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- Burgundy Diamond Mines (BDM) has launched a $49.7 million capital raise to accelerate its diamond strategy
- The funding package is made up of an unsecured convertible notes issue to raise $34.5 million and this is subject to shareholder approval
- The other $15.2 million is being raised through a placement which will issue 63.3 million shares at 24 cents, a 7.7 per cent discount to the last closing price
- Specifically, Burgundy is using the money to bring the Ellendale Diamond Project into production next year and advance its other diamond assets
- Company shares are trading steady at 28.5 cents at 2:00 pm AEST
Burgundy Diamond Mines (BDM) has launched a $49.7 million capital raise as part of its transformative diamond strategy.
The company inked the capital raise last week when it entered a trading halt on July 22.
The funding package is made up of an unsecured convertible notes issue to raise $34.5 million as well as a share placement to raise $15.2 million.
Convertible notes
Burgundy will issue 34.5 million convertible notes to sophisticated and high net worth investors. Each note has a face value of $1 with a three-year term and a 6 per cent coupon rate. The unsecured notes will convert at a 10 per cent premium to the price of the share placement at the election of the shareholders.
The company will seek shareholder approval at a general meeting in September this year.
Share placement
In conjunction, the company raised $15.2 million through a single tranche. Around 63.3 million shares will be issued at 24 cents per share. This marks a 7.7 per cent discount to the last closing price and a 7.9 per cent discount to the 30-day volume-weighted average price (VWAP).
The new shares are expected to settle on July 30 and will be issued on August 2.
Purpose of funding
Burgundy Diamond Mines will use the money to develop an international portfolio of high potential diamond projects. Specifically, it hopes to bring its Ellendale Diamond Project into production next year.
Located in Western Australia, Ellendale is a historical diamond project that’s known for producing ‘iconic’ yellow diamonds. Through an option agreement with Gibb River Diamonds (GIB), Burgundy can earn a 100 per cent interest in the Ellendale Diamond Project by making staged payments over two years.
Burgundy Diamond Mines will also use some of the money raised to progress its plans to expand its downstream business and generate cashflow from diamond cutting, polishing and selling fancy colour diamonds.
Managing Director and CEO, Peter Ravenscroft, commented on the acquisition: “We are now fully funded to successfully execute several key initiatives within our diamond strategy, predominantly advancing the Ellendale project towards production with lucrative downstream potential, finalising the first stage of the bulk sampling program at Naujaat, and continuing the promising exploration program in Botswana,” he said.
“This positions us well to achieve our goal to become the world’s leading midcap diamond company.”
Company shares were trading steady at 28.5 cents at 2:00 pm AEST.
