[miningmx.com] – MARK Bristow, the founder and CEO of Randgold Resources, has bought $1.1m worth of debentures in South Africa’s Rockwell Diamonds potentially raising his stake in the business to 9%.
This is assuming that $1.1m or R12.2m would buy you 7% of Rockwell Diamonds, a firm valued at R169m at its current share price on the Johannesburg Stock Exchange (JSE). Shares in the firm were unmoved today but they have registered a 12.6% decline on a 12-month return basis.
Bristow, the non-executive chairman of Rockwell Diamonds, already has a 2% stake in the company which mines for alluvial diamonds in the Middle Orange River region of the Northern Cape province.
His brother, John Bristow, was formerly CEO of Rockwell before a management ouster and the recruitment of current CEO, James Campbell in May, 2011. Mark Bristow joined the Rockwell board after serving as acting CEO in 2010.
In addition to Bristow’s subscription for $1.1m in debentures, Rockwell’s ‘beneficiation partner’, Daboll Consultants, an affiliate of Diacore, has agreed to buy $3m in debentures raising a total of $4.1m in funds for Rockwell.
The debentures carry an interest rate of 5% and mature in two years. There are also a host of conditions regarding potential discounts to shares at conversion should Rockwell consider a general equity issue in two years.
“The proceeds of the offering will be used to finance current and proposed work
programs on the company’s diamond projects and for general working capital purposes,” said Rockwell in an announcement to the JSE.
Interestingly, the offer of debentures was taken to other shareholders. “All key shareholders were consulted and given an opportunity to participate,” said Campbell in the company announcement.
“Having funded two new processing plants, at Saxendrift Hill Complex and
Niewejaarskraal, from working capital during the last two years, management felt it prudent to pursue this additional funding and received board approval to do so.
“Our partnership with Diacore has delivered significant value for both parties over the last seven years and we are delighted to have this further vote of confidence from them,” said Campbell.
“Furthermore, the additional investment by Mark Bristow, who is already a substantial investor in the Company, reflects his confidence in the future growth of Rockwell.”
Asked if Rockwell was considering raising capital through a general equity issue, Rockwell investor relations manager, Stephanie LeClercq said: “We have been saying in the market for some time now that we are looking at value accretive consolidation opportunities to grow the company. And if one of those opportunities were to materialise a raise could be a possibility”.
Rockwell said in October it was considering the possibility of doubling its current one million tonne/year mining rate target but would require funds to achieve this.
The firm recently replaced its former empowerment partner, the African Renaissance Holdings, with a newly created special purpose vehicle that would buy 30% of Rockwell’s Middle Orange River operations for $7.2m. The deal was vendor-financed, Campbell said in notes to the firms’ second quarter figures.
