Kimberley Diamonds has revealed plans to begin its capital rising exercise which was deferred earlier in the year on the back of difficult market conditions, as the company sets its eyes on restarting its Botswana project which has been placed under care and maintenance by previous owners.
The ASX listed diamond mining company has been exploring various funding models aimed at funding the options to commence operations at Lerala mine after it bought the mine from Mantle Diamonds Limited last year.
The outfit was cautious of unnecessarily diluting its loyal existing shareholder base, given the pricing levels currently available. There was therefore considerations to look at alternate, non-dilutive options to fund KDL’s development programme.
The company said on Friday it will be undertaking a non-renounceable pro-rata rights issue offer of new KDL ordinary shares at an issue price of $0.19 per New Share to raise up to approximately $9,912,672 or P88 million.
“The funds raised by the Offer, together with KDL’s existing cash reserves, will be used to fund the re-commissioning of Kimberley’s Lerala Diamond Mine in Botswana and general working capital
requirements,” the company said.
Eligible shareholders will be able to purchase 1 New Share for every 2 existing KDL ordinary shares held as at 7.00pm (AEST) on 1 September 2014 (Record Date). New shares issued under the Offer will rank equally with existing KDL ordinary shares from issue.
KDL revealed that for one to be an eligible shareholder they must as at 7.00pm (EST) on the Record Date be registered as a holder of KDL ordinary shares and have a registered address in Australia or New Zealand.
Kimberley said in April it had a cash balance of A$9.7 million (about P80 million) with no debt, and in the opinion of the Board, is fully funded for its existing operations. Lerala is situated 50km west of the Martin’s Drift Border Post with South Africa in east Botswana. The mine comprises a cluster of five diamondiferous kimberlite pipes (K2-K6) totaling 6.66 hectares in size, together with a 230 tonnes per hour processing and recovery facility currently on care and maintenance.
The kimberlites were discovered by De Beers in the early 1990s and subjected to limited mining by DiamonEx Ltd in 2008. Most recently, Mantle operated the mine between February and July 2012, producing 73,403 carats from 0.26Mt at 28.2 carats per hundred tonnes (cpht).
An independent valuation performed by WWW International Diamond Consultant Ltd in 2005 returned an average diamond price of US$ 57/ct for K3, K5 & K6 and US$ 45/ct for K2 -using a cut-off of +1mm. Lerala has a 15-year fully-permitted mining license covering an area of 21.86
The estimated remaining total Indicated Resource at Lerala is12.18Mt at 25.52 cpht (Table 1) including Probable Reserves of 8.38Mt at 29.68 cpht.
“KDL’s experienced diamond team view the Lerala operation and its well-established plant and resource as a unique opportunity in this well-known diamond mining jurisdiction,” the company said.
KDL Managing Director Noel Halgreen told a Botswana Resources Conference in June that they will be successful with Lerala because the second group that ran the mine ‘has done a good review’, which
allows operational readiness. He said the two groups had clean starts without operational readiness.
“We know reasons why the project failed previously and we can solve the problems easily. We have done alternative reviews and done extensive changes on what needs to be done,” Halgreen told the conference.
Lerala mine will be contract mined and consultants have been engaged to provide lump sum turnkey pricing for re-commissioning of the operation. Already, a tender for a contractor has been issued. Environmental consultants have also been engaged to analyse and advise on Health, Safety and Environmental aspects of the mine.