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DiamondCorp embarks on £1m raising for Lace mine

13th January 2017

By: Natasha Odendaal

Creamer Media Senior Deputy Editor

     

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JOHANNESBURG (miningweekly.com) – Dual-listed DiamondCorp has embarked on a conditional placing to raise the capital required to fund critical expenditure requirements of the Lace diamond mine during the Phase 1 business rescue process.

The expected gross proceeds of £1-million from the bookbuild, if successful, will pave the way for the resumption of the mining operations and recommencement of the ramp-up of production from the UK4 mine.

In the interim, the net proceeds of the placing, together with the group's current cash, will be used to start care and maintenance and mine remediation, cover the costs of the ongoing business rescue process and contribute to a cash settlement of the agreement to be reached with labour.

“In order to formally enter into, and complete, a care-and-maintenance and mine remediation programme at the Lace mine, it is critical that an agreement first be reached with the Association of Mineworkers and Construction Union to address retrenchments and reach a settlement on the balance of labour for the period up to completion of care and maintenance, expected to be until the end of April, and those employees required for recommencement of production ramp-up from the UK4 mine,” the Southern African diamond mining, development and exploration company said in an update on Friday.

Should the agreement not be finalised in the “very near term”, the company will likely face insolvency proceedings.

Meanwhile, DiamondCorp’s insurance claim is ongoing, with its insurance policy providing sufficient flood damage coverage to carry out the repairs necessary to the damaged longhole drill rig, which will need to be conducted off site.

“The company will recommence mine water pumping and rehabilitate underground roadways, thereby enabling the longhole drill rig to be brought to surface, repair and restore underground electrical reticulation and ready the mine for restart while the rig is rebuilt by Sandvik,” it explained.

However, despite some progress having been made, the company still has a long way to go to bounce back to its former sterling performance.

As the Phase 1 care and maintenance continues, DiamondCorp will maintain its focus on restructuring its creditor position, in addition to sufficiently recapitalising the operation to pull itself out of the business rescue.

Phase 2 funding will be required to resume the four-month ramp-up of the UK4 mining operations to 30 000 t/m of blasted kimberlite, and while this phase gets under way, additional funding will be required to access and develop kimberlite deeper than the existing production level, notably the proposed 500 m block cave level.

DiamondCorp is currently engaging senior management and personnel to assist in the Phase 2 fundraising and the management of the Lace mine production and development activities.

The group currently has cash equivalent to £240 000.

Edited by Creamer Media Reporter

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