Australian miner, Kimberley Diamonds Ltd says it has received the first AUD$5 million under the terms of a loan agreement entered into with a third party lender, Zhejiang Huitong Auction Co Ltd.
Under the terms of the Loan Agreement, Zhejiang has agreed to provide KDL with a total loan of AUD$10 million, with KDL to receive a further AUD$5 million by 31 July 2015.
The funds will be applied to the re-commissioning of KDL’s Lerala Diamond Mine in Botswana. The Lerala Diamond Mine is KDL’s primary focus, and once re-opened, will be KDL’s key source of revenue.
According to the Australian company, it will pay interest of 5% per annum and expects to repay the loan in full after 2 years. Equally, 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; and the loan is secured by a security interest over KDL’s shares in Mantle Diamonds Limited (UK).
KDL’s Managing Director, Noel Halgreen said the funding will allow KDL to immediately take key steps 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.”
Halgreen added 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.
The Lerala Diamond Mine is situated in north-east Botswana, approximately 34km north of the Martin’s Drift Border Post with South Africa, and comprises five diamondiferous pipes totaling 6.66ha in size.
The kimberlites were discovered in De Beers in the early 1990s and subject to limited mining by DiamonEx in 2009. Most recently, Mantle Diamonds Limited (Mantle) operated the mine between February and July 2012, producing 73,403 carats from 0.26 Mt at 28.2 cpht. KDL acquired Mantle in February 2014, and will be modifying the plant at Lerala to enable the plant to reliably treat 200 tonnes per hour and 1.4 million tonnes per annum. 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.
Zhejiang Huitong Auction Co Ltd is a Chinese based auction house company with its head office in Hangzhou. It was established in 2000 and services financial asset management companies, banks and other financial institutions and law enforcement agencies in Zhejiang province.