DiamondCorp (LON:DCP) said this morning South Africa’s Industrial Development Corporation has agreed to lend it U$26.7 million.
The funds will be used to develop a 1.2 million tonne a year block cave mining operation at the company’s 74 per cent owned Lace mine.
The figure covers 77 per cent per cent of the peak funding requirements for the South African project.
Chief executive officer Paul Loudon said: "I am very pleased that the terms of the IDC loan facility have been finalised amid difficult market conditions.
“This represents a major 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."
DiamondCorp has agreed to raise a further US$12.1 million prior to the initial drawdown of the new Lace facility.
To complete the total financing, the group 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 US$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 per cent over South African Prime Rate, which is currently 8.5 per cent.