Mr. Stuart Brown, Chief Executive Officer of Firestone Diamonds

Firestone Diamonds plc, has agreed to a US$15.0 million standby debt facility with Resource Capital Fund VI L.P. (RCF) in a bid to satisfy one of the remaining conditions to the drawdown of the Absa Debt Facility.

However, the deal is conditional on shareholder approval.

The company added that it has also agreed a restructuring of its existing US$30.0 million Mezzanine Facility with no changes to its commercial terms.

According to the AIM-quoted diamond development company, the standby debt facility, to be provided by RCF, will allow the company to drawdown the Absa Debt Facility.

The purpose of the standby debt facility is to fund any potential cost over-runs or delays in respect of the development of the Main Treatment Plant.

The project currently remains within budget and on schedule to achieve initial production at the end of H1 2016 and, accordingly, the Board does not currently envisage that it will need to drawdown the US$15.0 million standby debt facility.

The standby debt facility, if required, will be drawn down at the option of the company in up to three equal tranches and will be structured by way of Eurobonds, quoted on the Cayman Islands Stock Exchange, attracting an interest rate of 8 percent per annum.

In order to facilitate RCF’s ability to elect to receive shares, as opposed to cash on the redemption of the standby debt facility, upon drawdown of the facility, the Company will also issue RCF with Warrants that can only be exercised by way of a redemption of the standby debt facility.  The standby debt facility is subject to Shareholder approval to enable the Company to issue the Warrants.

The company, RCF and Pacific Road have amended the US$30.0 million Mezzanine Facility Agreement entered into as part of the Financing completed in 2014.  It has been agreed that it would be more efficient to restructure the Mezzanine Facility as a put option to issue quoted Eurobonds to RCF and Pacific Road.  The commercial terms of the Mezzanine Facility have not changed as a result of the restructuring. The Company has not drawn down on the mezzanine facility to date.

The proposed transactions are related party transactions for the purposes of the AIM Rules for Companies as RCF and Pacific Road are both substantial shareholders in the Company.

Stuart Brown, Chief Executive Officer of Firestone said RCF shows there is high level of confidence in the project.

“We are pleased that we have now completed, subject to shareholder approval, one of the final conditions to access the Absa Debt Facility,” Brown said.

“The standby facility provided by RCF is a sign of their and Firestone’s confidence in the Project and further strengthens the contingency reserves should it be needed in the future.  We look forward to the continued performance of the project team who remain on budget and on track to achieve initial production at the end of H1 2016.”