JOHANNESBURG (miningweekly.com) – Aim-listed Firestone Diamonds has signed a $15-million standby debt facility with mining-focused private equity firm Resource Capital Fund (RCF) to satisfy one of the remaining conditions to the drawdown of its Absa debt facility, it told shareholders on Thursday.
The purpose of the standby debt facility was to fund any potential cost overruns or delays in the development of the main treatment plant at its 11-million-carat Liqhobong operation, in Lesotho.
"We are pleased that we have now completed one of the final conditions to access the Absa debt facility. The standby facility provided by RCF is a sign of their and Firestone's confidence in the project and further strengthens the contingency reserves should it be needed in the future,” CEO Stuart Brown commented.
The company highlighted that the project remained within budget and on schedule to start production at the end of 2016. It did not envisage that it would need to draw down the standby debt facility.
However, if required, it would be drawn down in up to three equal tranches and would be structured by way of Eurobonds, quoted on the Cayman Islands Stock Exchange, attracting an interest rate of 8% a year.
To facilitate RCF's ability to elect to receive shares, as opposed to cash on the redemption of the standby debt facility, upon drawdown of the facility, the company would also issue RCF with warrants that could only be exercised by way of a redemption of the standby debt facility.
MEZZANINE DEBT
The diamond development company also agreed a restructuring of its existing $30-million mezzanine facility with no changes to its commercial terms.
The agreement was entered into as part of the financing completed in 2014. It was agreed that it would be more efficient to restructure the mezzanine facility as a put option to issue quoted Eurobonds to RCF and Pacific Road. The commercial terms of the mezzanine facility had not changed as a result of the restructuring.
The company added that it had not drawn down on the mezzanine facility to date.