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Diamondcorp ditches royalty finance plan as investors back Lace development with hard cash

Published: 03:24 05 Jun 2015 EDT

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The South African miner has raised £3.18mln through an oversubscribed placing at 10p.

In a sign of the growing confidence in its Lace mine development, DiamondCorp (LON:DCP)  has replaced its proposed royalty financing package with Acrux Resources by a straightforward call on shareholders.

The South African miner has raised £3.18mln through an oversubscribed placing at 10p with institutions and private investors. The price was a 10% discount to the close yesterday.

In addition, DiamondCorp intends to raise up to a further £2mln through an open offer to existing shareholders.

The miner said the progress on bulk sampling at Lace and the recent discovery of a sizeable Type IIa stone had persuaded it not to go ahead with Acrux’s royalty financing facility.

Some brokers had also not been happy with the royalty plan. Northland calculated Acrux could receive around US$56mln in royalties for its US$7mln up-front loan assuming a price of US$160 per carat.

The net proceeds of the placing will be sufficient to ramp up to commercial production, which is anticipated in the second half of 2015, leading to the commencement of positive cash flow anticipated by the end of 2015.

Any money raised by the open offer would be used further to enhance the working capital position and mine economics.

Paul Loudon, DiamondCorp’s chief executive, said: "I am delighted with the strong support we have received for the company by existing and new shareholders and I look forward to updating the market on our operational developments as we ramp up to commercial production at the Lace Mine."

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