UK-listed diamond junior, Stellar Diamonds, said the market for fund-raising had proved “extremely difficult” partly owing to the size of the company which is valued at $2m.
“The capital markets in the UK have proven extremely difficult to raise funds for junior mining companies in recent years,” said Karl Smithson, CEO of Stellar Diamonds. “Furthermore, the market capitalisation of Stellar during the last six months hovered around the $2m level, which provided additional challenges of raising capital to develop the mine in Sierra Leone,” he said.
Smithson was commenting in notes to the firm’s annual results in which it posted a $984,928 loss, ending 2017 with just over $50,000 of cash and equivalents. As a result, the company is being sold to an Australian firm, Newfield Resources, which also provided a $3m loan in order to keep Stellar’s primary project, the Tongo-Tonguma resource in Sierra Leone, operating.
“The loan will also be used to pay legal and corporate financial advisor costs including those related to the possible offer for the company,” said Smithson. “Working capital will therefore remain constrained as we continue discussions with Newfield Resources regarding the possible offer,” he said.
