Diamond miner DiamondCorp has raised £4.2m through secured convertible debt, which will enable it to restart production at the potentially highly cash generative Lace diamond mine in South Africa.
The convertible has a 14% coupon and they are repayable at the end of 2018. The conversion price is 5.81p a share. Two-thirds of the money was raised in South Africa and the rest in the UK.
DiamondCorp has also agreed a $6m term loan and an offtake agreement for diamond production with a subsidiary of Tiffany. The loan has a 9% interest rate and is repayable in April 2021. The loan is being advanced to the 74%-owned subsidiary that operates the Lace mine.
This will provide all the additional funding that DiamondCorp requires for investment in the mine. There will be no need to draw down on the equity finance facility with Darwin Strategic.
WH Ireland expects the first cash flow from the Lace mine in 2014 although it forecasts a post-tax loss. In 2015, EBITDA of £29.9m and a post-tax profit of £4.9m are forecast.
At 4.38p a share, DiamondCorp is valued at £10.8m
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