Tahera provides an update on its proposed refinancing plan



    TSX: TAH

    TORONTO, Dec. 11 /CNW/ - Tahera Diamond Corporation provides an update on
its refinancing activities.
    Tahera has obtained receipt for a preliminary prospectus in connection
with its previously announced Rights Offering (the "Rights Offering"). Tahera
is working on clearing its prospectus for final filing as soon as possible for
a Rights Offering of approximately $36.7 million.
    Tahera also announces that it has entered into an agreement with Tiffany
& Co. (Tiffany) regarding the conversion into equity of certain debt it owes
to Tiffany. Tiffany has agreed to convert a portion of the debt into that
number of Tahera common shares equal to 19% of the issued and outstanding
common shares following the closing of the Rights Offering and after giving
effect to the Tiffany conversion transaction. The Tiffany agreement will be
effective once Tahera has successfully completed the filing of a final
prospectus relating to the Rights Offering, which filing must be completed by
December 18, 2007, under the terms of the agreement.
    In addition, the Company's mining contractor, Nuna Logistics Limited
(Nuna) has agreed to convert $3.15 million of the amount Tahera currently owes
to it into Tahera common shares. As part of the agreement, Nuna has agreed to
make certain concessions with respect to labour and equipment costs.
    Each of the conversion transactions will be effected based on a
conversion price relative to the market price of the Tahera common shares less
a 25% discount, but at a price no less than the Rights Offering subscription
price, proposed to be $0.14 per unit.
    Both the Tiffany and Nuna conversion transactions are conditional upon
Tahera being successful in raising a minimum of $30 million in the Rights
Offering, and are subject to entering into definitive agreements and obtaining
regulatory approvals.
    In connection with its Rights Offering, the Company has received
confirmation from its largest shareholder, Teck Cominco Limited, which owns
approximately 16% of the outstanding common shares of Tahera, that it does not
intend to participate in the Rights Offering. Teck Cominco remains however,
very supportive of the Jericho mine and will continue to provide operational
and technical support to the Jericho mine on an as needed basis. Dundee
Precious Metals Inc., the second largest shareholder of the Company, holding
8% of the outstanding common shares of Tahera, has indicated that at this
point in time it is unsure whether it will participate in the Rights Offering.
    Although the Company has continued to make progress with its improvement
plan at the Jericho Mine, continuing financial losses have been incurred and,
as a result, its financial position has deteriorated. The continuing negative
cash flows being experienced from the Jericho Mine operations, combined with
the requirement to fund the upcoming winter road inventory purchases, have led
to the current need for additional financing. Failure by the Company to raise
$30 million in the Rights Offering would result in the Company not being able
to take advantage of the upcoming winter road re-supply and further develop
and implement its program of operational improvements at the Jericho Mine. The
Company will then face significant and dire financial difficulties. Failing to
find an alternative source of financing, Tahera would be forced to consider
various alternatives such as interrupting activities at the Jericho Mine, mine
closure, sale of the Company or seek creditor protection under Canadian
insolvency legislation.
    Given its current financial position, Tahera may require between
$3 million to $5 million in bridge financing to satisfy its current
obligations prior to the completion of the Rights Offering. Tahera has not yet
made any arrangements with respect to such bridge financing and there is no
assurance it will be successful in obtaining such financing, if it becomes
necessary.
    Despite a successful Rights Offering, negative cash flow generated by the
Jericho Mine may continue, and Tahera may be required to seek further
financing and/or explore other alternative measures in the future, including
placing the Jericho Mine on care and maintenance for a certain period of time.
Factors such as delays to realize the benefits expected from operational
improvements, the continued high value of the Canadian dollar versus the U.S.
dollar and the price of diamonds failing to increase in accordance with
expected trends, are factors which may prevent the Company from improving cash
flow generated from its operations.
    Tahera's Rights Offering is subject to obtaining all regulatory
approvals, including obtaining a receipt for a final prospectus from the
Canadian securities regulatory authorities of each province of Canada.

    Tahera Diamond Corporation
    R. Peter Gillin - Chairman and CEO

    CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
    This document may contain "forward-looking information". In certain
cases, forward-looking information can be identified by the use of words such
as "plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not
anticipate", or "believes", or variations of such words and phrases or
statements that certain actions, events or results "may", "could", "would",
"might" or "will be taken", "occur" or "be achieved". Forward-looking
information involves known and unknown risks, uncertainties and other factors
that may cause the actual results, performance or achievements of the Company
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking information. Such
factors include, among others, risks related to future prices of diamonds;
possible variations in mineral resources and/or mineral reserves, grade or
recovery rates; failure of plant, equipment or processes to operate as
anticipated; accidents, labour disputes and other risks of the mining
industry; delays or failure in obtaining financing; unexpected climate
conditions, as well as those factors discussed in the section entitled
"Narrative Description of the Business - Risk Factors" in the Annual
Information Form and in the "Risk Factors" section of the prospectus relating
to the rights offering. Although the Company has attempted to identify
important factors that could cause actual actions, events or results to differ
materially from those described in forward-looking information, there may be
other factors that cause actions, events or results not to be as anticipated,
estimated or intended. There can be no assurance that forward-looking
information will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements.
Accordingly, readers should not place undue reliance on forward-looking
information.

    /THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR
    FOR DISSEMINATION IN THE U.S./

    %SEDAR: 00003313E




For further information:

For further information: Investor Relations, Tel: (416) 777-1998, Fax:
(416) 777-1898, Toll free: (877) 777-2004, Email:
investor_relations@tahera.com, Website: www.tahera.com

Organization Profile

TAHERA DIAMOND CORPORATION

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890