MIDDLE EAST DIAMOND RESOURCES LIMITED - Transaction to acquire the Kamferdam dumps from Blain Capital Solutions and appointment of Blain as contractor

Transaction to acquire the Kamferdam dumps from Blain Capital Solutions and appointment of Blain as contractor

MIDDLE EAST DIAMOND RESOURCES LIMITED
(formerly Sable Metals and Minerals Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2001/006539/06)
(JSE code: MED ISIN: ZAE000211876)
(“MEDR” or the “Company”)


TRANSACTION TO ACQUIRE THE KAMFERSDAM DUMPS FROM BLAIN CAPITAL SOLUTIONS
(PTY) LTD AND APPOINTMENT OF BLAIN AS CONTRACTOR



1.   INTRODUCTION

     Shareholders are referred to previous announcements in this regard. The proposed transaction
     previously envisaged has been materially renegotiated.

     Shareholders are advised that Sable Platinum Holdings (Pty) Ltd (“SPH”), a wholly owned
     subsidiary of MEDR, has entered into an agreement on 8 August 2016 to acquire the sale assets
     of Blain Capital Solutions (Pty) Ltd (“Blain”) (“the transaction”).

2.   RATIONALE AND BACKGROUND FOR THE TRANSACTION

     MEDR has expressed its intention to acquire assets in the diamond mining sector. It has been
     negotiating with Blain since December 2015 for the acquisition of certain assets.

3.    TERMS AND CONDITIONS OF THE TRANSACTION

      3.1    In terms of the agreement SPH will acquire the sale assets of Blain, consisting of
             equipment and the residue stockpile in situ on the dumps situated at remaining Extent of
             Portion 4 of the Farm Roode Pan No. 70, Kimberley (“the Property”) owned by
             Kamfersdam Diamond Mining (Pty) Ltd, known as the Kamfersdam dumps.

      3.2.   The purchase price of R14 000 000 (fourteen million Rand) will be subject to reduction if
             the profit target of R3.45 million every 6 months for a period of 24 months after the
             effective date, achieved through a sale of diamonds, is not met. Diamonds are defined
             as unpolished diamonds as determined in the Diamond Act, no 56 of 1986, which are
             recovered by Blain from the Property.

      3.2    The purchase price will be payable by the issue to Blain of 40 000 000 shares in MEDR
             at a price of 35 cents per share, as follows:

             3.2.1 10 000 000 shares will be issued on each fulfilment of the profit target at 6
                   monthly intervals for a period of two years calculated from the effective date;

             3.2.2 in the event that a profit target is not achieved, there shall be a pro rata reduction
                   of the purchase price to be paid relative to the profit actually achieved.

      3.3    Blain will be appointed to render certain services to SPH (“Services”), which will include the
             proper treatment of the residue stockpile for the purposes of recovering diamonds therefrom,
             the provision of all vehicles, plant, equipment and capital required for the mining, removal
             and treatment of the stockpile and rehabilitation. Blain will employ the necessary staff to
             render the Services. Blain will utilise such plant and equipment as may be necessary. All
             costs will be borne by Blain. Blain undertakes to rehabilitate all land worked by it in rendering
             the Services. Blain will take out and maintain the necessary insurance policies.
      3.4    The purchase price received from the sale of diamonds shall be paid to SPH less Blain’s
             costs, which shall be paid to Blain.

      3.5    Within 90 days of the termination of this agreement, Blain shall comply with its rehabilitation
             obligations, dismantle the plant and remove it and all equipment from site, remove all
             concrete foundations and other infrastructure, and level and rehabilitate the surface of the
             site on the Property.

      3.6    The parties warranted and gave reciprocal undertakings in respect of conflict diamonds and
             the Kimberley process. In addition, Blain warranted that it holds all the necessary statutory
             authorisations for the removal of diamondiferous ores from the property and the exploitation
             thereof.

      3.7    The transaction is subject to the condition precedent that Blain satisfies SPH that any and all
             amounts owing to Friedshelf 1425 (Pty) Limited, the erstwhile owner of the sale assets, have
             been paid. Should the condition not be fulfilled prior to the effective date, the agreement shall
             lapse if not extended by SPH for a period of no longer than 30 days.

      3.8    The effective date will be 1 September 2016.

4.   FINANCIAL INFORMATION IN RESPECT OF THE ACQUISITION

     The net asset value of the sale assets is approximately R19 million. The Kamfersdam dumps were
     not exploited recently and it is therefore not possible to attribute any profit figure to it.

5.   CATEGORISATION OF THE TRANSACTION

     The transaction is a category 2 transaction and does not require shareholders’ approval.


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11 August 2016
Johannesburg

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