30/10/2014 - 14:59

Kimberley shares up on Chinese placement

30/10/2014 - 14:59

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Shares in Kimberley Diamonds closed 25 per cent higher today after the company announced it had entered into a subscription agreement to raise $4.37 million from a Chinese institutional investor.

Kimberley shares up on Chinese placement

Shares in Kimberley Diamonds closed 25 per cent higher today after the company announced it had entered into a subscription agreement to raise $4.37 million from a Chinese institutional investor.

The subscription agreement, which involves placing 23 million shares at a price of 19 cents per share to the investor, follows a 51.7 million share shortfall in KDL's rights issue earlier in the week.

“The company believes that the reluctance by most shareholders to take up their rights in the rights issue can be attributed largely to the fall in the company’s share price below the 19 cents rights issue price,” the Sydney-headquartered miner said in a statement.

The company said a big reason for the share price fall was a shareholder recently selling his 4 million shares in a three-day period, which increased the daily volume of traded shares to 20 times the average.

“More generally, unfavourable publicity surrounding the company following the recent attempts by two shareholders to replace the majority of the board has created uncertainty amongst shareholders about the future leadership and direction of the company,” it said.

“The company remains in discussions with a number of investors in relation to the placement of the remainder of the shortfall.”

In April, KDL was trading at around $1.16 per share on the ASX, but by the end of May it had plunged more than 75 per cent due to “prevailing market conditions”.

It then announced it had replaced its managing director Lee-Anne de Bruin with mining engineer Noel Halgreen.

The miner’s Perth-based subsidiary, Kimberley Diamond Company, owns the Ellendale diamond project in Western Australia.

KDL said it expects the funds from the placement to be received in November or December.

Shares in KDL closed 25 per cent higher at 12.5 cents per share.

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