African exploration and development firm DiamondCorp PLC (LON:DCP) was full of good news on Friday, as it revealed it is rising $1.6 million ( £1 million gross) from a share placing to help fund the expansion of its Lace mine in South Africa.
The diamond miner has issued 28.5 million new shares at 3p each, and it is also setting up a $16 million (£10 million) equity line facility with specialist financier Darwin Strategic.
The company also announced it is in advanced talks about a potential diamond offtake agreement and/or royalty over production from the Lace mine, the company's primary asset in South Africa.
"We are delighted with the support of new and existing shareholders in this equity placing at a time of difficult market conditions. We are also very pleased to have received the support of Henderson Global Investors and Darwin Strategic in offering a funding structure to assist us in fulfilling the initial drawdown conditions of the IDC project loan. We look forward with much excitement to restarting underground development of the Lace mine," DiamondCorp's CEO Paul Loudon said in a press release.
Lace diamond mine is located 25km northwest of the town of Kroonstad in the Free State Province of South Africa. The mine operated from 1896 to 1931, and — to mine records— IT produced approximately 700,000 carats of diamonds from 4.5 million tonnes of kimberlite at a recovered grade of 16 carats per hundred tonnes.
Once revamped, Lace will have a life of 26 years and is expected to produce 380,000 carats in the earlier years, but will average 260,000 over the entire period.
DiamondCorp PLC’s brokers in London and South Africa are working on a bond issue, which is expected to satisfy the majority of its funding requirement.
In September, the company the group struck a financing deal with the Industrial Development Corporation, which will meet more than three-quarters of the costs construction at lace.