Loan Facility
February 11 2010 - 2:00AM
UK Regulatory
TIDMPDF
RNS Number : 9807G
Pangea DiamondFields PLC
11 February 2010
Pangea DiamondFields plc
('Pangea' or the 'Company')
Loan Facility
Pangea DiamondFields plc (AIM:PDF), the diamond producer and exploration company
announces that a wholly owned subsidiary of the Company has entered into a
US$2.8 million convertible loan facility (the 'Loan'), to be provided by Pangea
Exploration (Proprietary) Limited ('Panex').
Background to the Loan
On 23 December 2009, the Company announced that it had commissioned the upgraded
processing facilities at its Cassanguidi project in Angola, but that production
in December had been negatively impacted by logistical challenges and breakdowns
with the project's mining fleet. These interruptions were reported as likely to
hamper throughput to the plant and production in January 2010.
The Cassanguidi upgrade was achieved by purchasing equipment from dormant third
party projects within Angola at prices well below market values. A result of the
extended dormancy of this equipment is that a number of breakdowns are
occurring. These breakdowns combined with long lead times in obtaining spare
parts are constraining the productivity of the project. As a result management
has taken the decision to increase the capacity of the mining fleet in order to
reach the targeted plant throughput of 30,000m3 of in situ gravels per month.
To achieve this an additional new excavator has already been purchased, to be on
site by mid February 2010, and dump trucks and a front end loader are being
redeployed from the Company's Bakerville project in South Africa. In addition a
larger inventory of fast moving spares is being built up on site. The enhanced
mining fleet is expected to be fully operational by the end of March 2010 at
which point the ramp up to targeted production levels will commence. By June
2010 management plan to reach the previously announced steady state production
target of 6,000 carats per month.
Following the successful completion of pilot mining at Bakerville, mining
activities are currently suspended pending the transition to a full scale
commercial operation on receipt of a Mining Right which is targeted for August
2010. The Company is currently well ahead of the required submission dates in
relation to this application. The transfer of equipment from Bakerville will not
hinder the development of that project in the interim.
As a result of the reduced production levels the Company requires additional
cash to fund operational expenses in addition to the capital expenditure
associated with the enhancement of the Cassanguidi mining fleet. To satisfy
these requirements, Panex has made a facility of US$2.8 million available to the
Company. The Company has diamond inventory of 2,800 carats that will be sold
in mid February 2010 and further sales of diamond production are planned.
Together with these diamond sales, the Loan will fund the ramp up of production
at Cassanguidi and pay other operating expenses for a period of around three
months. A production rate of approximately 4,500 carats per month is planned to
occur at Cassanguidi in April 2010 and management expects the Company to become
self financing at this level of production. Thereafter, a ramp up to the
projected steady state production of 6,000 carats per month targeted for June
2010 will start generating positive cash flows to the group for general working
capital requirements and loan repayments.
Summary Terms of the Loan
The Loan is to be advanced and repaid in South African Rand. The Loan will incur
interest at South African Bank Prime rate (currently 10.5%) and is repayable by
30 November 2011.
Panex will have the option to convert the Loan at any time into new ordinary
shares in the Company ('Shares') at a price of 1.5p per Share against the drawn
down amount.
Related Party Transaction
Panex is a mineral exploration company in which a trust associated with Rob
Still, the Company's Deputy Chairman, is a substantial shareholder. Pursuant to
Rule 13 of the AIM Rules for Companies, the provision of the Loan therefore
constitutes a related party transaction. The Board of Pangea (excluding Rob
Still), having consulted with Ambrian Partners Limited, the Company's Nominated
Adviser, considers that the terms of the Loan are fair and reasonable insofar as
its shareholders are concerned.
Chief Executive Boris Kamstra said "With the processing plants able to treat
30,000m3 per month, we needed to augment the mining fleet to have sufficient
capacity to deal with inevitable breakdowns. The new excavator and additional
front end loader and trucks will add a significant buffer to the current fleet
which puts us in a position to attain our targeted production."
Further information:
+----------------------+------------------------+-----------------------+
| Pangea DiamondFields | Ambrian Partners | Walbrook PR Ltd |
| plc | Limited | |
| | | |
+----------------------+------------------------+-----------------------+
| Boris Kamstra | Richard Brown / | Louise Goodeve / Leah |
| | Richard Greenfield | Kramer |
+----------------------+------------------------+-----------------------+
| T: +27 11 438 4100 | T: +44 (0) 20 7634 | T: +44 (0) 20 7933 |
| | 4700 | 8780 |
| | | |
+----------------------+------------------------+-----------------------+
Notes to Editors:
About Pangea Diamondfields PLC
Pangea DiamondFields plc (AIM: PDF) is an emerging diamond producer and
exploration company with a portfolio of eight projects each with multiple
resource targets, located in the Central African Republic, Democratic Republic
of the Congo, South Africa and Angola. The Company aims to minimise risk by
diversifying its projects geographically.
PDF listed on AIM in October 2006 and is led by a strong management team, with a
track record for creating shareholder value in mineral exploration.
For more information on PDF, please visit:
http://www.pangeadiamondfields.com/
This information is provided by RNS
The company news service from the London Stock Exchange
END
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