DiamondCorp raises £2.05 mln to pay debt; seeks project financing for Lace mine
DiamondCorp (LON:DCP) this morning unveiled a £2.05 million cash call to pay off its debts and boost working capital as it continues to develop the Lace diamond mine in South Africa.
It is issuing 31.6 million shares, around 13 per cent of the enlarged share capital, at a price of 6.5p each. The placing price represents an 8.77 per cent discount to yesterday's closing price. DiamondCorp will use most of the funds to retire debt and accrued interest owed to Africa Opportunity Fund LP.
"I am delighted that with the support of our shareholders, DiamondCorp will now be completely debt free," said chief executive Paul Loudon.
"This fundamental strengthening of our balance sheet comes at the same time as we have demonstrated that our flagship asset, the Lace mine in South Africa, will support a +25-year mine life, producing almost 450,000 carats per annum at peak production and generating life-of-mine cashflows of almost £500 million."
Earlier this month DiamondCorp published revised development plans to by-pass the mine's historical working and instead aim straight for the lower lying, higher grade kimberlite.
This new plan has a capital cost of £11.4 million. The company now plans to secure project finance, rather than raise additional equity, to cover these costs.
Explaining the decision to seek project financing to complete the Lace development, Loudon added: "Markets for resource stocks are experiencing a difficult period at the moment, and financing the whole of the Lace mine development from equity capital cannot be done without an unacceptably high dilution to existing shareholders.
"Therefore management will now turn its attention to investigating sources of project finance for Lace in a form which provides the least dilution and maximum leverage for existing shareholders."
Meanwhile Loudon also highlighted that drilling is underway in Botswana at the group's ‘exciting' diamondiferous kimberlites near De Beers' massive Jwaneng mine - the richest diamond mine in the world - and an initial grade indication is expected before the end of this year.
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