Miles Kennedy's Lucapa Diamond Company is seeking to raise $5.7 million to expand its exploration programme at its Lulo diamond concession in Angola.
The Perth-based explorer said it would launch a non-renounceable one for four entitlements issue for existing shareholders, priced at 0.9 cents per share.
Indian Ocean Capital is acting as lead manager to the entitlements issue.
Lucapa began a 12-18 month drilling programme in September, targeting 61 kimberlite targets across the Lulu project.
The company said drilling results, aeromagnetic surveys and geological reviews suggested the exploration be expanded.
At close of trade today, Lucapa shares fell 16.7 per cent, to finish at 1 cent.
Lucapa was formerly known as Lonhro Mining before changing its name last month.
The company made headlines in August when it unearthed a 131-carat, $3.5 million near-perfect diamond at the Lulo project.
Chief executive Miles Kennedy has a long history in the diamond sector, having floated and sold Kimberley Diamonds, as well as more than 25 years experience on various company boards, including Sandfire Resources, MOD Resources and Normandy Mining.