The beleaguered DiamondCorp plc has been searching for ways to stabilise its business operations and fund the care and maintenance of the Lace Diamond Mine, which was placed on Business Rescue mode some time months back.  

The Company reported on February 28 that a formal agreement has been entered into between the Industrial Development Corporation of South Africa (IDC), the BRP and DiamondCorp Holdings Limited (DCH), a wholly owned subsidiary of the Company.

Amongst other things, the agreement allows for PCF loan/s to be advanced to the Group’s operating subsidiary LDM. Any such loans advanced under the terms the agreement are to be “secured against the assets of LDM on a basis senior to all existing indebtedness of LDM with the exception of the first ZAR1.2 million that will shortly be ceded by the IDC from proceeds of a recent insurance claim received by LDM,” DiamondCorp said.

Loans to LDM under the IDC Agreement will attract an interest rate of 13.5 per cent per annum; and would be repayable “upon completion of the Business Rescue process or after six months, whichever is sooner and upon the election of the Company”.  Moreover, LDM is permitted to prepay the PCF loan without any penalty accruing.

“The IDC Agreement provides for a LDM PCF Loan to be made either in addition to or as a substitute for the Placing, the conditions for which have yet to be met,” DiamondCorp explained. “It is intended pursuant to the IDC Agreement that the BRP will in due course publish a Business Rescue Plan to be voted upon by the LDM creditors that will provide, inter alia, for DCH (and therefore the Company) to maintain its controlling shareholding in LDM and to seek sufficient additional, Phase 2, finance within 90 days of publication and to successfully conclude the Business Rescue process. The BRP may also continue to solicit expressions of interest for a strategic investor(s) in LDM.”

DiamondCorp also continues to pursue discussions with the Association of Mining & Construction Union (AMCU) – which it needs to sign an agreement to proceed ahead – and the BRP which are held under the supervision the South African Commission for Conciliation, Mediation and Arbitration. 

If the original agreement is not finalised soon, the Company will be compromised in the execution of the Lace Mine’s care and maintenance and remediation programme.  

“The Board of DiamondCorp shall continue to explore all options available to the Group in relation to the ongoing Business Rescue process, the IDC Agreement, the Placing, and the Group's creditors and other stakeholders,” Diamond Corp stressed. “The Board reiterates that there can be no assurance that an appropriate agreement with AMCU can be obtained in sufficient time, or at, all or that sufficient finance can be obtained to continue with the Business Rescue process. In the absence of a successful continuation and conclusion of the Business Rescue process, it is likely that the Group would be subsequently placed into administration.”