JOHANNESBURG (miningweekly.com) – The future of the Lace diamond mine, in the Free State, hangs in the balance as dual-listed DiamondCorp again delays its share placement to give the State-owned Industrial Development Corporation (IDC) time to meet conditions precedent, as well as provide the Association of Mining and Construction Union (AMCU) a chance to document and finalise an in-principle agreement.
The troubled Southern African diamond mining, development and exploration company will now admit the placing shares and the free shares to raise much-needed funds on the London bourse on February 28. This will be effective on the AltX by March 7.
The previous extension gave the parties until January 30 to conclude agreements and approvals.
“The continued delays to the agreements sought by the business rescue practitioner and the group from both AMCU and the IDC are causing commensurate delays in commencing the care and maintenance and remediation programme of the Lace mine,” the company said in a statement on Tuesday.
This meant that the Lace diamond mine remained nonoperational – without mine water pumping, zero roadway and electrical rehabilitation and a longhole drill rig remaining underground – and its effective idling could be compromised if these agreements were not finalised “in the very near future”.
“The agreement in-principle reached with AMCU is now being subjected to material amendments by AMCU, and it is currently unclear whether or not final terms and associated documentation that is consistent with the terms that had previously been agreed upon, will be able to be entered into between the parties,” DiamondCorp explained.
In addition, discussions continue with the IDC on modifications to loan terms, as well as over the approval for the provision of immediate post-commencement funding, in advance of the longer-term restructuring necessary and funding for a successful business rescue plan.
“No assurances can be made that such IDC approval will be forthcoming, either in time for post-commencement funding to be sought, to be raised promptly, or at all,” DiamondCorp warned.
The business rescue practitioners, Deloitte & Touche, have also started seeking expressions of interest for strategic investors into the Lace diamond mine.
The company's wholly-owned subsidiary Soapstone Investments obtained a standstill agreement from South African bondholders until the conclusion of the business rescue proceedings or March 13, whichever happens first.
“The delays in obtaining agreements with the IDC and AMCU place a doubt over the timing of the payment of the next bond payment due on March 14. JSE rules require notice of whether or not the payment is to be made to be announced by February 23,” the group explained.
Accordingly, discussions with bondholders to obtain an extension to this standstill will now commence.
“The board reiterates that, without agreement on the above points, it is likely that the business rescue will not be concluded successfully and, therefore, that the group will be subsequently placed into administration.”
The mine did, however, receive net insurance proceeds of R1.36-million from the successful conclusion of an insurance claim for an incident prior to the mine flood that brought operations to a halt in November and resulted in DiamondCorp embarking on the business rescue process.