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DiamondCorp plc is an emerging diamond producer focused on maximising shareholder value through the development of high margin diamond production assets. The company is incorporated in the UK and the highly prospective diamondiferous regions of South Africa and Botswana are its chosen areas of operation.
DiamondCorp moves closer to US$33.6 mln IDC loan facility
July 23 2012, 7:20am
DiamondCorp (LON:DCP) reported further progress with its loan funding from the IDC to develop its Lace mine in South Africa, having received approval from the power provider.
As reported in May, the firm entered a deal for a loan of 280 million Rand, around US$33.6 million, with the Industrial Development Corporation of South Africa Ltd, subject to various conditions.
Today, DiamondCorp said the IDC had finished its due diligence and that approval had been granted from power utility Eskom.
Chief executive Paul Loudon told investors he was very pleased with the progress.
"Further, in light of the positive involvement of the IDC in funding the Lace mine development, the company has been approached by a number of diamond groups with respect to securing diamond off-take agreements for the future Lace production and commercial South African banks looking to work alongside the Company and the IDC in providing additional subordinated funding facilities," he said.
"The company is actively pursuing these avenues with a view to further strengthening the funding arrangements for the Lace mine development in a manner that will provide significant cushion and comfort for shareholders in the current challenging macroeconomic environment."
The final loan agreement and terms are now expected to be completed and signed by mid September 2012 - slightly longer than the end of July anticipated in May.
The cash will be used for underground development of the 1.2 mtpa block cave mining operation on the 47 Level (470 metres) at the Lace mine.
DiamondCorp also noted the Reserve Bank of South Africa's move to cut the repo rate by 0.5 per cent, which means the South African Prime Rate goes to 8.5 per cent from 9 per cent.
"If the South African Prime Rate remains unchanged when DiamondCorp commences drawdowns from the proposed IDC facility, the company would be paying an interest rate of 10.5 per cent (i.e, the South African Prime Rate plus 2 per cent)," the firm said.
