Ukrainian businessmen to raise stake in diamond miner Namakwa to 32.5%
KYIV. Nov 25 (Interfax) - Jarvirne Limited, a British Virgin Islands firm owned by Ukrainian businessman Eduard Prutnik, will increase its stake in diamond miner Namakwa Diamonds Limited from 13.42% to 32.5%.
Namakwa said in a statement that shareholders voted at an extraordinary general meeting on November 23 to approve an additional issue of 66,791,667 shares to Jarvirne as payment for a $16.03 million trade debt. The shares will be issued at a price of 15p per share, representing a 150% premium to the closing market price of the company's shares on November 22.
Namakwa in early September signed an agreement with Jarvirne for a two-year loan of $40 million to finance the Kao Project in Lesotho and operating expenses. The facility is secured by Namakwa's 62.5% stake in Storm Mountain Diamonds (Pty) Ltd, the operator of the project. With the capitalization of the loan, shares are being issued to the creditor.
Namakwa said it has so far drawn $23 million of the loan from Jarvirne. The company expects to draw another $2 million in early December and receive the remaining $15 million by the middle of 2012.
The financing has made it possible carry out planned work at the Kao deposit. The processing plant at the Kao Project, with capacity of 500 tonnes per hour, processed its first kimberlite and recovered its first concentrate this week, the company said.
The project is expected to reach design capacity in the first quarter of 2012, after which it is expected to produce an estimated 200,000 carats in the 2012 financial year from 2.5 million tonnes of kimberlite or processed.
Namakwa said earlier that Jarvirne has been a shareholder, and financial and trade partner since the beginning of 2010. The company has said that Prutnik has business interests in agriculture, real estate, mineral mining and processing, the recreation industry and other sectors.
Prutnik was a deputy in the Donetsk regional legislature for eight years, ran twice for a seat in Ukraine's Upper Rada as a candidate for the Party of Regions, and in 2006-2008 he chaired Ukraine's State Committee for Television and Radio Broadcasting.
Namakwa Diamonds, which mines diamonds in Africa, reported revenue up 13.9% to $93.3 million in the financial year ended August 31, 2011; EBITDA after write-down of assets was negative at $32.5 million, up 51.2%; and net losses rose 150% to $76.7 million. The company mined 38,090 carats of diamonds in South Africa, and 76,900 carats in Congo, compared to respectively 38,480 carats and 40,100 carats a year earlier. The operation in Congo, which was unprofitable, was sold this fall for $6.25 million, and the loss-making operation in South Africa is to be wound down to 20,000 carats in 2012.
Namakwa, which raised $183.7 million with an IPO in December 2007, is traded on the London Stock Exchange.