Southern African diamond mining, development and exploration company DiamondCorp announced last week it would raise £1million ($1.23M) through a placing at 4p ($0.05). The South African-focused diamond miner initiated the funding round as a first step in pulling its Lace mine out of Business Rescue, and now reports that the placing is progressing well. They have extended the closing date for the round of funding that will bring its diamond mine out of the South African equivalent of administration. The shares will be issued at around 4p through a bookbuilding exercise by Panmure Gordon with a warrant attached that can be exercised at 1p. A condition of the placing is that a labour agreement is reached with the AMCU union over back wages and staff reductions, without which the miner said it faces insolvency.
If it can conclude the placing, the next phase will start to ramp up operations at Lace again. That will see more money raised and a new management team join the company. Diamondcorp is Lace’s largest creditor with £36m ($44m) owed through a subordinated loan. South Africa’s IDC is the next largest creditor with an £18m ($22m) project loan. Diamondcorp shares will remain suspended until the Business Rescue process is concluded. DiamondCorp was issued in October with a Section 54 shut down notice on underground operations at its Lace diamond mine in the Free State province. The notice was issued by the South African Department of Mineral Resources (DMR) and relates to a fire on a dump truck that was extinguished without injury.