Photo by: Reuters
JOHANNESBURG (miningweekly.com) – As mining resumes at the Lace diamond mine, dual-listed DiamondCorp on Tuesday said it was considering a merger or the outright sale of the embattled Free State-based asset.
Last week, mining at the diamond mine was halted under a Section 54 notice, while the third party it was in advanced discussions with for an urgent £500 000 convertible debt facility had withdrawn after DiamondCorp suffered adverse share price movements on the JSE and LSE.
DiamondCorp had accelerated its discussions with alternative third parties and shareholders after failing to secure the much-needed funding to remain a going concern.
However, following initial expressions of interest from credible potential acquirers, DiamondCorp will, in parallel to its discussions to secure additional funding, embark on a wider strategic review to explore additional opportunities.
This would include a corporate transaction, such as a merger with or offer for the group by a third party, or a sale of the group's businesses, the company highlighted.
“The board, therefore, intends to pursue any such possible alternatives to ensure the best outcome for its shareholders,” it noted in an update to shareholders.
The company's shares rose by 37.5% and 66.8% on the JSE and LSE respectively on Tuesday following the news.
The company’s share price had plunged by nearly 50% and 40% on the JSE and LSE respectively after the notification last week that there was another delay in the ramp-up to full commercial mine production.
A day later, DiamondCorp’s shares fell for a second consecutive day, by as much as 11% on the JSE and 30.44% on the LSE, after the announcement of a Section 54 shutdown after a fire incident on a dump truck just inside the portal to the decline at the mine.
Mining has since resumed.
“The financial impact of the four days of mining lost as a result of the shutdown instruction has been minimised by a rescheduling of programme maintenance and the fact that the mine was ahead of its planned tonnage for the month at the time of the shutdown,” DiamondCorp assured shareholders.