Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Shares in diamond exploration and development company DiamondCorp PLC (LON:DCP) went up over 24% in early trade Friday after the group struck a financing deal that will meet more than three-quarters of the costs of its Lace mine project in South Africa.
The Industrial Development Corporation has agreed to lend DCP U$26.7 million, which will be used to develop a 1.2 million tonne a year block cave mining operation at the company’s 74% owned project, located in the country’s Free State province.
“This represents a significant milestone for our company’s transition from developer to a medium-sized diamond mining company, and we look forward to finalising the balance of our project funding requirements as soon as possible,” CEO Paul Loudon said in a statement.
To complete the total financing, the group said it is considering a “number of options” and it has appointed Rand Merchant Bank and PSG Capital as advisers and arrangers in South Africa to raise up to $18.1 million via the issue of convertible bonds.
The term of the IDC loan is seven years and the company will pay an interest rate of 2% over South African PrimeRate, which is currently 8.5%.
