In the media

DiamondCorp secures $6m from Tiffany in return for supply

16 November 2012

Source: miningweekly.com

JOHANNESBURG (miningweekly.com) – Southern Africa-focused DiamondCorp has agreed a term loan of $6-million with a subsidiary of Tiffany & Co in exchange for an offtake agreement for diamond production from its flagship Lace mine, in the Free State.

DiamondCorp would draw down the Laurelton Diamonds loan in two equal tranches on January 10 and April 10, with the proceeds advanced to its 74%-owned subsidiary Lace Diamond Mines (LDM) and used to complete the funding required for the 47 level block cave development.

The loan would bear a 9% interest and must be repaid in full by the eighth anniversary of the second funding date. The loan could be repaid early in part or in full without penalty.

The loan is subject to the completion of legal due diligence and execution of binding legal agreements.

The offtake agreement would take effect from the first funding date until the end of the life of the mine.

Subject to any purchases by the South African State Diamond Trader, the offtake agreement would give Laurelton Diamonds the right to purchase, on commercial terms related to fair market value, production from the Lace mine which meets the quality and colour standards required to yield Tiffany-quality polished diamonds.

Special stones, and those diamonds which do not meet the Tiffany standard, would be excluded from the offtake agreement.

Commenting on the loan and the offtake agreement, DiamondCorp CEO Paul Loudon said the company was excited to have secured such a “prestigious funding partner” as Tiffany.

“Their decision to provide project finance in return for access to a long-term supply agreement is testament to the quality of the Lace diamonds and an expression of confidence in DiamondCorp's development strategy," he concluded.

The Lace mine would produce 380 000 ct in the early years, averaging 260 000 ct over the 26-year life-of-mine.

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