermore, ABSA intends to undertake a credit review of the Liqhobong mine (including an updated technical review) in 12 months time to assess the actual performance against expectations and consider if additional restructuring actions are necessary. If the Group is unable to generate sufficient cash flow to satisfy its debt obligations and/or ABSA's review reveals that Liqhobong's anticipated ability to service debt repayments is lower than currently anticipated, the Group may have to undertake alternative financing plans, such as refinancing or restructuring its debt, reducing or delaying capital investments or seeking to raise additional capital. There is no guarantee that any refinancing would be possible or that additional financing could be obtained on acceptable terms, if at all. The Group's inability to satisfy its debt obligations, or to refinance its indebtedness on commercially reasonable terms, could, in the long term, materially and adversely affect its financial condition and results of operations.

If the Fundraising does not proceed

Implementation of the Fundraising is conditional, among other things, on Shareholders passing the Resolutions. If Shareholders do not pass these Resolutions and the Fundraising does not proceed, the Company may not be able to meet its obligations under the ABSA Debt Facility or Eurobonds. The Fundraising is not guaranteed nor underwritten.

If the proposed amendments to the ABSA Debt Facility are not implemented

As announced on 11 April 2014, ABSA granted the Group a project debt finance facility of up to US$82.4 million for the construction and commissioning of Liqhobong. The terms of the ABSA Debt Facility included a total term of 6.5 years, with an 18 month draw down period for construction and with the repayment of capital occurring in the final 4.5 years of the loan term. ABSA has agreed, in principle, to an 18 month debt standstill on capital repayments for the period from 1 January 2018 to 30 June 2019 and an extension of the final maturity date by 30 months to December 2023 conditional, inter alia, on: (i) approval of both commercial and political risk insurance by ECIC; (ii) the Company raising at least US$20 million pursuant to the Fundraising; (iii) the Company's debt service reserve account to be expanded to cover 18 months' interest during the standstill period and (iv) other customary conditions standard for facilities of this nature including documentation and the signing of material contracts. The Company believes that good progress is being made in relation to satisfying the conditions precedent for such amendment. However, there can be no guarantee that such conditions will be satisfied and/or that definitive agreements to amend the ABSA Debt Facility as described above will be entered into, following which, the Company may not be able to meet its obligations under the terms of the existing ABSA Debt Facility.

Risks relating to the Ordinary Shares and the Open Offer

Dilution of ownership of Ordinary Shares

For those Qualifying Shareholders who do not participate in the Open Offer, their proportionate ownership and voting interest in the Company will be reduced as a consequence. In particular, to the extent that Shareholders do not take up the offer of Open Offer Shares under the Open Offer, their proportionate ownership and voting interest in the Company will be further reduced and the percentage that their shareholdings represent of the Ordinary Shares capital of the Company will, following Admission, be reduced accordingly.

Suitability

An investment in Ordinary Shares is only appropriate for investors capable of evaluating the risks (including the risk of capital loss) and merits of such investment and who have sufficient resources to sustain a total loss of their investment. An investment in Ordinary Shares should be seen as long-term in nature and complementary to investments in a range of other financial assets and should only constitute part of a diversified investment portfolio. Potential investors should consider carefully whether investment in the New Ordinary Shares is suitable for them in the light of the information in this announcement and their personal circumstances. Before making any final decision, potential investors in any doubt should consult with an investment adviser authorised under FSMA who specialises in advising on investments of this nature.

Volatility in price of New Ordinary Shares

The Issue Price may not be indicative of the market price for the New Ordinary Shares following Admission. The market price of the New Ordinary Shares could be volatile and subject to significant fluctuations due to a variety of factors, including changes in sentiment in the market regarding the Company, the sector or equities generally, any regulatory changes affecting the Group's operations, variations in the Group's operating results and/or business developments of the Group and/or its competitors, the operating and share price performance of other companies in the industries and markets in which the Group operates, news reports relating to trends in the Group's markets or the wider economy and the publication of research analysts' reports regarding the Company or the sector generally.

Liquidity of the Ordinary Shares and AIM generally

An investment in the Ordinary Shares is highly speculative and subject to a high degree of risk. Application will be made for the New Ordinary Shares to be traded on AIM. AIM is a market designed primarily for emerging or smaller companies. The rules of this market are less demanding than those of the Official List. Investments in shares traded on AIM carry a higher degree of risk than investments in shares quoted on the Official List. An investment in the Ordinary Shares may be difficult to realise and the price at which the Ordinary Shares will be traded and the price at which investors may realise their investment will be influenced by a large number of factors, some specific to the Group and its operations and some, which may affect quoted companies generally. Admission to AIM should not be taken as implying that there will be a liquid market for the Ordinary Shares. The market for shares in smaller public companies, such as the Company, is less liquid than for larger public companies. Consequently, the share price may be subject to greater fluctuation on small volumes of shares, and thus the Ordinary Shares may be difficult to sell at a particular price. The value of the Ordinary Shares may go down as well as up. Investors may therefore realise less than their original investment, or sustain a total loss of their investment. The Company is unable to predict when and if substantial numbers of Ordinary Shares will be sold in the open market following Admission. Any such sales, or the perception that such sales might occur, could result in a material adverse effect on the market price of the Ordinary Shares.

Taxation Risk

Any change in the Group's tax status or the tax applicable to holding Ordinary Shares or in taxation legislation or its interpretation, could affect the value of the investments held by the Group, affect the Group's ability to provide returns to Shareholders and/or alter the post-tax returns to Shareholders. 

 

APPENDIX II

DEFINITIONS

The following definitions apply throughout this announcement, unless the context requires otherwise:

2014 Warrants

warrants to subscribe for, in aggregate, 48,786,436 new Ordinary Shares, as more particularly described in the Company's circular dated 11 April 2014

ABSA

ABSA Bank Limited, acting through its Corporate Investment Banking division

ABSA Debt Facility

the US$82.4 million project debt finance facility provided by ABSA to LMDC

Admission

admission of the New Ordinary Shares to trading on AIM and such admission becoming effective in accordance with the AIM Rules

AIM

the AIM market operated by the London Stock Exchange

AIM Rules

the AIM Rules for Companies and/or the AIM Rules for Nominated Advisers (as the context may require)

AIM Rules for Companies

the rules of AIM as set out in the publication entitled 'AIM Rules for Companies' published by the London Stock Exchange from time to time

AIM Rules for Nominated Advisers

the rules of AIM as set out in the publication entitled 'AIM Rules for Nominated Advisers' published by the London Stock Exchange from time to time

Application Form

the application form which will accompany the Circular to be used by Qualifying Non-CREST Shareholders in connection with the Open Offer

Basic Entitlement(s)

the entitlement to subscribe for Open Offer Shares, allocated to a Qualifying Shareholder pursuant to the Open Offer

Board or Directors

the board of directors of the Company for the time being

certificated or in certificated form

the description of a share or other security which is not in uncertificated form (that is not in CREST)

Circular

the shareholder circular of the Company to be issued on or around 1 December 2017 in connection with the Fundraising

Closing Price

the closing middle market quotation of an Ordinary Share as derived from the Daily Official List of the London Stock Exchange

Company or Firestone

Firestone Diamonds plc, a company incorporated in England and Wales with registered number 03589905 and having its registered office at The Triangle, 5 - 17 Hammersmith Grove, London W6 0LG

CREST

the relevant system (as defined in the CREST Regulations) in respect of which Euroclear is the Operator (as defined in the CREST Regulations)

CREST Regulations

the Uncertificated Securities Regulations 2001 (as amended)

ECIC

Export Credit Insurance Corporation of South Africa SOC LTD

Enlarged Issued Share Capital

the issued share capital of the Company immediately following Admission

EU

the European Union

Eurobonds

the Series A Bonds and/or Series B Bonds, as appropriate

Euroclear

Euroclear UK & Ireland Limited

Excess Application Facility

the facility pursuant to which Qualifying Shareholders may apply to subscribe for such number of Open Offer Shares in excess of their Basic Entitlements

Excess Entitlement(s)

in respect of a Qualifying Shareholder, the entitlement (provided that the Qualifying Shareholder has agreed to take up its Basic Entitlement in full) to apply for Open Offer Shares in excess of the Basic Entitlement

Existing Ordinary Shares

the 320,271,086 Ordinary Shares in issue at the Record Date

FCA

the UK Financial Conduct Authority

Firm Placing Shares

the new Ordinary Shares to be issued by the Company under the Firm Placing at the Issue Price

Firm Placing

the placing of the Firm Placing Shares pursuant to the Placing and Open Offer Agreement

FSMA

the UK Financial Services and Markets Act 2000 (as amended)

Fundraising

the Firm Placing and the Placing and Open Offer

Fundraising Results Announcement

the announcement expected to be released by the Company on or around 1 December 2017, setting out final details of the Fundraising (including the expected timetable of principal events)

General Meeting

the general meeting of the Company to be held in connection with the Fundraising, notice of which will be set out in the Circular

Group

the Company and/or its subsidiary undertakings at the date of this announcement (as defined in sections 1159 and 1160 of the Companies Act 2006)

Issue Price

10 pence per New Ordinary Share

Lesotho

the Kingdom of Lesotho

Lesotho Government

the Government of the Kingdom of Lesotho

Liqhobong or Liqhobong Diamond Mine

the Liqhobong Diamond Mine which is located in the Lesotho Highlands

LMDC

Liqhobong Mining Development Company (Pty) Limited, which is 75 per cent. owned by the Company and 25 per cent. owned by the Lesotho Government, which operates the Liqhobong Diamond Mine

London Stock Exchange

London Stock Exchange plc

Macquarie

Macquarie Capital (Europe) Limited, a private limited company incorporated in England and Wales under registered number 03704031 and having its registered office at Ropemaker Place, 28 Ropemaker Street, London EC2Y 9HD, the Company's nominated adviser and sole broker for the purposes of the Fundraising and Admission

Mezzanine Facility

the mezzanine facility for US$30 million in total received from Pacific Road and RCF

New Ordinary Shares

together, the Firm Placing Shares, the Placing Shares and the Open Offer Shares

Open Offer

the conditional invitation by the Company to Qualifying Shareholders to apply to subscribe for Open Offer Shares at the Issue Price on the terms and subject to the conditions to be set out in the Circular and in the case of the Qualifying Non-CREST Shareholders only, the Application Form

Open Offer Entitlements

an entitlement to subscribe for Open Offer Shares, allocated to a Qualifying Shareholder under the Open Offer (and, for the avoidance of doubt, references to Open Offer Entitlements include Basic Entitlements and Excess CREST Open Offer Entitlements)

Open Offer Shares

the new Ordinary Shares to be offered to Qualifying Shareholders under the Open Offer

Ordinary Shares

the ordinary shares of one penny each in the capital of the Company

Overseas Shareholders

Shareholders with registered addresses outside the UK or who are citizens of, incorporated in, registered in or otherwise resident in, countries outside the UK

Pacific Road

(i) Pacific Road Resources Fund II L.P. represented by Pacific Road Capital Management GP II Limited; and (ii) Pacific Road Resources Fund II represented by Pacific Road Capital II PTY Limited

Placees

any persons who have agreed to subscribe for Placing Shares pursuant to the Placing

Placing

the placing of the Placing Shares pursuant to the Placing and Open Offer Agreement

Placing Shares

the new Ordinary Shares (excluding the Firm Placing Shares) to be issued by the Company under the Placing at the Issue Price in accordance with the terms of the Placing and Open Offer Agreement and which number shall reduce commensurate with the number of Open Offer Shares to be issued

Placing and Open Offer Agreement

the conditional placing and open offer agreement dated 1 December 2017 between the Company and Macquarie relating to the Fundraising

Prospectus Rules

the rules made by the FCA under Part VI of FSMA in relation to offers of transferable securities to the public and admission of transferable securities to trading on a regulated market

Qualifying CREST Shareholders

Qualifying Shareholders whose Existing Ordinary Shares on the register of members of the Company on the Record Date are in uncertificated form

Qualifying Non-CREST Shareholders

Qualifying Shareholders whose Existing Ordinary Shares on the register of members of the Company on the Record Date are held in certificated form

Qualifying Shareholders

holders of Existing Ordinary Shares on the register of members of the Company at the Record Date with the exception (subject to certain exceptions) of Shareholders resident in or citizens of any Restricted Jurisdiction

RCF

Resource Capital Fund VI L.P.

Record Date

5.30 p.m. on 30 November 2017 being the latest time by which transfers of Existing Ordinary Shares must be received for registration by the Company in order to allow transferees to be recognised as Qualifying Shareholders

Regulatory Information Service

has the meaning given in the AIM Rules for Companies

Resolutions

the resolutions to be proposed at the General Meeting in connection with the Fundraising

Restricted Jurisdictions

each of Australia, Canada, Japan, the Republic of South Africa, New Zealand and the United States

Securities Act

the US Securities Act of 1933, as amended from time to time and the rules and regulations promulgated thereunder

Series A Bonds

has the meaning given to such term at the paragraph titled 'The Series A Bonds' of this announcement

Series B Bonds

has the meaning given to such term at the paragraph titled 'The Series B Bonds' of this announcement

Series B Warrants

has the meaning given to such term at the paragraph titled 'The Series B Bonds' of this announcement

Shareholders

holders of Existing Ordinary Shares

uncertificated or uncertificated form

recorded on a register of securities maintained by Euroclear in accordance with the CREST Regulations as being in uncertificated form in CREST and title to which, by virtue of the CREST Regulations, may be transferred by means of CREST

Takeover Code

the City Code on Takeovers and Mergers

UK or United Kingdom

the United Kingdom of England, Scotland, Wales and Northern Ireland

US or United States

the United States of America, its territories and possessions, any state of the United States of America and the District of Columbia

£ or sterling

pounds sterling, the legal currency of the United Kingdom

 

 

APPENDIX III

TERMS & CONDITIONS OF THE FIRM PLACING AND THE PLACING

IMPORTANT INFORMATION FOR PLACEES ONLY CONCERNING THE FIRM PLACING AND THE PLACING

MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE FIRM PLACING OR THE PLACING. THE TERMS AND CONDITIONS SET OUT HEREIN ARE FOR INFORMATION PURPOSES ONLY AND ARE ONLY DIRECTED AT, AND BEING DISTRIBUTED TO, PERSONS WHOSE ORDINARY ACTIVITIES INVOLVE THEM IN ACQUIRING, HOLDING, MANAGING AND DISPOSING OF INVESTMENTS (AS PRINCIPAL OR AGENT) FOR THE PURPOSES OF THEIR BUSINESS AND WHO HAVE PROFESSIONAL EXPERIENCE IN MATTERS RELATING TO INVESTMENTS AND ARE: (A) IF IN A MEMBER STATE OF THE EUROPEAN ECONOMIC AREA ("EEA"), PERSONS WHO ARE QUALIFIED INVESTORS WITHIN THE MEANING OF ARTICLE 2(1)(E) OF THE EU PROSPECTUS DIRECTIVE (WHICH MEANS DIRECTIVE 2003/71/EC, AS AMENDED FROM TIME TO TIME, AND INCLUDES ANY RELEVANT IMPLEMENTING DIRECTIVE MEASURE IN ANY MEMBER STATE OF THE EEA TO THE EXTENT IMPLEMENTED IN THE RELEVANT MEMBER STATE OF THE EEA) (THE "PROSPECTUS DIRECTIVE") ("QUALIFIED INVESTORS"); (B) IF IN THE UNITED KINGDOM, PERSONS WHO FALL WITHIN THE DEFINITION OF "INVESTMENT PROFESSIONALS" IN ARTICLE 19(5) OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 (FINANCIAL PROMOTION) ORDER 2005, AS AMENDED ("THE ORDER") OR ARE PERSONS FALLING WITHIN ARTICLE 49(2) OF THE ORDER AND ARE "QUALIFIED INVESTORS" AS DEFINED IN SECTION 86(7) OF THE FSMA; (C) IF IN THE UNITED STATES, PERSONS REASONABLY BELIEVED TO BE QIBS AS DEFINED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"); (D) ANY OTHER PERSON TO WHOM IT MAY OTHERWISE LAWFULLY BE COMMUNICATED; AND, IN EACH CASE, WHO HAVE BEEN INVITED TO PARTICIPATE IN THE FIRM PLACING AND THE PLACING BY MACQUARIE (ALL SUCH PERSONS TOGETHER BEING REFERRED TO AS "RELEVANT PERSONS").

THE TERMS AND CONDITIONS SET OUT HEREIN MUST NOT BE ACTED ON OR RELIED ON BY PERSONS WHO ARE NOT RELEVANT PERSONS. ANY PERSON WHO HAS RECEIVED OR IS DISTRIBUTING THESE TERMS AND CONDITIONS MUST SATISFY THEMSELVES THAT IT IS LAWFUL TO DO SO. ANY INVESTMENT OR INVESTMENT ACTIVITY TO WHICH THESE TERMS AND CONDITIONS RELATE IS AVAILABLE ONLY TO RELEVANT PERSONS AND WILL BE ENGAGED IN ONLY WITH RELEVANT PERSONS. THESE TERMS AND CONDITIONS DO NOT THEMSELVES CONSTITUTE AN OFFER FOR SALE OR SUBSCRIPTION OF ANY SECURITIES IN THE COMPANY. THE SECURITIES HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION OF THE UNITED STATES AND THE SECURITIES MAY NOT BE OFFERED, SOLD, TRANSFERRED OR DELIVERED, DIRECTLY OR INDIRECTLY IN, INTO OR WITHIN THE UNITED STATES, EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. THERE WILL BE NO PUBLIC OFFERING OF THE SECURITIES IN THE UNITED STATES.

EACH PLACEE SHOULD CONSULT WITH ITS OWN ADVISERS AS TO LEGAL, TAX, BUSINESS AND RELATED ASPECTS OF AN ACQUISITION OF PLACING SHARES (AS SUCH TERM IS DEFINED BELOW)

Unless otherwise defined in these terms and conditions, capitalised terms used in these terms and conditions shall have the meaning given to them in this announcement.

If a person indicates to Macquarie that it wishes to participate in the Firm Placing or the Placing (together the "Equity Placings") by making an oral offer to acquire Firm Placing Shares pursuant to the Firm Placing and Open Offer Shares pursuant to the terms of the Placing (together the "Placing Shares") (each such person, a "Placee") it will be deemed to have read and understood these terms and conditions and the announcement of which it forms part and the draft circular dated 1 December 2017 prepared by, and relating to, the Company (the "Placing Proof") in their entirety and to be making such offer on the terms and conditions, and to be providing the representations, warranties, indemnities, agreements and acknowledgements, contained in these terms and conditions. In particular, each such Placee represents, warrants and acknowledges that it is a Relevant Person and undertakes that it will acquire, hold, manage and dispose of any of the Placing Shares that are allocated to it for the purposes of its business only. Further, each such Placee represents, warrants and agrees that: (a) if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, that the Placing Shares acquired by and/or subscribed for by it in the Equity Placings will not be acquired on a nondiscretionary basis on behalf of, nor will they be acquired with a view to their offer or resale to, persons in circumstances which may give rise to an offer of securities to the public other than an offer or resale in a member state of the EEA which has implemented the Prospectus Directive to Qualified Investors, or in circumstances in which the prior consent of Macquarie has been given to each such proposed offer or resale; and (b) it is and, at the time the Placing Shares are acquired, will be either (i) outside the United States, and acquiring the Placing Shares in an offshore transaction in accordance with Rule 903 and Rule 904 of Regulation S for its own account or purchasing the Placing Shares for an account with respect to which it exercises sole investment discretion; or (ii) a QIB. These terms and conditions do not constitute an offer to sell or issue or the invitation or solicitation of an offer to buy or acquire Placing Shares in the United States or any other jurisdiction where to do so may be unlawful, including, without limitation, Australia, Canada, Japan, the Republic of South Africa or any other Excluded Territory.

These terms and conditions and the information contained herein are not for release, publication or distribution, directly or indirectly, in whole or in part, to persons in the United States, subject to certain exceptions, or Australia, Canada, Japan, the Republic of South Africa or any other Excluded Territory.

In particular, the Placing Shares referred to in these terms and conditions have not been and will not be registered under the Securities Act or the securities laws of any state or other jurisdiction of the United States and the Placing Shares may not be offered or sold directly or indirectly in, into or within the United States, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and applicable state securities laws. There will be no public offering of the Placing Shares in the United States. Subject to certain exceptions, no offering of the Placing Shares will be made in the United States. The Placing Shares have not been approved or disapproved by the U.S. Securities and Exchange Commission, any state securities commission in the United States or any other regulatory authority in the United States, nor have any of the foregoing authorities passed upon or endorsed the merits of the Equity Placings or the accuracy or adequacy of these terms and conditions. Any representation to the contrary is a criminal offence in the United States.

The distribution of these terms and conditions and the offer and/or placing of Placing Shares in certain other jurisdictions may be restricted by law. No action has been taken by Macquarie or the Company that would permit an offer of the Placing Shares or possession or distribution of these terms and conditions or any other offering or publicity material relating to the Placing Shares in any jurisdiction where action for that purpose is required, save as mentioned above. Persons into whose possession these terms and conditions come are required by Macquarie and the Company to inform themselves about and to observe any such restrictions.

Each Placee's commitments will be made solely on the basis of the information set out in this announcement and the Placing Proof. Each Placee, by participating in the Equity Placings, agrees that it has neither received nor relied on any other information, representation, warranty or statement made by or on behalf of Macquarie or the Company and none of Macquarie, the Company, or any person acting on such person's behalf nor any of their respective affiliates has or shall have liability for any Placee's decision to accept this invitation to participate in the Equity Placings based on any other information, representation warranty or statement. Each Placee acknowledges and agrees that it has relied on its own investigation of the business, financial or other position of the Company in accepting a participation in the Equity Placings. Nothing in this paragraph shall exclude the liability of any person for fraudulent misrepresentation.

No undertaking, representation, warranty or any other assurance, express or implied, is made or given by or on behalf of Macquarie or its affiliates, directors, officers, employees, agents, advisers, or any other person, as to the accuracy, completeness, correctness or fairness of the information or opinions contained in the Placing Proof or this announcement or for any other statement made or purported to be made by any of them, or on behalf of them, in connection with the Company or the Equity Placings and no such person shall have any responsibility or liability for any such information or opinions or for any errors or omissions. Accordingly, save to the extent permitted by law, no liability whatsoever is accepted by Macquarie or any of its directors, officers, employees or affiliates or any other person for any loss howsoever arising, directly or indirectly, from any use of this announcement or such information or opinions contained herein or otherwise arising in connection with the Placing Proof.

These terms and conditions do not constitute or form part of, and should not be construed as, any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for, any Placing Shares or any other securities or an inducement to enter into investment activity, nor shall these terms and conditions (or any part of them), nor the fact of their distribution, form the basis of, or be relied on in connection with, any investment activity. No statement in these terms and conditions is intended to be nor may be construed as a profit forecast and no statement made herein should be interpreted to mean that the Company's profits or earnings per share for any future period will necessarily match or exceed historical published profits or earnings per share of the Company.

Proposed Firm Placing of Firm Placing Shares and Placing of Open Offer Shares subject to clawback in respect of valid applications by Qualifying Shareholders pursuant to the Open Offer

Placees are referred to these terms and conditions, this announcement and the Placing Proof containing details of, inter alia, the Equity Placings. These terms and conditions, this announcement and the Placing Proof have been prepared and issued by the Company, and each of these documents is the sole responsibility of the Company.

Firm Placing

The Firm Placing Shares are not subject to clawback and do not form part of the Placing and Open Offer. The Firm Placing is subject to the same conditions and termination rights which apply to the Placing and Open Offer.

Macquarie have agreed, pursuant to the Placing and Open Offer Agreement, to use reasonable endeavours to place, as agent for the Company, the Firm Placing Shares at a purchase price per New Ordinary Share of 10 pence (the "Issue Price") with Placees. Subscribers may, with Macquarie's consent, subscribe directly with the Company for Firm Placing Shares at the Issue Price. For the avoidance of doubt, Macquarie will not have any obligation to use its reasonable endeavours to place, as agent for the Company, such Firm Placing Shares at the Issue Price with Placees and references to Firm Placing Shares in this announcement shall be interpreted mutatis mutandis.

Application will be made to the London Stock Exchange for the Firm Placing Shares to be issued pursuant to the Firm Placing to be admitted to trading on AIM. Subject to the conditions below being satisfied, it is expected that Admission will become effective on 21 December 2017 and that dealings for normal settlement in the Firm Placing Shares will commence at 8.00 a.m. on the same day. The Firm Placing Shares, when issued and fully paid, will be identical to, and rank pari passu with, the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Existing Ordinary Shares by reference to a record date on or after Admission.

The Firm Placing is conditional, inter alia, upon:

(i)         Admission becoming effective by not later than 8.00 a.m. on 21 December 2017 (or such later time and/or date as the Company and Macquarie may agree); and

(ii)        the Placing and Open Offer Agreement having become unconditional in all respects and not having been terminated in accordance with its terms.

Placing and Open Offer

Macquarie have agreed, pursuant to the Placing and Open Offer Agreement, to use reasonable endeavours to conditionally place, as agent for the Company, all the Open Offer Shares at Issue Price with placees.  The commitments of placees in the Placing (the "Conditional Placees") are subject to clawback in respect of valid Applications for Open Offer Shares by Qualifying Shareholders pursuant to the Open Offer.

Qualifying Shareholders are being given the opportunity to apply for the Open Offer Shares at the Issue Price on and subject to the terms and conditions of the Open Offer, pro rata to their holdings of Existing Ordinary Shares on the Record Date. Open Offer Shares will also be made available to Qualifying Shareholders under the Excess Application Facility. Fractions of Open Offer Shares will be rounded down to the nearest whole number.

The New Ordinary Shares issued under the Placing and Open Offer, when issued and fully paid, will be identical to, and rank pari passu with, the Existing Ordinary Shares, including the right to receive all dividends and other distributions declared, made or paid on the Existing Ordinary Shares after Admission.

Application will be made to the London Stock Exchange for the Open Offer Shares to be issued under the Placing and Open Offer to be admitted to trading on AIM. Subject to the conditions below being satisfied, it is expected that Admission will become effective on 21 December 2017 and that dealings for normal settlement in the New Ordinary Shares will commence at 8.00 a.m. on the same day.

The Placing and Open Offer are conditional, inter alia, upon:

(i)         Admission becoming effective by not later than 8.00 a.m. on 21 December 2017 (or such later time and/or date as the Company and Macquarie may agree); and

(ii)        the Placing and Open Offer Agreement having become unconditional in all respects and not having been terminated in accordance with its terms.

The full terms and conditions of the Open Offer will be contained in the Circular to be issued by the Company

Bookbuild of the Equity Placings

Commencing today, Macquarie will be conducting the Bookbuild to determine demand for participation in the Equity Placings. Macquarie will seek to procure Placees as agent for the Company as part of this Bookbuild. These terms and conditions give details of the terms and conditions of, and the mechanics of participation in, the Equity Placings.

Principal terms of the Bookbuild

a)         By participating in the Equity Placings, Placees will be deemed to have read and understood this announcement, these terms and conditions and the Placing Proof in their entirety and to be participating and making an offer for any Placing Shares on these terms and conditions, and to be providing the representations, warranties, indemnities, acknowledgements and undertakings, contained in these terms and conditions.

b)         Macquarie is arranging the Equity Placings as agents of the Company.

c)         Participation in the Equity Placings will only be available to persons who are Relevant Persons and who may lawfully be and are invited to participate by Macquarie. Macquarie and its affiliates are entitled to offer to subscribe for Placing Shares as principal in the Bookbuild.

d)         Any offer to subscribe for Placing Shares should state the aggregate number of Firm Placing Shares and Open Offer Shares which the Placee wishes to acquire or the total monetary amount which it wishes to commit to acquire Placing Shares at the Issue Price.

e)         The Bookbuild is expected to close on or around 1 December 2017 but may close earlier or later, at the discretion of Macquarie and the Company. The timing of the closing of the books and allocations will be agreed between Macquarie and the Company following completion of the Bookbuild (the "Allocation Policy"). Macquarie may, in agreement with the Company, accept offers to subscribe for Placing Shares that are received after the Bookbuild has closed.

f)          An offer to subscribe for Placing Shares in the Bookbuild will be made on the basis of these terms and conditions and the Placing Proof and will be legally binding on the Placee by which, or on behalf of which, it is made and will not be capable of variation or revocation after the close of the Bookbuild.

g)         Subject to paragraph (e) above, Macquarie reserves the right not to accept an offer to subscribe for Placing Shares, either in whole or in part, on the basis of the Allocation Policy and may scale down any offer to subscribe for Placing Shares for this purpose.

h)         If successful, each Placee's allocation will be confirmed to it by Macquarie following the close of the Bookbuild. Oral or written confirmation (at Macquarie's discretion) from Macquarie to such Placee confirming its allocation will constitute a legally binding commitment upon such Placee, in favour of Macquarie and the Company to acquire the number of Placing Shares allocated to it (and in the respective numbers of Firm Placing Shares and Open Offer Shares (subject to clawback) so allocated) on the terms and conditions set out herein. Each Placee will have an immediate, separate, irrevocable and binding obligation, owed to Macquarie, to pay to Macquarie (or as Macquarie may direct) as agent for the Company in cleared funds an amount equal to the product of the Issue Price and the sum of the number of Firm Placing Shares and, once apportioned after clawback (in accordance with the procedure described in the paragraph entitled 'Placing Procedure' below), the Open Offer Shares, which such Placee has agreed to acquire.

i)          The Company will make a further announcement following the close of the Bookbuild detailing the number of Placing Shares to be issued (the "Placing Results Announcement"). It is expected that such Placing Results Announcement will be made as soon as practicable after the close of the Bookbuild.

j)          Subject to paragraphs (g) and (h) above, Macquarie reserves the right not to accept bids or to accept bids, either in whole or in part, on the basis of allocations determined at Macquarie's discretion and may scale down any bids as Macquarie may determine, subject to agreement with the Company. The acceptance of bids shall be at Macquarie's absolute discretion, subject to agreement with the Company.

k)         Irrespective of the time at which a Placee's allocation(s) pursuant to the Equity Placings is/are confirmed, settlement for all Placing Shares to be acquired pursuant to the Firm Placing will be required to be made at the time specified and all Placing Shares to be acquired pursuant to the Placing will be required to be made at the later time specified, on the basis explained below under the paragraph entitled "Registration and Settlement".

l)          No commissions are payable to Placees in respect of the Firm Placing or the Placing.

m)        By participating in the Bookbuild, each Placee agrees that its rights and obligations in respect of the Firm Placing and/or the Placing will terminate only in the circumstances described below and will not be capable of rescission or termination by the Placee. All obligations under the Equity Placings will be subject to the fulfilment of the conditions referred to below under the paragraph entitled "Conditions of the Equity Placings and Termination of the Placing and Open Offer Agreement".

Conditions of the Equity Placings and Termination of the Placing and Open Offer Agreement

Placees will only be called on to acquire Placing Shares if the obligations of Macquarie under the Placing and Open Offer Agreement have become unconditional in all respects and Macquarie has not terminated the Placing and Open Offer Agreement prior to Admission.

Macquarie' obligations under the Placing and Open Offer Agreement in respect of the Firm Placing and the Placing and Open Offer are conditional upon, inter alia:

(a)        Admission occurring not later than 8.00 a.m. on 21 December 2017 (or such later time and/or date as the Company and Macquarie may agree);

(b)        the passing of the Resolutions (without amendment) at the General Meeting on 20 December 2017;

(c)        the warranties given by the Company to Macquarie as contained in the Placing and Open Offer Agreement being true, accurate and not misleading on and as of the date of the Placing and Open Offer Agreement and at all times between the date of the Placing and Open Offer Agreement and Admission, by references to the facts and circumstances from time to time subsisting; and

(d)        there not having occurred, in the opinion of Macquarie (acting in good faith), a material adverse change affecting the condition of, or in the earnings, management, business properties, assets, rights, results of operations, solvency, credit rating or prospects of, (i) the Company or (ii) the Group taken as a whole, in each case whether or not arising in the ordinary course of business at any time prior to Admission,

(all such conditions included in the Placing and Open Offer Agreement being together the "Conditions").

The Placing and Open Offer Agreement can be terminated at any time before Admission by Macquarie giving notice to the Company in certain circumstances, including (but not limited to) where (a) any of the relevant conditions in the Placing and Open Offer Agreement are not satisfied in all material respects at the required times (unless waived); and (b) there has been a breach by the Company of any of the warranties, undertakings or covenants in the Placing and Open Offer Agreement or any of the warranties has ceased to be true, accurate and not misleading, and in each case, the effect, in the opinion of Macquarie, is singly or in the aggregate material in the context of the Equity Placings and/or is such as to make it impracticable or inadvisable to proceed with the Equity Placings, Admission or to market or enforce contracts for the sale of, any New Ordinary Shares.

If any Condition has not been satisfied, has not been waived by Macquarie or has become incapable of being satisfied (and is not waived by Macquarie as described below) or if the Placing and Open Offer Agreement is terminated, all obligations under these terms and conditions will automatically terminate. By participating in the Equity Placings, each Placee agrees that its rights and obligations hereunder are conditional upon the Placing and Open Offer Agreement becoming unconditional in all respects in respect of the Firm Placing (in respect of Firm Placing Shares subscribed for) and/or in respect of the Placing (in respect of Open Offer Shares subscribed for under the Placing) and that its rights and obligations will terminate only in the circumstances described above and will not be capable of rescission or termination by it after oral or written confirmation by Macquarie (at Macquarie's discretion) following the close of the Bookbuild.

Macquarie may in its absolute discretion in writing waive fulfilment of certain of the Conditions in the Placing and Open Offer Agreement or extend the time provided for fulfilment of such Conditions. Any such extension or waiver will not affect Placees' commitments as set out in these terms and conditions. Neither Macquarie nor the Company, shall have any liability to any Placee (or to any other person whether acting on behalf of a Placee or otherwise) in respect of any decision made by Macquarie as to whether or not to waive or to extend the time and/or date for the fulfilment of any condition in the Placing and Open Offer Agreement.

By participating in the Equity Placings each Placee agrees that the exercise by the Company or Macquarie of any right or other discretion under the Placing and Open Offer Agreement shall be within the absolute discretion of the Company and Macquarie and that neither the Company nor Macquarie need make any reference to such Placee and that neither the Company nor Macquarie shall have any liability to such Placee (or to any other person whether acting on behalf of a Placee or otherwise) whatsoever in connection with any such exercise.

Placing Procedure

Placees shall acquire the Firm Placing Shares and Open Offer Shares to be issued pursuant to the Equity Placings (after clawback) and any allocation of the Firm Placing Shares and Open Offer Shares (subject to clawback) to be issued pursuant to the Equity Placings will be notified to them on or around 1 December 2017 (or such other time and/or date as the Company and Macquarie may agree).

Placees will be called upon to subscribe for, and shall subscribe for, the Open Offer Shares only to the extent that valid Applications by Qualifying Shareholders under the Open Offer are not received by 11.00 a.m. on 19 December 2017 (or any such later time and/or date as the Company may agree with Macquarie) or if Applications have otherwise not been deemed to be valid in accordance with the Circular and the Application Form.

Payment in full for any Firm Placing Shares and Open Offer Shares so allocated in respect of the Equity Placings at the Issue Price must be made by no later than 21 December 2017 (or such other date as shall be notified to each Placee by Macquarie) on the closing date for the Firm Placing and the closing date for the Open Offer, respectively (or such other time and/or date as the Company and Macquarie may agree). Macquarie will notify Placees if any of the dates in these terms and conditions should change, including as a result of delay in the posting of the Circular, the Application Forms or the crediting of the Open Offer Entitlements in CREST.

Registration and settlement

Settlement of transactions in the Placing Shares following Admission will take place within the CREST system, subject to certain exceptions.

Macquarie and the Company reserve the right to require settlement for, and delivery of, the Placing Shares to Placees by such other means that they deem necessary if delivery or settlement is not possible within the CREST system within the timetable set out in the Placing Proof and/or Circular or would not be consistent with the regulatory requirements in the Placee's jurisdiction.

Each Placee will be deemed to agree that it will do all things necessary to ensure that delivery and payment is completed in accordance with either the standing CREST or certificated settlement instructions which they have in place with Macquarie.

Settlement for the Equity Placings will be on a T+2 and delivery versus payment basis and settlement is expected to take place on 21 December 2017. Interest is chargeable daily on payments to the extent that value is received after the due date from Placees at the rate of 2 percentage points above prevailing LIBOR. Each Placee is deemed to agree that if it does not comply with these obligations, Macquarie may sell any or all of the Placing Shares allocated to it on its behalf and retain from the proceeds, for its own account and benefit, an amount equal to the aggregate amount owed by the Placee plus any interest due. By communicating a bid for Placing Shares, each Placee confers on Macquarie all such authorities and powers necessary to carry out any such sale and agrees to ratify and confirm all actions which Macquarie lawfully take in pursuance of such sale. The relevant Placee will, however, remain liable for any shortfall below the aggregate amount owed by it and may be required to bear any stamp duty or stamp duty reserve tax (together with any interest or penalties) which may arise upon any transaction in the Firm Placing Shares on such Placee's behalf.

Acceptance

By participating in the Equity Placings, a Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with Macquarie and the Company, the following:

1.         in consideration of its allocation of a placing participation, to subscribe at the Issue Price for any Placing Shares comprised in its allocation for which it is required to subscribe pursuant to these terms and conditions, subject to clawback of the Open Offer Shares in respect of valid Applications from Qualifying Shareholders in the Open Offer;

2.         it has read and understood this announcement (including these terms and conditions) and the Placing Proof in their entirety and that it has neither received nor relied on any information given or any investigations, representations, warranties or statements made at any time by any person in connection with Admission, the Equity Placings, the Company, the New Ordinary Shares, or otherwise, other than the information contained in this announcement (including these terms and conditions) and the Placing Proof that in accepting the offer of its placing participation it will be relying solely on the information contained in this announcement (including these terms and conditions) and the Placing Proof, receipt of which is hereby acknowledged, and undertakes not to redistribute or duplicate such documents;

3.         its oral commitment will be made solely on the basis of the information set out in this announcement and the Placing Proof and the information publicly announced to a Regulatory Information Service by or on behalf of the Company on the date of this announcement, such information being all that such Placee deems necessary or appropriate and sufficient to make an investment decision in respect of the Placing Shares and that it has neither received nor relied on any other information given, or representations or warranties or statements made, by Macquarie or the Company nor any of their respective affiliates and neither Macquarie or the Company will be liable for any Placee's decision to participate in the Firm Placing and/or the Placing based on any other information, representation, warranty or statement;

4.         the content of this announcement, these terms and conditions and the Placing Proof are exclusively the responsibility of the Company and agrees that neither Macquarie nor its affiliates nor any person acting on behalf of any of such persons will be responsible for or shall have liability for any information, representation or statements contained therein or any information previously published by or on behalf of the Company, and neither Macquarie nor the Company, or any of their respective affiliates or any person acting on behalf of any such person will be responsible or liable for a Placee's decision to accept its placing participation;

5.         (i) it has not relied on, and will not rely on, any information relating to the Company contained or which may be contained in any research report or investor presentation prepared or which may be prepared by Macquarie or its affiliates; (ii) neither Macquarie, its affiliates or any person acting on behalf of any of such persons has or shall have any responsibility or liability for public information relating to the Company; (iii) neither Macquarie, its affiliates or any person acting on behalf of any of such persons has or shall have any responsibility or liability for any additional information that has otherwise been made available to it, whether at the date of publication of such information, the date of these terms and conditions or otherwise; and that (iv) neither Macquarie, its affiliates or any person acting on behalf of any of such persons makes any representation or warranty, express or implied, as to the truth, accuracy or completeness of any such information referred to in (i) to (iii) above, whether at the date of publication of such information, the date of this announcement or otherwise;

6.         it has made its own assessment of the Company and has relied on its own investigation of the business, financial or other position of the Company in deciding to participate in the Equity Placings, and has satisfied itself concerning the relevant tax, legal, currency and other economic considerations relevant to its decision to participate in the Firm Placing and/or the Placing;

7.         it is acting as principal only in respect of the Equity Placings or, if it is acting for any other person (i) it is duly authorised to do so and has full power to make the acknowledgments, representations and agreements herein on behalf of each such person, (ii) it is and will remain liable to the Company and Macquarie for the performance of all its obligations as a Placee in respect of the Equity Placings (regardless of the fact that it is acting for another person), (iii) if it is in the United Kingdom, it is a person (a) who has professional experience in matters relating to investments and who falls within the definition of "investment professionals" in Article 19(5) of the Order or who falls within Article 49(2) of the Order, and (b) is a "qualified investor" as defined in Section 86 of the FSMA, (iv) if it is in a member state of the EEA, it is a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive, and (v) if it is a financial intermediary, as that term is used in Article 3(2) of the Prospectus Directive, the Placing Shares subscribed by it in the Equity Placings are not being acquired on a nondiscretionary basis for, or on behalf of, nor will they be acquired with a view to their offer or resale to persons in a member state of the EEA in circumstances which may give rise to an offer of shares to the public, other than their offer or resale to qualified investors within the meaning of Article 2(1)(e) of the Prospectus Directive in a member state of the EEA which has implemented the Prospectus Directive;

8.         if it has received any confidential price sensitive information about the Company in advance of the Equity Placings, it has not (i) dealt in the securities of the Company; (ii) encouraged or required another person to deal in the securities of the Company; or (iii) disclosed such information to any person, prior to the information being made generally available;

9.         it has complied with its obligations in connection with money laundering and terrorist financing under the Proceeds of Crime Act 2002, the Terrorism Act 2000, the Terrorism Act 2006 and the Money Laundering Regulations 2007 and the Criminal Justice (Money Laundering and Terrorism Financing) Act 2010 and any related or similar rules, Regulations or guidelines, issued, administered or enforced by any government agency having jurisdiction in respect thereof (the "Regulations") and, if it is making payment on behalf of a third party, it has obtained and recorded satisfactory evidence to verify the identity of the third party as may be required by the Regulations;

10.        it has only communicated or caused to be communicated and will only communicate or cause to be communicated any invitation or inducement to engage in investment activity (within the meaning of Section 21 of FSMA) relating to the Placing Shares in circumstances in which Section 21(1) of FSMA does not require approval of the communication by an authorised person;

11.        it is not acting in concert (within the meaning given in the City Code on Takeovers and Mergers) with any other Placee or any other person in relation to the Company;

12.        it has complied and will comply with all applicable provisions of the FSMA with respect to anything done by it in relation to the Placing Shares in, from or otherwise involving the United Kingdom;

13.        it and any person acting on its behalf is entitled to acquire the Placing Shares under the laws of all relevant jurisdictions and that it has all necessary capacity and has obtained all necessary consents and authorities to enable it to commit to this participation in the Equity Placings and to perform its obligations in relation thereto (including, without limitation, in the case of any person on whose behalf it is acting, all necessary consents and authorities to agree to the terms set out or referred to in these terms and conditions);

14.        unless otherwise agreed by the Company (after agreement with Macquarie), it is not, and at the time the Placing Shares are subscribed for and purchased will not be, subscribing for and on behalf of a resident of Australia, Canada, Japan, the Republic of South Africa or any other Excluded Territory and further acknowledges that the Placing Shares have not been and will not be registered under the securities legislation of any Excluded Territory and, subject to certain exceptions, may not be offered, sold, transferred, delivered or distributed, directly or indirectly, in or into those jurisdictions;

15.        it does not expect Macquarie to have any duties or responsibilities towards it for providing protections afforded to clients under the rules of the FCA Handbook (the "Rules") or advising it with regard to the Placing Shares and that it is not, and will not be, a client of Macquarie as defined by the Rules. Likewise, any payment by it will not be treated as client money governed by the Rules;

16.        any exercise by Macquarie of any right to terminate the Placing and Open Offer Agreement or of other rights or discretions under the Placing and Open Offer Agreement or the Equity Placings shall be within Macquarie's absolute discretion and Macquarie shall not have any liability to it whatsoever in relation to any decision to exercise or not to exercise any such right or the timing thereof;

17.        neither it, nor the person specified by it for registration as a holder of  Placing Shares is, or is acting as nominee(s) or agent(s) for, and that the Placing Shares will not be allotted to, a person/person(s) whose business either is or includes issuing depository receipts or the provision of clearance services and therefore that the issue to the Placee, or the person specified by the Placee for registration as holder, of the Placing Shares will not give rise to a liability under any of Sections 67, 70, 93 and 96 of the Finance Act 1986 (depositary receipts and clearance services) and that the Placing Shares are not being acquired in connection with arrangements to issue depository receipts or to issue or transfer Placing Shares into a clearance system;

18.        the person who it specifies for registration as holder of the Placing Shares will be (i) itself or (ii) its nominee, as the case may be, and acknowledges that Macquarie and the Company will not be responsible for any liability to pay stamp duty or stamp duty reserve tax (together with interest and penalties) resulting from a failure to observe this requirement; and each Placee and any person acting on behalf of such Placee agrees to participate in the Equity Placings on the basis that the Placing Shares will be allotted to a CREST stock account of one of Macquarie who will hold them as nominee on behalf of the Placee until settlement in accordance with its standing settlement instructions with it;

19.        where it is acquiring Placing Shares for one or more managed accounts, it is authorised in writing by each managed account to acquire Placing Shares for that managed account;

20.        if it is a pension fund or investment company, its acquisition of any Placing Shares is in full compliance with applicable laws and Regulations;

21.        it has not offered or sold and will not offer or sell any New Ordinary Shares to persons in the United Kingdom, except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their business or otherwise in circumstances which have not resulted and which will not result in an offer to the public in the United Kingdom within the meaning of Section 85(1) of the FSMA;

22.        it has not offered or sold and will not offer or sell any New Ordinary Shares to persons in any member state of the EEA prior to Admission except to persons whose ordinary activities involve them acquiring, holding, managing or disposing of investments (as principal or agent) for the purpose of their business or otherwise in circumstances which have not resulted and will not result in an offer to the public in any member state of the EEA within the meaning of the Prospectus Directive;

23.        participation in the Equity Placings is on the basis that, for the purposes of the Equity Placings, it is not and will not be a client of Macquarie and that Macquarie does not have any duties or responsibilities to it for providing the protections afforded to their clients nor for providing advice in relation to the Equity Placings nor in respect of any representations, warranties, undertakings or indemnities contained in the Placing and Open Offer Agreement or the contents of these terms and conditions;

24.        to provide Macquarie with such relevant documents as they may reasonably request to comply with requests or requirements that either they or the Company may receive from relevant regulators in relation to the Equity Placings, subject to its legal, regulatory and compliance requirements and restrictions;

25.        any agreements entered into by it pursuant to these terms and conditions shall be governed by and construed in accordance with the laws of England and Wales and it submits (on its behalf and on behalf of any Placee on whose behalf it is acting) to the exclusive jurisdiction of the English courts as regards any claim, dispute or matter arising out of any such contract, except that enforcement proceedings in respect of the obligation to make payment for the Placing Shares (together with any interest chargeable thereon) may be taken by Macquarie in any jurisdiction in which the relevant Placee is incorporated or in which any of its securities have a quotation on a recognised stock exchange;

26.        to fully and effectively indemnify and hold harmless the Company and Macquarie and each of their respective affiliates (as defined in Rule 501(b) under the Securities Act) and each person, if any, who controls any Bank within the meaning of Section 15 of the Securities Act or Section 20 of the US Exchange Act of 1934, as amended, and any such person's respective affiliates, subsidiaries, branches, associates and holding companies, and in each case their respective directors, employees, officers and agents from and against any and all losses, claims, damages and liabilities (i) arising from any breach by such Placee of any of the provisions of these terms and conditions and (ii) incurred by Macquarie and/or the Company arising from the performance of the Placee's obligations as set out in these terms and conditions;

27.        to indemnify on an aftertax basis and hold the Company and Macquarie and any of their affiliates and any person acting on their behalf harmless from any and all losses, claims, damages, liabilities and expenses (including legal fees and expenses) arising out of or in connection with any breach of the representations, warranties, acknowledgments, agreements and undertakings in these terms and conditions and further agrees that the provisions of these terms and conditions shall survive after completion of the Fundraising;

28.        in making any decision to subscribe for the Placing Shares, (i) it has knowledge and experience in financial, business and international investment matters as is required to evaluate the merits and risks of acquiring the Placing Shares; (ii) it is experienced in investing in securities of this nature and is aware that it may be required to bear, and is able to bear, the economic risk of, and is able to sustain a complete loss in connection with, the Placing; (iii) it has relied on its own examination, due diligence and analysis of the Company and its affiliates taken as a whole, including the markets in which the Group operates, and the terms of the Equity Placings, including the merits and risks involved; (iv) it has had sufficient time to consider and conduct its own investigation with respect to the offer and purchase of the Placing Shares, including the legal, regulatory, tax, business, currency and other economic and financial considerations relevant to such investment and (v) will not look to Macquarie, any of their respective affiliates or any person acting on their behalf for all or part of any such loss or losses it or they may suffer;

29.        Macquarie and the Company and their respective affiliates and others will rely upon the truth and accuracy of the foregoing representations, warranties, acknowledgments and undertakings which are irrevocable; and

30.        its commitment to acquire Placing Shares will continue notwithstanding any amendment that may in future be made to the terms and conditions of the Firm Placing and/or the Placing, and that Placees will have no right to be consulted or require that their consent be obtained with respect to the Company's or Macquarie' conduct of the Firm Placing and/or the Placing.

Please also note that the agreement to allot and issue Placing Shares to Placees (or the persons for whom Placees are contracting as agent) free of stamp duty and stamp duty reserve tax in the UK relates only to their allotment and issue to Placees, or such persons as they nominate as their agents, direct from the Company for the Placing Shares in question. Such agreement assumes that such Placing Shares are not being acquired in connection with arrangements to issue depositary receipts or to transfer such Placing Shares into a clearance service. If there were any such arrangements, or the settlement related to other dealing in such Placing Shares, stamp duty or stamp duty reserve tax may be payable, for which neither the Company nor Macquarie would be responsible and Placees shall indemnify the Company and Macquarie on an aftertax basis for any stamp duty or stamp duty reserve tax paid by them in respect of any such arrangements or dealings.

Furthermore, each Placee agrees to indemnify on an aftertax basis and hold each of Macquarie and/or the Company and their respective affiliates harmless from any and all interest, fines or penalties in relation to stamp duty, stamp duty reserve tax and all other similar duties or taxes to the extent that such interest, fines or penalties arise from the unreasonable default or delay of that Placee or its agent. If this is the case, it would be sensible for Placees to take their own advice and they should notify Macquarie accordingly. In addition, Placees should note that they will be liable for any capital duty, stamp duty and all other stamp, issue, securities, transfer, registration, documentary or other duties or taxes (including any interest, fines or penalties relating thereto) payable outside the UK by them or any other person on the acquisition by them of any Placing Shares or the agreement by them to acquire any Placing Shares.

Selling Restrictions

By participating in the Equity Placings, a Placee (and any person acting on such Placee's behalf) irrevocably acknowledges, confirms, undertakes, represents, warrants and agrees (as the case may be) with Macquarie and the Company, the following:

1.         it is not a person who has a registered address in, or is a resident, citizen or national of, a country or countries, in which it is unlawful to make or accept an offer to subscribe for Placing Shares;

2.         it has fully observed and will fully observe the applicable laws of any relevant territory, including complying with the selling restrictions set out herein and obtaining any requisite governmental or other consents and it has fully observed and will fully observe any other requisite formalities and pay any issue, transfer or other taxes due in such territories;

3.         if it is in the United Kingdom, it is a person (i) who has professional experience in matters relating to investments and who falls within the definition of "investment professionals" in Article 19(5) of the Order or who falls within Article 49(2) of the Order, and (ii) is a "qualified investor" as defined in Section 86 of the FSMA;

4.         if it is in a member state of the EEA, it is a "qualified investor" within the meaning of Article 2(1)(e) of the Prospectus Directive;

5.         it is a person whose ordinary activities involve it (as principal or agent) in acquiring, holding, managing or disposing of investments for the purpose of its business and it undertakes that it will (as principal or agent) acquire, hold, manage or dispose of any Placing Shares that are allocated to it for the purposes of its business;

6.         it is and, at the time the Placing Shares are purchased, will be either (i) outside the United States, purchasing in an offshore transaction pursuant to Regulation S or (ii) a QIB that makes each of the representations, warranties, acknowledgments and agreements set out in paragraph 9 below;

7.         none of the Placing Shares have been or will be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction of the United States;

8.         none of the Placing Shares may be offered, sold, taken up or delivered directly or indirectly, in whole or in part, into or within the United States except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or other jurisdiction of the United States;

9.         if it is in the United States, (i) it is a QIB and is acquiring the Placing Shares for its own account or for the account of one or more QIBs with respect to whom it has the authority to make, and does make, the representations and warranties set forth herein, for investment purposes and not with a view to further distribution of such Placing Shares; (ii) it is aware, and each beneficial owner of the Placing Shares has been advised, that the sale of  Placing Shares to it is in reliance on Rule 144A or another exemption from the registration requirements of the Securities Act; (ii) it will only offer, resell, pledge or otherwise transfer the Placing Shares (a) to a person that the seller and any person acting on its behalf reasonably believes is a QIB purchasing for its own account or for the account of a QIB in a transaction meeting the requirements of Rule 144A, (b) outside the United States in accordance with Regulation S under the Securities Act, (c) pursuant to an exemption from registration under the Securities Act provided by Rule 144 thereunder (if available), or (d) pursuant to an effective registration statement under the Securities Act, in each case in accordance with any applicable securities laws of any state or other jurisdiction of the United States; and (iii) notwithstanding anything to the contrary, it understands that Placing Shares may not be deposited into any unrestricted depositary receipt facility in respect of Placing Shares established or maintained by a depositary bank unless and until such time as such Placing Shares are no longer "restricted securities" within the meaning of Rule 144(a)(3) under the Securities Act; and

10.        it (on its behalf and on behalf of any Placee on whose behalf it is acting) has (a) fully observed the laws of all relevant jurisdictions which apply to it; (b) obtained all governmental and other consents which may be required; (c) fully observed any other requisite formalities; (d) paid or will pay any issue, transfer or other taxes; (e) not taken any action which will or may result in the Company or Macquarie (or any of them) being in breach of a legal or regulatory requirement of any territory in connection with the Equity Placings: (f) obtained all other necessary consents and authorities required to enable it to give its commitment to subscribe for the relevant Placing Shares and (g) the power and capacity to, and will, perform its obligations under the terms contained in these terms and conditions.

Setoff and Miscellaneous

If a Placee is entitled to participate in the Open Offer by virtue of being a Qualifying Shareholder it will be able to apply to subscribe for Open Offer Shares under the terms and conditions of the Open Offer. Any participation by a Placee as a Qualifying Shareholder in the Open Offer will not reduce such Placee's commitment in respect of its placing participation in the Placing (but not the Firm Placing).

The Company reserves the right to treat as invalid any Application or purported Application for Placing Shares that appears to the Company or its agents to have been executed, effected or dispatched from the United States or an Excluded Territory or in a manner that may involve a breach of the laws or Regulations of any jurisdiction or if the Company or its agents believe that the same may violate applicable legal or regulatory requirements or if it provides an address for delivery of the share certificates of Placing Shares in an Excluded Territory or the United States, or any other jurisdiction outside the United Kingdom in which it would be unlawful to deliver such share certificates.

When a Placee or person acting on behalf of the Placee is dealing with Macquarie, any money held in an account with Macquarie on behalf of the Placee and/or any person acting on behalf of the Placee will not be treated as client money within the meaning of the rules and Regulations of the FCA made under the FSMA. The Placee acknowledges that the money will not be subject to the protections conferred by the client money rules; as a consequence, this money will not be segregated from Macquarie' money in accordance with the client money rules and will be used by each of Macquarie in the course of its own business; and the Placee will rank only as a general creditor of Macquarie.

Times

Unless the context otherwise requires, all references to time are to London time. All times and dates in these terms and conditions may be subject to amendment. Macquarie will notify Placees and any persons acting on behalf of the Placees of any changes.

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This information is provided by RNS
The company news service from the London Stock Exchange
 
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