LUCAPA Diamond Company said $5.25m raised in funds following a rights issue would be used to “preserve” mining assets affected by COVID-19 pandemic lockdowns, as well as to fund exploration at its Lulo project in Angola.
The rights offer consisted of one share for every five shares held at an issue price of $0.05 per new share. The new shares bought would also have a free option on another share at a price of $0.10/share which would expire in two years from date of issue.
“During such unprecedented times, we were both delighted and appreciative to see such a strong show of support for our plans and strategies in the diamond sector,” said Stephen Wetherall, MD of Lucapa Diamond in a statement. “This included support from our loyal shareholders as well as strong demand for the shortfall.”
The company raised $3.26m from the rights issue – equal to 45.9 million new shares – and therefore relied on commitments in the event of a shortfall. This included directors who had followed their rights to the fullest.
Trading conditions are especially tough in the world’s diamond sector where clients prefer to inspect goods in person at tenders. As a result, COVID-19 travel restrictions have reduced purchases of rough diamonds to a bare minimum.
Lucapa said on April 14 that it had sold diamonds from its Mothae mine in Lesotho directly to a high-end diamantaire realising $2m in upfront revenue.
The company said it had sold 3,963 carats into a cutting and polishing partnership at an average price of $505 per carat. In terms of the partnership, Lucapa will receive the rough price for the diamonds upfront and then take on the subsequent procurement and diamond manufacturing costs in order to generate short-term revenue.