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25 September 2009

Target Resources Plc 

('Target', or the 'Company')

Notice of Extraordinary General Meeting and Cancellation of Admission to AIM

Target Resources plc (AIM: TGT) the alluvial diamond and gold mining company operating in Sierra Leone, announces that a circular (detailed below) will today be despatched to Shareholders convening an Extraordinary General Meeting to seek Shareholder approval to cancel the admission of the Company's ordinary shares to trading on AIM.

The Board has concluded that the costs and regulatory requirements associated with retaining Target's AIM listing are a significant burden on the Company's financial resources and outweigh the benefits gained from Admission. 

The Extraordinary General Meeting will be held at Arbuthnot House, 20 Ropemaker Street, London EC2Y 9AR commencing at 10.00 a.m. on Wednesday, 21 October 2009. If approved it is expected that Cancellation will take effect from 7.00 a.m. on 29 October 2009.

Enquiries:

Target Resources plc                                020 7258 2300

Dr Nissim Levy, Managing Director          www.target-resources.co.uk

Nominated Adviser and Broker

Arbuthnot Securities                                 020 7012 2000

John Prior

Ed Burbidge

Introduction

The Company announces that it is seeking Shareholder approval to cancel the admission of the Ordinary Shares to trading on AIM.

Recommendations

The Directors consider that the Resolution is in the best interests of the Company and the Shareholders as a whole and is most likely to promote the success of the Company for the benefit of the Shareholders as a whole.

Accordingly, your Directors unanimously recommend that Shareholders vote in favour of the Resolution to be proposed at the EGM, as they have irrevocably undertaken to do. Certain other Shareholders have conditionally undertaken to do so in respect of their beneficial shareholdings, which in aggregate with the Directors' irrevocable undertakings, amount to 64,938,951 Ordinary Shares, representing approximately 52.59per cent. of the Ordinary Shares.

Background and Reasons for Cancellation of Admission

Owing to the steep fall in prices on the international diamond market in early 2009, and despite the Company's achieving its targeted throughput rates, Target decided to suspend its diamond mining activities in March 2009 in order to prevent further losses. Having looked at securing an alternative source of income from a gold production operation on the Teye River following the suspension of its diamond mining activities, the Company suspended further investment in this operation in April 2009 so that the Company could operate on a greatly reduced operations budget.

The Company stated in an operational update to the market in April 2009 that it had sufficient current cash resources to cover its anticipated costs and liabilities until the end of June 2009, at which time certain periodic payments would fall due, the most significant being an interest payment to its principal lender. In the absence of any significant increase in income, the Company would therefore need to secure further funding.

On 8 July 2009, the Company announced a directors' loan facility of up to $300,000, which along with the deferral of a number of periodic payments to its principal lender, would ensure the Company has sufficient cash resources to cover the Directors' estimate of the anticipated costs and liabilities of the business to the end of October 2009.

Given the difficult financial position of the Company, the Board has reached the conclusion that the costs and regulatory requirements associated with maintaining admission to AIM are a significant burden on the Company's financial resources and outweigh the benefits gained from Admission. The costs include fees paid to the Company's nominated adviser, annual fees paid to London Stock Exchange, costs relating to public announcements and certain fees and expenses of professional advisers engaged to provide services relating to the Company's Ordinary Shares being traded on AIM.

In addition to the overheads incurred by the Company as a result of its Ordinary Shares being traded on AIM:

• the Company has seen limited trading volume in the Company's shares since its Admission; and
• the Directors consider that given the Company's size and share price and the current market conditions it would be difficult to raise additional funds on AIM.

Furthermore, those directors of the Company who have granted it the loan facility, and also Target's principal lender, whose collective support has ensured that the Company can continue to meet its costs and liabilities, have indicated that they will not continue to support the company should its Ordinary Shares continue to trade on AIM. Shareholders should therefore be aware that should the Cancellation of Admission not occur, the Company is unlikely to be able to continue as a going concern and therefore the Company is likely to be put into administration. In such circumstances it is highly unlikely that Shareholders will receive any payments in respect of their holdings in the Company.  

Following the Cancellation of Admission (if approved by the Shareholders) certain of the Directors and the Company's principal lender have indicated that they will continue to support the Company, which the Directors believe will give them an opportunity to secure a viable future for the Company. 

After careful consideration, your Board have therefore concluded that it is in the best interests of the Company and Shareholders for the Company's admission to trading on AIM to be cancelled.

Effect of Cancellation of Admission

Shareholders should note that the Cancellation of Admission is likely to reduce significantly the liquidity and marketability of the Ordinary Shares. Once the Cancellation of Admission has taken effect, Shareholders will no longer be able to effect transactions in the Ordinary Shares on market at the market price. Following cancellation, therefore, Shareholders will have to effect any further transactions in the Ordinary Shares off market at a price to be agreed between the relevant parties.  However, while there can be no guarantee of any Shareholders being able to purchase or sell any Ordinary Shares, any Shareholder seeking to do so should contact the Company Secretary in writing at 16th Floor, Marble Arch Tower, 55 Bryanston Street, London W1H 7AA. Dealings in the Ordinary Shares following the Cancellation of Admission will continue to be eligible for settlement through CREST in uncertificated form.  

The Company will continue to post information about the Company on its website (www.target-resources.co.uk) and will continue to send its Annual Report and Accounts to shareholders and to hold general meetings in accordance with the applicable statutory requirements and the Company's articles. Shareholders should note that the Company will remain subject to the provisions of the City Code on Takeovers and Mergers.

Options

As at 24 September 2009, the latest practicable date prior to publication of this document, the Company had granted options over 10,170,434 Ordinary Shares which remain outstanding and have not been exercised.  Apart from 2,778 options with an exercise price of 1p, all of the options are 'under water', that is to say their exercise prices are above the current market value of the Ordinary Shares.

 

The proposed Cancellation of Admission will not affect the status of these options, which can be exercised in accordance with their terms following the proposed Cancellation of Admission.

 

Irrevocable Undertakings

The proposed Cancellation of Admission is conditional, inter alia, upon the Shareholders passing the Resolution at the EGM. The Directors have irrevocably undertaken to vote in favour of the Resolution in respect of 21,844,801 Ordinary Shares, representing, in aggregate, approximately 17.69 per cent. of the Company's issued share capital, and certain other Shareholders have conditionally undertaken to vote in favour of the Resolution in respect of 43,094,150 Ordinary Shares, representing, in aggregate, approximately 34.90 per cent. of the Company's issued share capital. Therefore, the Company has received in aggregate undertakings to vote in favour of the Resolution in respect of 64,938,951 Ordinary Shares, representing 52.59 per cent. of the Ordinary Shares.

DEFINITIONS

The following definitions apply throughout this document unless the context requires otherwise:

'Admission'	admission of the Ordinary Shares to trading on AIM, effective from 12 July 2006
'AIM'	the market of that name operated by London Stock Exchange
'AIM Rules for Companies'	the rules for companies applying for admission to and whose securities are traded on AIM and published by London Stock Exchange as amended from time to time
'Cancellation of Admission'	the cancellation of Admission, subject to the passing of a resolution at the EGM
'Company' or 'Target'	Target Resources Plc
'CREST'	the relevant system (as defined in the Uncertificated Securities Regulations 2001) operated by Euroclear UK & Ireland Limited which facilitates the transfer of title to shares in uncertificated form
'Directors' or 'the Board'	the directors of the Company whose names are set out on page 5 of this document
'EGM'	the extraordinary general meeting of the Company convened for 10.00 a.m. on 21 October 2009, notice of which is set out at the end of this document
'London Stock Exchange'	London Stock Exchange plc
'Ordinary Shares'	the ordinary shares of 1 pence in the capital of the Company
'Resolution'	the resolution to be proposed at the EGM as set out in the notice at the end of this document
'Shareholders'	holders of Ordinary Shares

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