Dioro plans $70m TSX listing

Nedlands-based Dioro Exploration NL has announced plans to list on the Toronto Stock Exchange, appointing broking firm Cormark Securities to managed a proposed $70 million capital raising.

The company plans to use funds raised to complete the acquisition of the south Kalgoorlie assets of South Africa's Harmony Gold Ltd, with Dioro issuing 160 million shares for a deemed value of $20 million to Harmony.

Harmony now has Board and South African Reserve Bank approval to complete the divestment of the South Kalgoorlie assets to Dioro under the agreed terms.

On completion of the capital raising, the company will finalise the transaction through the cash payment of $25 million.

Dioro has also announced plans to spin out its recently-acquired Penfolds tenements, also acquired from Harmony, into a subsidiary, Lodestar Resources Ltd, which it expects to list on the ASX in November with a $5 million capital raising.

The full text of a Dioro announcement is pasted below

Highlights:

• Dioro appoints leading advisory team for proposed capital raising and TSX listing;
• Funds from listing to be used to acquire Harmony's South Kal assets and improve working capital;
• Prospectus to be issued for new spin off nickel company Lodestar Minerals Limited; and,
• Aggressive exploration program planned to upgrade resources at the Penfolds, Frog's Leg and South Kal gold projects.

Australian gold company Dioro Exploration NL ("Dioro" or "the company") has appointed leading Canadian broking firm Cormark Securities Inc to manage a proposed capital raising of up to A$70,000,000 and listing on the Toronto Stock Exchange (TSX).

The TSX listing and associated capital raising are intended to provide the company with the necessary funds to complete the recent acquisition of the South Kal assets from Harmony Gold Limited, to meet working capital and development requirements at Frog's Leg and South Kal, to fund future exploration and general working capital, and to provide an opportunity to increase its investor base in a key North American market.

Cormark Securities is one of Canada's foremost investment houses in the international mining sector that has advised on more than $3.2 billion of M&A activity. Cormark has assisted with the TSX-listing of Australian resources companies, the most recent being Mirabela Nickel Ltd.

As part of its TSX listing plans, the company has also appointed Lawson Lundell LLP as the company's Canadian lawyers. For more than ten years, Lawson Lundell has been providing legal advice to Perth-based ASX listed companies active in the Canadian capital markets.

Dioro Exploration's Managing Director Rhod Grivas said the planned capital raising program is intended to ensure the company remained hedge free and debt free to ensure the rapid growth of the company's gold production and exploration projects.

"We are looking forward to working with Cormark Securities to raise the necessary funds to complete the acquisition of Harmony's South Kal operations, upgrade our working capital and ensure the ongoing exploration of our projects, which will see Dioro producing a projected 100,000 ounces of gold per year," Mr Grivas said.

"Importantly, access to the Canadian market via a TSX-listing will give Dioro significant access to North American markets."

The $45m acquisition of Harmony's South Kal assets would create significant synergies with a number of gold projects in the area requiring milling capacity. These include the ability to process ore from Dioro's 49 per cent of the Frog's Leg mine and from resources at the nearby Penfold Gold Project, 100 per cent owned by Dioro, through South Kal's efficient mill.

Mr Grivas said "The new injection of funds will ensure that Dioro will supplement current reserves by undertaking aggressive exploration programs on the plus 1500 sq km highly prospective land package which we will own at the combined Penfold and South Kal projects."

Funds from the Capital Raising are to be used:

• To complete the acquisition of Harmony's South Kal operations, which include the operating Jubilee 1.2mtpa mill, three years of reserves and a resource inventory of approximately 1.878 million ounces and working capital requirements.
• To meet Dioro's contribution to the development of the Frog's Leg underground.
• To fund a planned aggressive exploration program at the company's South Kal and Penfolds 1,500 km2 gold projects.
• Capital raising, stamp duty, cash reserves and contingency costs.

Completion of acquisition - Harmony's South Kal operations

Dioro is on track to complete the 100 per cent acquisition of Harmony's South Kal operations (as announced to the ASX on 31 July 2007). As part of this transaction Dioro will issue Harmony Gold 160 million Dioro shares for a deemed value of A$20 million.

Harmony now has Board and South African Reserve Bank approval to complete the divestment of the South Kalgoorlie assets to Dioro under the agreed terms.

On completion of the capital raising, the company will finalise the transaction through the cash payment of A$25 million.

Planned IPO - Lodestar Resources Limited

Dioro will assign the nickel rights over its recently acquired Penfolds tenements to a new wholly-owned subsidiary, Lodestar Resources Limited, which is expected to list on the ASX around November this year. The consideration for the assignment of the nickel rights will be the issue by Lodestar Resources of 25,000,000 shares at an issue price of 20 cents each. Subject to shareholder approval, these shares will be distributed to Dioro shareholders pro rata by way of an in specie distribution.

Lodestar will then issue 25,000,000 shares at 20 cents each to raise $ 5 million, with Dioro shareholders to be offered a pro rata priority entitlement under the placement.

Update on Dioro's exploration program

Colnago

The company has completed a 3000 metre RC drilling program at Colnago to follow up successful regional RAB and Aircore drilling which included a 1m @ 106 g/t bottom of hole intercept. RC drilling intersected a shear zone with associated quartz veining and brecciation over a strike length of 700 metres. Laboratory results are expected in September 2007.

Frog's Leg gold project (49% Dioro)

Since the portal opening of the Frog's Leg gold project in July, JV partners La Mancha Resources and Dioro have made good progress, with the decline now at 100 metres with good rock conditions. The Frog's Leg deposit is located 50kms from the South Kal Mine Operations, and has a total resource of 933,000 ounces of gold, of which Dioro's share is 457,000 ounces. Further drilling results from the project will be released shortly, which remains on target for gold production in 2008.

Kunderong and Kennedy uranium projects

Dioro and JV partner, Brazilian mining company CVRD, will shortly commence an airborne electromagnetic ("airborne EM") survey over the Kunderong uranium project, located near Newman in Western Australia. The survey will provide the JV with invaluable geophysical information that will focus future uranium exploration. The airborne EM will locate electrical conductors, linear structures and map rock types.

Shareholder meeting

A shareholder meeting to approve the Harmony Gold transaction and Lodestar Minerals Limited nickel spin-off will be held in early October. Shareholders will be notified by mail of the meeting and, subject to shareholder approval, investors who hold shares at the ex Date will be issued shares in Lodestar Minerals Limited.

Dioro shareholders will also receive a priority entitlement to subscribe for shares in the capital raising undertaken by Lodestar.