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Diamcor Expands on Successful Project with Financing

Omri Wallach Omri Wallach, Stockhouse
0 Comments| July 18, 2019

Click to enlargeOnce the perennial market favorites, mining companies now face a lot of investor scrutiny on whether they can deliver on expectations. But even though the mining sector is still seen as gloomy by some investors, certain metals and mining companies have made some major gains so far this year.

Nowhere is this truer than in the diamond mining industry. Diamond mines in Canada may have faltered, but the industry as a whole is alive, healthy, and has insiders very optimistic. With renewed interest and potential in the sector, the time is ripe for companies like Diamcor Mining Inc. (V.DMI, DMIFF, Forum) to deliver.

Stockhouse readers are familiar with Diamcor’s strong track record, with previous coverage detailing strong sales results from the Krone-Endora Project as well as an in-depth look at the Company’s diamond mining operations.

The Company’s most recent fiscal quarter saw 6,259.97 carats delivered for tender from Krone-Endora. By June 4, 5363.75 carats had already been sold for gross revenues of USD $759,523.13.

Given Diamcor’s success with the Krone-Endora project, it’s not surprising that the Company is eager to double-down and expand its operations. On July 4, Diamcor announced that it intends to complete a round of financing through a term loan of up to CDN $1 million.

The financing is already half complete, with CDN $500,000 committed from one of Diamcor’s largest investors. Loans under the financing will be unsecured with a 7% annual interest rate payable at maturity, and the Company will issue 120,000 common shares and 60,000 share purchase warrants for every CDN $100,000 of principal advanced as part of the financing.

In the announcement, Diamcor details how the funding will further the Company’s continued growth at a fitting pace:

“The proceeds from the Initial Term Loan will be used forgeneral corporate purposes, the deployment of additional operational equipment to support increased processing volumes, the continued advancement of the work programmes currently underway at the Company's Krone-Endora at Venetia Project, and to provide the Company with additional working capital to offset the time frames associated with the tendering and sale of rough diamonds in Antwerp.”


(Image via Diamcor Mining. Click image to enlarge)

The Krone-Endora project already has a strong level of support. The Canadian subsidiary of diamond retailer Tiffany & Co (NYSE: TIF) invested USD $10 million for first right of refusal on the project’s production. With the initial NI 43-101 resource for Krone-Endora estimating 1.3 million carats of diamonds, and Diamcor’s average price per carat of USD $176.16, the project has a potential value exceeding USD $100 million.

To tap into that potential, President and CEO of Diamcor Mining, Dean Taylor, commented to Stockhouse Editorial on the how the financing is the best method forward for the Company.

“We are pleased with the progress underway on site, and our primary goal is to reach profitability in the very short-term. Given we think we can achieve that, we do not want to do equity, but also want to keep progressing with ramping up and work underway. The funding allows us to deploy additional equipment, continue ramping up, and not worry about time delays associated with Antwerp.”

The financing move looks like a reassuring sign to investors that Diamcor is committed to its goals, and far away from a cheap equity raise. With significant initial support in the financing coming from large shareholders, it’s clear the Company has no trouble securing funds and reinforces the position that by minimizing dilution, that funding will be best utilized.

More importantly, the Company seems to be on track for profitability very soon. The financing and increased activity at the Krone-Endora project is setting the stage for the end of summer to be the beginning of a new chapter for Diamcor.

FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.

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