IT’S fair to describe 2016 as Paul Loudon’s annus horribilis. Precious little has gone well for DiamondCorp at its refurbished Lace kimberlite mine in South Africa’s Free State province. Central to the mine’s troubles is the failure to get into commercial production which has starved the company of cash flow and put its balance sheet under pressure. The outcome has been a series of unfavourable financing arrangements as Loudon sought to pay Lace’s short-term bills and get the mine over the line. The operating company that houses Lace is currently in business rescue and Loudon is overseeing efforts at the holding company level to raise £3m to complete the mine following a recent history of geological and labour problems, equipment failures, flooding, and safety stoppages. DiamondCorp’s share price has fallen precipitously which has hobbled the power of its equity. The final tender of diamonds in 2016, short of high quality diamonds, also didn’t realise as much revenue as hoped. Such are the dangers of single asset development companies. For a time, Loudon sought a buyer for the company but the sharks scented blood and so he pulled discussions, citing a lack of value. For all this, we think it would be a shame for Lace to go into liquidation, but in the time-honoured tradition of Rainmaker & Potstirrer bell-tolling, we reckon the next three months is do-or-die for Loudon’s Lace.
LIFE OF PAUL
Loudon has held a number of leading positions in junior mining companies and earned his stripes in stockbroking and corporate finance, particularly in his role as head of equity sales at Loeb Aron & Company in London where he raised money for mining companies. He’s been on the DiamondCorp board since 2005.
“The mine is in a challenging period.”
- Web Address: www.diamondcorp.plc.uk