The company was forced to halt its marine diamond production off the coast of Namibia in late February after placing subsidiaries into voluntary liquidation. The company had run out of cash to pay off some of its creditors, who were demanding repayment, as a result of an earlier accident with its NamSSol mining system.
The financing saw 9.5 million units and US$6.3-million worth of 2-year notes issued to investors outside of Canada. The units are priced at US33 each and can be exchanged for shares at no additional cost, whereas the notes, which carry interest of 10%, can be exchanged for debentures; the debentures, in turn, can be converted into shares at US33 apiece.
Namibian has until late June to file a prospectus that would qualify the shares and convertible debentures for trading. Failing that (and subject to the approval of shareholders), the company must issue another 2.9 million shares as compensation.
Also, each unit and note come attached with a half-warrant. A full warrant can be exercised at US40 within three years, pending shareholder approval.
While the debt securities are outstanding, the holders can appoint two members to Namibian’s board.
Canaccord Capital received 850,000 shares for underwriting the deal.
Meanwhile, the Leviev Group of Israel has agreed to subscribe for 22.7 million shares at US$33 per share and another 15 million shares at US50 apiece to become Namibian’s largest shareholder. The group, which is the world’s largest diamond manufacturer, would also receive 9.4 million warrants, which can be exercised at US40 or US50 each. This translates into total proceeds of US$8.3 million for Namibian.
The deal, which is subject to various approvals, also grants Leviev a 15-year exclusive marketing agreement for Namibian’s production. The diamonds would be bought at market prices. Leviev has a similar arrangement with the Angolan goverment to market its production.
Namibian notes that the two financings are sufficient to cancel the provisional liquidation agreements and allow mining and exploration activities to resume. They would also allow for repairs to the NamSSol mining system to resume.
Namibian’s bankers have granted a debt-repayment moratorium until October and allowed the company to sell the Ivan Prinsep airlift mining vessel for US$4.4 million. Proceeds went to debt reduction.
Similarly, a group of South African creditors has waived repayment rights for 12 months. The group is owed US$6 million.
Meanwhile, partners
According to the joint-venture agreement, Trans Hex must provide two conventional airlift vessels in return for a share of the production proceeds. The second ship is expected to set sail no later than mid-November.
Trans Hex, which has been mining alluvial diamonds for more than two decades, will manage the project. Marketing is left to Diamond Fields, though Trans Hex maintains an advisory role.
Resources at mining licence 111 are pegged at 6.1 million cubic metres containing 1.1 million carats (including 81% defined as probable reserves). A cutoff grade of 0.15 carat per sq. metre was used.
Production in the first year is expected to exceed 65,000 carats.
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