Shares in DiamondCorp (LON:DCP) climbed 13% after the company announced it has put in place, what it called the final piece of the puzzle, for its Lace Mine in South Africa (photo).
The African exploration and development firm did so with $6.8 million convertible bond issue, which carries a coupon of 14%.
Along with loans from a subsidiary of Tiffany's and the Industrial Development Corporation, the firm said it now has the cash required to push on with the 1.2 million tonne-a-year block cave development at Lace.
Chief executive Paul Loudon said the bond issue is the “last piece of the funding jigsaw,” adding it will allow the company to unlock significant shareholder value from the Lace resource.
“The loans from IDC and Tiffany & Co. illustrate confidence in Lace, with its above average gem content and potential for fancy lilac stones."
The shares were marked 0.5 pence higher to 4.25 pence, valuing DiamondCorp at $17.7 million (£10.3 million).
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 struck a financing deal with the Industrial Development Corporation, which will meet more than three-quarters of the costs construction at Lace.
Image courtesy of DiamondCorp.