BRC subsidiary seeks court order against Sefalana

BRC DiamondCore Ltd., a growth-focused African diamond explorer and developer with an outstanding portfolio of landholdings in proven diamond producing regions of South Africa and in prospective diamond districts of the Democratic Republic of the Congo, announces that its subsidiary company, Samadi Resources SA (Proprietary) Limited (Samadi), has launched an application in the Johannesburg High Court for an order declaring the agreement with its former Black Economic Empowerment (BEE) partner, Sefalana Mineral Resources (Proprietary) Limited (Sefalana), to be void.

Company Chief Executive Officer Theo Botoulas said that company legal counsel has advised that the application, if successful, will finally dispose of any future claims that Sefalana believes that it has against Samadi and will allow BRC DiamondCore to finalise an agreement with an alternative BEE partner, in compliance with South African legislation.

It may be recalled that during September 2006, Samadi and Sefalana concluded an agreement in terms of which Sefalana became Samadi’s BEE partner. This agreement was subject to the fulfilment of certain conditions precedent. Sefalana failed to fulfil five of the six conditions precedent in the agreement, as a result of which the agreement lapsed. The shares issued to Sefalana were recovered and cancelled pursuant to a deemed offer clause in the agreement.

Mr. Botoulas said that Sefalana has responded by repeatedly making threats in the media to litigate against BRC DiamondCore; no action has been forthcoming from Sefalana, but we believe that these public threats have adversely affected investor sentiment towards the Company, and created an incorrect perception of the Company’s commitment to BEE, as required by South African legislation.

Several efforts by the Company, management consultants and other stakeholders to resolve the matter amicably have proved unsuccessful, and we believe that Samadi’s approach to the High Court is the only recourse left to dispose of the ongoing dispute with Sefalana and deliver a degree of certainty to shareholders, he further said.

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