[miningmx.com] – DIAMONDCORP is in discussions with private investment firm, Acrux Resources, that will see the latter advance $7m to the diamond firm’s 74% owned subisdidary Lace Diamond Mines (LDM) in return for a revenue based royalty.
A term sheet has been agreed in which Acrux, which has former BHP Billiton manager Richard Linnell as director, will receive a 3% net revenue royalty payable on the first 12 milliion carats of diamonds recovered from the Lace mine after marketing costs.
After eight years, LDM will have the right to repurchase the royalty at an independent valuation. The proceeds of the transaction will be used by LDM to provide working capital cover during ramp-up of the mine in the second half of this year.
“The Royalty with Acrux will provide significant cash at the operating company level without the dilution of a large equity issue or additional debt at a time when we consider DiamondCorp shares to be trading at a significant discount to the underlying value of the Lace mine,” said Paul Loudon, CEO of DiamondCorp.
