The diamond miner Diamcor Mining has announced a term-loan financing to accelerate growth in diamond processing at its primary project, the Krone-Endora mine in South Africa. The company believes the short-term issues that depressed demand and prices throughout the rough diamond sector in 2024 are showing signs of improvement, and thus expects the market to rebound in 2025.
Details
Diamcor Mining expects demand for rough diamonds to recover in 2025 as market players have reduced excess inventories, tougher sanctions are being imposed on Russian diamonds, and the largest luxury retailers are launching advertising campaigns to inform consumers about the differences between lab-grown and rare natural diamonds. Additionally, global diamond production is expected to decline due to the depletion of existing mines and a lack of major new finds. These factors present an opportunity for companies that can supply natural conflict-free diamonds, Diamcor Mining noted in the press release announcing the financing.
To take advantage of this opportunity, the company plans to boost diamond processing at its primary project, the Krone-Endora mine in South Africa. It intends to raise a term loan of up to CAD1.5 million (about $1.08 million) at a 15% annual interest rate to fund its operations. In addition, Diamcor plans to issue 150,000 common shares and 75,000 warrants for every CAD100,000 of debt to lenders, potentially totaling 2.25 million shares and 1.1 million warrants. According to the rules of Toronto’s TSX Venture Exchange, where Diamcor Mining is listed, issuers can offer such incentives if their ability to repay is not evident.
About Diamcor Mining
Diamcor mines and supplies rough diamonds to industry players and luxury retailers. Among its clients is the Canadian subsidiary of Tiffany & Co (owned by LVMH). Under the contract, Tiffany & Co may purchase 100% of the rough diamonds from the Krone-Endora mine. In return, Tiffany has provided Diamcor with funding to advance the project as quickly as possible, the diamond miner stated.
This summer, Diamcor completed a private placement of CAD2.5 million (about $1.8 million). It planned to use the proceeds for development of Krone-Endora and thus avoid tapping a convertible loan of up to CAD2.0 million (around $1.44 million).
Context
Krone-Endora is adjacent to the Venetia mine, owned by the diamond giant De Beers. In May 2024, its parent, the British mining conglomerate Anglo American, announced it was considering selling De Beers. Despite its status as a trophy asset, De Beers looked increasingly out of place within Anglo’s portfolio, Bloomberg pointed out, adding that the diamond market has been increasingly volatile in recent years with changing consumer habits leading to rising advertising costs, for example. Today, synthetic diamonds are cheaper to produce than natural ones, according to Koen Vandenbempt, chair of the High Diamond Council. They are particularly popular in the U.S., the world’s largest diamond market. Meanwhile, the economy of China, the second-largest market, has been struggling of late, and people there are spending less money on luxury items.
