Diamondcorp Plc Convertible Bond Issue (6024T)
December 17 2012 - 2:00AM
UK Regulatory
TIDMDCP
RNS Number : 6024T
Diamondcorp Plc
17 December 2012
17 December 2012
NOT FOR DISTRIBUTION IN OR INTO AUSTRALIA, CANADA, JAPAN OR THE
UNITED STATES OR ANY OTHER JURISDICTION IF TO DO SO WOULD
CONSTITUTE A VIOLATION OF THE LAWS OF SUCH JURISDICTION
DiamondCorp plc
JSE share code: DMC & AIM share code: DCP
ISIN: GB00B183ZC46
(Incorporated in England and Wales)
(Registration number 05400982)
(SA company registration number 2007/031444/10)
("DiamondCorp", "the Group" or "the Company")
GBP4.2 million issue of 14% senior secured convertible bonds
The Board of DiamondCorp, the Southern African diamond mine
development and exploration company, is delighted to announce that
it has conditionally raised GBP4.2 million through the issue of 14%
senior secured convertible bonds.
The issue totals R40 million (approximately GBP2.8 million) of
bonds issued to investors in South Africa (the "SA Bonds") and
GBP1.4 million of bonds issued to investors in the UK (the "UK
Bonds"). The net proceeds of the SA Bonds and the UK Bonds
(together the "Bonds") plus the US$6 million term loan from
Laurelton Diamonds, Inc., a wholly-owned subsidiary of Tiffany
& Co. (the "Tiffany Loan"), announced last month, equate to a
total of approximately R113 million which finalises the funding
required for the 1.2 million tonne per annum 47 Level underground
block cave development at the Lace diamond mine in South
Africa.
The release of the proceeds of the Bonds from escrow is
conditional upon the completion of the Tiffany Loan. Drafting of a
binding legal agreement for the Tiffany Loan is progressing well
and is expected to be completed before year end.
The proceeds from the Bonds and the Tiffany Loan will allow the
Company to meet its initial drawdown condition on the R220 million
secured project finance facility signed with the Industrial
Development Corporation of South Africa ("IDC") and provide total
project funding of R320 million (approximately GBP22.8 million) for
the Lace mine development, including a 33% capital contingency.
The Company's CEO Paul Loudon and Chairman Euan Worthington have
each invested GBP100,000 in the UK Bonds. Loeb Aron & Co.
Limited, a company in which DiamondCorp Board Members Paul Loudon
and Jonathan Willis-Richards are directors, has invested GBP60,000
in the UK bonds.
The Bonds are due for repayment at 100% of face value on 31
December 2018 and interest will be paid quarterly in arrears. The
first 24 months of interest on the UK Bonds will accumulate and
will be added to the principal amount to be repaid. Bondholders can
request conversion of the Bonds and outstanding interest at any
time after 41 days from issue. Any request for conversion can be
settled at the absolute discretion of DiamondCorp with ordinary
shares of the Company at 5.81p per share or the cash equivalent of
the number of underlying shares multiplied by the share price at
the time of conversion. With strong cashflow forecast from mine
production due to commence in two year's time, this latter term is
intended to minimise dilution for existing shareholders.
The Lace mine funding has been completed without any use of the
equity finance facility ("EFF") arranged in October 2012 with
Darwin Strategic Limited. Management has no current need to
drawdown on the EFF.
Commenting on the Bond issue, DiamondCorp's CEO Paul Loudon
said: "We are very pleased to have arranged the funding required
for the Lace underground development in a period of extremely
challenging capital markets. The Bond issue is the last piece of
the funding jigsaw and 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 SA Bonds were arranged by Rand Merchant Bank, which is now
working with the Company to list them on the JSE Limited. The UK
Bonds were arranged by SP Angel Corporate Finance and will not be
listed.
The Lace mine is expected to produce more than 500,000 carats of
diamonds per annum at peak production with a potential mine life of
25 years. Using a constant dollar financial model and nominal
diamond price of $160/ct, Lace is forecast to generate almost
GBP500 million in after-tax cashflow over the life of the mine. At
a 10% discount rate, this after-tax cashflow has a net present
value of GBP106 million, which represents an NPV per share of 29p
for DiamondCorp's 74% interest in the mine. DiamondCorp is also due
to receive the first GBP18 million (6.6p per share) plus
accumulated interest of free cash from the project in repayment of
outstanding shareholder loans.
Paul Loudon said: "I believe the long-term outlook for diamond
prices is strong, with future demand forecast to outstrip supply.
Lace is one of the few long life diamond resources which will be
commencing production in an improving market. On behalf of the
shareholders, management will now focus on meeting targets on
underground mine development. We also continue to investigate
additional diamond development opportunities, as and when they
arise, on the condition that they are value accretive to
shareholders and meet our strategy of building and operating
high-margin diamond mines around our core competency in underground
kimberlite mining."
Contact details:
DiamondCorp plc
Paul Loudon, Chief Executive
Tel: +27 56 212 2308
Euan Worthington, Executive Chairman
Tel: +44 775 3862 097
SP Angel Corporate Finance LLP
AIM Nomad and Broker
Ewan Leggat/Laura Littley
Tel: +44 203 463 2260
Ocean Equities Limited
Guy Wilkes
Tel: +44 207 786 4370
PSG Capital (Pty) Limited
John-Paul Dicks
Tel: +27 21 887 9602
Russell & Associates
Charmane Russell/Marion Brower
Tel: +27 11 880 3924
This information is provided by RNS
The company news service from the London Stock Exchange
END
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