Shares in diamond exploration and development company DiamondCorp PLC (LON:DCP) went up over 24% in early trade Friday after the group struck a financing deal that will meet more than three-quarters of the costs of its Lace mine project in South Africa.
The Industrial Development Corporation has agreed to lend DCP U$26.7 million, which will be used to develop a 1.2 million tonne a year block cave mining operation at the company’s 74% owned project, located in the country’s Free State province.
“This represents a significant milestone for our company’s transition from developer to a medium-sized diamond mining company, and we look forward to finalising the balance of our project funding requirements as soon as possible,” CEO Paul Loudon said in a statement.
To complete the total financing, the group said it is considering a “number of options” and it has appointed Rand Merchant Bank and PSG Capital as advisers and arrangers in South Africa to raise up to $18.1 million via the issue of convertible bonds.
The term of the IDC loan is seven years and the company will pay an interest rate of 2% over South African PrimeRate, which is currently 8.5%.