West Perth-based Kimberley Diamond Company NL has raised $25.5 million through a placement, enabling it to pursue revenue enhancing marketing and operational initiatives.
West Perth-based Kimberley Diamond Company NL has raised $25.5 million through a placement, enabling it to pursue revenue enhancing marketing and operational initiatives.
The company issued 30 million shares at 85 cents each to eligible investors through Argonaut Ltd, with the offer closing oversubscribed.
The full text of a company announcement is pasted below
Kimberley Diamond Company NL advises that pursuant to a mandate issued to Argonaut Limited of Perth, 30 million shares have been placed to eligible investors in accordance with section 708 of the Corporations Act 2001 at A$0.85 per share to raise $25.50 million. The issue was substantially oversubscribed. Argonaut Limited will be paid a fee of 5 per cent for managing the issue.
The funds raised will place the Company on a sound financial footing for pursuing marketing and operational initiatives that are aimed at enhancing revenue and reducing operating risks and costs.
Kimberley recently announced, following its diamond sale in early November, its intention to stockpile diamonds for a tender sale at the end of January or early February 2007 when the diamond market is traditionally buoyant. Whilst this is intended to maximise value, it means the Company will derive little revenue for nearly three months whilst incurring normal operating costs for this period.
In addition to the above, in the lead-up to the forthcoming wet season and in light of the expanded scale of operations, the Company will stockpile around 2 million tonnes of diamond bearing ore on the run-of-mine pads, at an estimated cost of over $10 million.
Whilst processing of ore continues 24 hours a day all year round, there is no mining in the wet season months of January, February and March each year, thus necessitating the build up of ore stockpiles. In addition to the seasonal cost of the ore stockpile, significant quantities of diesel fuel, critical spares and other consumables will be purchased and stored prior to the wet season as the only access road, the Gibb River Road, is often impassable during the wet. This will temporarily absorb a further $5 million in working capital.
The East Plant at Pipe 9 is currently shut down for the major upgrade from 2.2 million to 3.3 million tonnes per annum, which is expected to be complete by 7 December 2006. The final upgrade to 4.4 million tonnes is scheduled to occur by June 2007, taking combined production to 8.8 million tonnes thereafter and allowing the original 600,000 tonne per annum West Plant at Pipe 9 to be used as a bulk sampling plant for other regional pipes.
Although production at 7.7 million tonnes per annum will not occur until mid-December 2006, total minesite operating cash costs have already dropped to approximately $13 per tonne processed in September and October 2006. Further reductions are anticipated.
Over 50,000 tonnes of Bauer samples have been collected from drilling regional pipes 7, 10, 11, 12, 13 and 14. Bauer drilling has now also been completed at Pipe 9 and is about to commence at Pipe 4, followed by the 106 hectare Pipe 6. It will take until July 2007 to process all these samples.
Based on current operating plans and cash flow forecasts, the Company does not anticipate needing to raise any further capital.
