Archangel Diamond Corporation notified that Russian government to give conditional consent for its acquisition of a 49.99% equity interest in AGD, but escrow release conditions not satisfied by October 17, 2008

    TORONTO, Oct. 20 /CNW/ -

    Status of Russian Government Approvals

    Archangel Diamond Corporation ("Archangel" or the "Corporation") (TSXV :
AAD) announces that, in connection with its proposed acquisition of a 49.99%
equity interest in OAO Arkhangelskoe Geologodobychnoe Predpriyatie from OAO
LUKOIL (the "Transaction") described in the Corporation's news release dated
April 16, 2008, the Russian Federal Anti-Monopoly Service ("FAS") has notified
Archangel by letter dated October 15, 2008 that at its first session held on
October 10, 2008, the newly established Russian Government Commission on
control over foreign investment (the "Commission") took a positive decision to
grant conditional consent to the Transaction pursuant to the Russian Law on
foreign investment in strategic assets (the "FISS Law"). Based on discussions
with senior FAS officials held in Moscow, Archangel understands that the
consent will be subject to a condition relating to local diamond processing.
The formal decision ("Decision"), including details of the condition, will be
issued by FAS and provided to Archangel once the relevant Commission protocol
has been signed, which Archangel understands to be imminent. Archangel has
been further advised that the condition will have to be formalized in an
ancillary agreement to be entered into between the Corporation and FAS within
20 days of the Decision. Archangel will study the condition and proposed
ancillary agreement on receipt of the Decision, in order to understand its
impact, if any, on the Transaction.
    With respect to the other outstanding condition precedent to completion
of the Transaction, Russian competition law approval, FAS has confirmed that
it will issue its approval after notification of the Decision under the FISS
Law has been provided. Archangel was advised by FAS officials that this
approval may also be subject to certain conditions but no details have yet
been specified. Archangel will study any conditions on receipt of the approval
in order to understand their impact, if any, on the Transaction.

    Escrow Release Conditions

    With respect to the US$172.4 million private placement of Subscription
Receipts described in the Corporation's news release dated June 24, 2008,
Archangel announces that the Escrow Release Conditions as defined in the
Subscription Receipt Agreement dated June 24, 2008 between the Corporation and
Computershare Trust Company of Canada ("Computershare") were not satisfied by
4.00 pm Toronto time on October 17, 2008. The Corporation was unsuccessful in
obtaining an extension, consequently each Subscription Receiptholder's
escrowed funds, plus any accrued interest earned thereon, will be repaid pro
rata to each such holder by Computershare in accordance with the terms and
conditions of the Subscription Receipt Agreement.
    Given the return of the escrowed funds to the Subscription
Receiptholders, in the event of fulfillment of the remaining conditions
precedent and completion of the Transaction prior to the long-stop date of
December 31, 2008, Archangel anticipates drawing under the US$115 million
standby credit facility agreement dated April 15, 2008 made available by De
Beers Société Anonyme.
    In the meantime, Archangel will consider alternative financing options
together with its financial advisors.

FINANCIAL PROJECTIONS - This news release contains "forward-looking
statements", within the meaning of applicable Canadian securities legislation.
Forward-looking statements include, but are not limited to, statements with
respect to the outcome of future negotiations, completion of the Transaction,
execution of definitive agreements, exercise of future call rights, success of
financing activities, identification or upgrade of mineral resources,
requirements for additional capital, government regulation, results of future
diamond exploration, results of diamond marketing, changes in legal
requirements, changes in the political environment, environmental liabilities
and title disputes. Generally, these forward-looking statements can be
identified by the use of forward-looking terminology 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 state that certain
actions, events or results "may", "could", "would", "might" or "will be
taken", "occur" or "be achieved". Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may cause the
actual outcomes, results, level of activity, performance or achievements of
Archangel Diamond Corporation to be materially different from those expressed
or implied by such forward-looking statements, including but not limited to:
risks described in the above news release; those risks set out in Archangel's
disclosure documents and its annual, interim management discussion and
analysis and annual reports. Although Archangel has attempted to identify
important factors that could cause actual results to differ materially from
those contained in forward-looking statements, there may be other factors that
cause results not to be as anticipated, estimated or intended. There can be no
assurance that such statements 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 statements. Archangel does not undertake to update any
forward-looking statements or financial projections, except in accordance with
applicable securities laws.


For further information:

For further information: Ms. Jocelyn Fraser, Archangel Diamond
Corporation - Media Enquiries, Vancouver, British Columbia, Canada, Tel: (604)
731-6164,; Mr. Steven Thomas, Chief Financial
Officer, Archangel Diamond Corporation, 65 Overlea Boulevard, Suite 400,
Toronto, Ontario, M4H 1P1, Canada, Tel: (416) 423-1600,

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