17th Mar 2015 08:28
LONDON (Alliance News) - Shares in South African diamond miner DiamondCorp PLC rose early Tuesday after the company said its Lace Diamond Mines Pty Ltd subsidiary has signed a royalty financing agreement with Acrux Resources Pty Ltd.
Under the terms of the deal, South Africa-based investment company Acrux will advance USD7 million to Lace Diamond Mines, in which DiamondCorp owns a 74% stake, in exchange for a 3% net revenue royalty on the Lace mine.
The royalty will be payable on the first 12 million carats of diamonds recovered from the Lace mine and will be calculated on the net revenue received by Lace Diamond Mines after the deduction of marketing costs.
Lace Diamond Mines will use the proceeds to shore up its finances and provide working capital amid the ramp up of operations at the mine in the second half of 2015.
"The Royalty with Acrux will provide significant cash at the operating company level without the dilution of a large equity issue or additional debt at a time when we consider DiamondCorp shares to be trading at a significant discount to the underlying value of the Lace mine," said Paul Loudon, Chief Executive of DiamondCorp.
DiamondCorp shares were up 5% to 8.4 pence in early trade on Tuesday, one of the best performers in the AIM All-Share index.
By Sam Unsted; [email protected]; @SamUAtAlliance
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