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DiamondWorks says CEO, two directors resign
By Allan Dowd
VANCOUVER, Dec 13 (Reuters) - Canadian miner DiamondWorks Ltd. <DMW.TO> announced on Monday the sudden resignation of its chief executive and two directors as its diamond operations in war-torn Angola continue to sap its financial resources.
A spokesman at the company's Vancouver headquarters declined to comment on the timing of the shake-up, but linked the changes to the purchase of a 29-percent stake in DiamondWorks earlier this year by South Africa's New Mining Corp Ltd. <NEWJ.J>.
"The major shareholder is now in South Africa...I think it is just a logical transition that management and control of the company is moving in the same jurisdiction of where the major shareholder is," Bill Trenaman said.
The Toronto Stock Exchange late on Monday also announced it was investigating if DiamondWorks still met the exchange's requirements for listing. DiamondWorks' shares on the TSE closed on Monday at 6.5 Canadian cents, down 1 Canadian cent.
DiamondWorks, which has holdings in Angola, Sierra Leone and Canada, said President and CEO Bruce Walsham and directors Michael Grunberg and Paul Hipps had stepped down on December 10. Chief Financial Officer Robert Rainey was named acting CEO.
In announcing the boardroom shake-up, DiamondWorks repeated a warning about its ability to continue operations that it said were dependent on winning a deferral of payment on loan obligations and extension of additional credit from major shareholders.
"The company continues to operate at a loss and to be unable to meet its obligations generally as they come due," the company said in a statement.
Monday's announcement also came less than a month after it again suspended operations at its Yetwene mine -- one of its two operations in Angola -- citing higher costs caused by the resumption of Angola's civil war as one of the reasons.
Operations at the Yetwene mine were also suspended for several months earlier this year following an attack on the mine by an estimated 100 gunman in November 1998. The raid by Angola's UNITA rebel movement left eight dead and 10 people, including six foreign nationals, missing.
Angola's former Marxist government and UNITA have been at war for more than two decades since the country won independence from Portugal in 1975. The latest round of fighting flared in December 1998 after the collapse of a 1994 United Nations-brokered peace agreement.
DiamondWorks' holdings in Angola and Sierra Leone have long been politically controversial over its alleged ties with mercenary groups from Britain and South Africa.
Grunberg, who resigned from the board, has also been a commercial advisor to the British mercenary firm Sandline International, which has been at the center of a political scandal in Britain over the alleged breach of a U.N. embargo on arms sales to Sierra Leone.
DiamondWorks on Monday again denied any direct commercial link with Sandline, although Trenaman said the company had always acknowledged "several of our directors" have had "relationships" with Sandline and firms related to it.
"But that's been on their own time and own business and it has nothing to do with a commercial basis with DiamondWorks, Trenaman said.
The first suspension of operations at Yetwene this year led to a restructuring of DiamondWorks' debt. New Mining Corp. acquired its stake in the company in July when it purchased Ekusensi Resources.
19:01 12-13-99
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