Kimberley Diamonds, a junior diamond mining company listed in Australia, has announced that it has secured debt finance of AUD $10-million from China-based auction house Zhejiang Huitong Auction, which it intends to use for the recommissioning of its Lerala diamond mine in Botswana. The company said that the first AUD $5-million of the loan has been received and the balance will be payable by July 31, 2015.

It also said that the Lerala Diamond Mine will now be KDL’s primary focus, and once re-opened, will be KDL’s key source of revenue.

Media reports from Australia state that KDL is likely to shortly announce the closure of its Ellendale Diamond mine in the Kimberly region of WA. The mine was known for producing rare and extremely valuable yellow stones.

The fresh loan has to be repaid in full after two years along with interest of 5% per annum. The company said that Zhejiang may elect for one third of the loan to be repaid in KDL shares at a 20% discount to the volume weighted average price of KDL’s shares for the 20 business days prior to conversion.

The Lerala Diamond Mine is situated in north-east Botswana, and comprises five diamondiferous pipes totalling 6.66ha in size. KDL acquired the asset, discovered by De Beers in the early 1990s, from its most recent owner Mantle Diamonds in February 2014. The company says that the current total resource estimate for the Lerala kimberlites is 10.3 Mt at an average grade of 31.5 cpht equating to approximately 3.3 million carats.

KDL’s Managing Director, Noel Halgreen said “this funding will allow KDL to immediately take key steps to towards the re-commissioning of the Lerala Diamond Mine, which, once re-opened, will provide KDL with significant revenue streams for the life of mine of approximately 7 years with significant potential for extension.”

He noted that KDL will require further funds of approximately AUD$5 million to complete the re-commissioning of Lerala, and is in discussions with third parties to raise the required funds.

Pic Caption: The plant at the Lerala Diamond Mine