London, England — MININGREVIEW.COM — 08 December 2010 – JSE- and AIM-listed junior miner DiamondCorp has raised â‚¤2.95 million (R32.1 million) through a placing at 8.5p a share, of which â‚¤1 million (R10.9 million) is needed for additional development work on its Lace mine near Kroonstad.
DiamondCorp shares have traded between a high of 14p and a low of 6p this year. The placing price of 8.5p was at a discount of 11.7% to the closing price of 9.6p on Tuesday. The company raised â‚¤7 million (R76.3 million) in April to fund development of the decline shaft at Lace to a depth of 240m, as well as pay down debt.
“An independent geotechnical review of the proposed bulk sampling programme has suggested that the 260m level is a better target to take the bulk sample than the 240m level,” CEO Paul Loudon explained
“Access to most areas of the kimberlite pipe at this level will be unrestricted, allowing for easier and safer sampling methods. This extra 20m of vertical depth requires approximately 140m of additional decline development, and adds approximately six weeks to the programme,” he added.
According to UK institution Fairfax, the direct cost of the additional development is about â‚¤450 000 (R4.9 million) but the strong rand and general inflation added a further â‚¤300 000 (R3.3 million) to the original â‚¤4 million (R43.5 million) budget for completing the bulk sample.
“Management has also added â‚¤250 000 (R2.7 million) to costs for secondary support that could be required during the sampling programme in order to minimise risks, which will also demonstrate to government the precautions being taken.”
The good news is that DiamondCorp has raised this money fairly easily, which Loudon puts down to improving investor sentiment towards the diamond market. He also cited DiamondCorp’s track record in delivering the decline development on time and budget so far.
Miningmx reports that this is good news for DiamondCorp which has stated its intention to come back to the market to raise around â‚¤8.5 million (R92.5) in April/May to complete the development of Lace and bring the mine into production by the end of 2011.