5th Jun 2015 07:51
LONDON (Alliance News) - DiamondCorp PLC, which owns the Lace Diamond Mine in South Africa, said it is issuing new shares to raise GBP3.2 million, and intends to raise a further amount of up to GBP2 million, with the company moving to overcome a working capital shortfall.
About 31.8 million shares have been placed at 10 pence per share to raise GBP3.2 million from new and existing institutional and private investors, with the company intending to offer up to 20 million new shares at the same price in a non-underwritten open offer to existing shareholders.
The diamond development, exploration and mining company's decision to raise funds through an equity placing could be seen as a change of plan for Chief Executive Paul Loudon, who in March opted for a USD7 million royalty financing with Acrux Resources (Pty) Ltd to "provide significant cash at the operating company level without the dilution of a large equity issue or additional debt".
DiamondCorp has now decided that the royalty financing facility agreed with Acrux Resources is not in its best interests, resulting in the termination of that deal at "no additional expense", citing the placing and the "potential value implications" for the Lace mine due to the discovery of a Type IIa diamond.
At the time of publishing annual results for 2014 on March 26, DiamondCorp said its working capital shortfall was GBP1.8 million in a base case scenario and GBP2.8 million in the worst case, with the proceeds of the share issuance to fund the gap.
DiamondCorp said the placing will give it "sufficient funds to ramp up to commercial production".
It expects that to take place in the second half of 2015, with "the commencement of positive cashflow" by the end of the year.
Additional funds from the open offer would be used to bolster working capital and mine economics.
DiamondCorp shares were down 3.6% at 11.09 pence on Friday morning.
By Samuel Agini; [email protected]; @samuelagini
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