DiamondCorp’s capital raising date extended as bankruptcy spectre magnifies
JOHANNESBURG (miningweekly.com) – The date of the placing of shares by the London- and Johannesburg-listed DiamondCorp to raise money for the troubled Lace diamond mine in South Africa’s Free State province has been extended out, magnifying the bankruptcy spectre which is hovering over this halted operation that heavy rains flooded in November.
The mine, near Kroonstad, was placed in business rescue in December.
The board of DiamondCorp said in a Stock Exchange News Service announcement on Thursday that it was delaying its share placement to give South Africa’s State-owned Industrial Development (IDC) time to meet conditions precedent, as well as provide a chance to the Association of Mining and Construction Union (AMCU) to document and finalise an in-principle agreement it had stuck with the union.
Headed by CEO Paul Loudon, the London Aim- and Johannesburg AltX-listed company announced on January 13 that it had embarked on a conditional placing of shares to raise £1-million to pave the way for the resumption of the mining operations and recommencement of the ramp-up of production.
While agreement in principle has been reached with AMCU, DiamondCorp said that Lace mine’s business rescue practitioner Deloitte & Touche had thus far been unable to reach agreement with the IDC, the secured lender, with respect to what the company describes as “various issues related to the board’s obligations pursuant to this placing”.
Without agreement, the board said it would be unable to proceed and the company would likely face insolvency proceedings.
Meanwhile, DiamondCorp’s flood insurance claim is ongoing, with its insurance policy providing sufficient flood damage coverage to carry out repairs to a damaged longhole drill rig.
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