| ||Fri Sep 29, 2006|
Notice of Default Pursuant to CSA Staff Notice 57-301
| ||(Cape Town, September 29, 2006) - Diamond Fields International Ltd. (DFI:TSX) ("DFI" or the "Company") is filing this Notice of Default pursuant to CSA Staff Notice 57-301 Failure to File Financial Statements on Time -- Management Cease Trade Orders ("57-301") in respect of the Company's inability to file its annual audited financial statements for the year ended June 30, 2006 (the "Annual Financial Statements") by the deadline of September 28, 2006 as required by National Instrument 51-102 Continuous Disclosure Obligations. In connection with the Company's inability to file the Annual Financial Statements on time, the Company has applied to applicable Canadian securities regulators requesting that a management cease trade order (which restricts trading in the Company's securities by the Company's insiders) be issued as opposed to an issuer cease trade order (which restricts all trading in the Company's securities).|
The Company is unable to file the Annual Financial Statements on time due to the cumulative effect of the following factors:
• Complicated technical issues relating to currency exchange matters, inter-company reconciliations and income tax accounting issues, as well as complex issues regarding financial instruments, were recently identified by management in the course of the preparation of the Annual Financial Statements.
• The Company has encountered virus problems in its computer network which has delayed access to certain information required for the preparation of the Annual Financial Statements and resolution of certain of the technical issues mentioned in the previous point.
• The audit of the Annual Financial Statements will be the first audit of the Company's financial statements undertaken by the Company's new auditor PricewaterhouseCoopers LLP, which replaced the Company's former auditor in June, 2006.
• The proposed transaction with Moydow Mines International Inc. tied up significant financial resources and personnel of the Company and as a result of the termination of that transaction (please refer to the Company's news releases dated March 1, 2006 and August 8, 2006 for further details) the Company was unable to utilize various personnel and resources that were anticipated to be available to assist with the preparation of the Annual Financial Statements following the completion of the transaction.
• As a result of various changes in the position of Chief Financial Officer during the fiscal year ended June 30, 2006 including in connection with the Company's office move from Vancouver to Cape Town, South Africa as well as in connection with the planned completion of the Moydow transaction (discussed in the previous item), there has been a lack of CFO continuity during the relevant period which has caused various delays in relation to the preparation of the Annual Financial Statements.
The Company currently expects to file the Annual Financial Statements by October 12, 2006.
Pursuant to 57-301, applicable Canadian securities commissions or regulators may impose an issuer cease trade order against the Company if the Annual Financial Statements are not filed by November 28, 2006, being the date that is two months following the date of the filing deadline for the Annual Financial Statements. In addition, an issuer cease trade order may be imposed sooner if the Company fails to file Default Status Reports on time in accordance with 57-301.
The Company intends to satisfy the provisions of Appendix B to 57-301 by filing a Default Status Report in the prescribed form, as long as the Company remains in default of the financial statement filing requirement.
The Company is not currently subject to any insolvency proceedings. If the Company provides any information to any of its creditors during the period in which it is in default of filing the Annual Financial Statements, the Company confirms that it will also file material change reports on SEDAR containing such information.
As a result of the Company's inability to file the Annual Financial Statements on time, the Company plans to proceed with its proposed rights offering (as announced on September 1, 2006) following the date that the Annual Financial Statements have been filed. In addition, the Company will file its Annual Information Form in respect of its fiscal year ended June 30, 2006 on the date that the Company files its Annual Financial Statements.
DIAMOND FIELDS INTERNATIONAL LTD.
"Roger J. Daniel" Roger J. Daniel, President and CEO For further information, contact Roger Daniel or Randal Cullen at +27 21 425 1990 Website: www.diamondfields.com
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