PDF Pangea Diamond

 

TIDMPDF 
 
RNS Number : 9807G 
Pangea DiamondFields PLC 
11 February 2010 
 

 
 
 
 
 
 
                            Pangea DiamondFields plc 
                          ('Pangea' or the 'Company') 
 
                                  Loan Facility 
 
Pangea DiamondFields plc (AIM:PDF), the diamond producer and exploration company 
announces that a wholly owned subsidiary of the Company has entered into a 
US$2.8 million convertible loan facility (the 'Loan'), to be provided by Pangea 
Exploration (Proprietary) Limited ('Panex'). 
 
Background to the Loan 
 
On 23 December 2009, the Company announced that it had commissioned the upgraded 
processing facilities at its Cassanguidi project in Angola, but that production 
in December had been negatively impacted by logistical challenges and breakdowns 
with the project's mining fleet. These interruptions were reported as likely to 
hamper throughput to the plant and production in January 2010. 
 
The Cassanguidi upgrade was achieved by purchasing equipment from dormant third 
party projects within Angola at prices well below market values. A result of the 
extended dormancy of this equipment is that a number of breakdowns are 
occurring. These breakdowns combined with long lead times in obtaining spare 
parts are constraining the productivity of the project. As a result management 
has taken the decision to increase the capacity of the mining fleet in order to 
reach the targeted plant throughput of 30,000m3 of in situ gravels per month. 
 
To achieve this an additional new excavator has already been purchased, to be on 
site by mid February 2010, and dump trucks and a front end loader are being 
redeployed from the Company's Bakerville project in South Africa. In addition a 
larger inventory of fast moving spares is being built up on site. The enhanced 
mining fleet is expected to be fully operational by the end of March 2010 at 
which point the ramp up to targeted production levels will commence.  By June 
2010 management plan to reach the previously announced steady state production 
target of 6,000 carats per month. 
 
Following the successful completion of pilot mining at Bakerville, mining 
activities are currently suspended pending the transition to a full scale 
commercial operation on receipt of a Mining Right which is targeted for August 
2010. The Company is currently well ahead of the required submission dates in 
relation to this application. The transfer of equipment from Bakerville will not 
hinder the development of that project in the interim. 
 
As a result of the reduced production levels the Company requires additional 
cash to fund operational expenses in addition to the capital expenditure 
associated with the enhancement of the Cassanguidi mining fleet. To satisfy 
these requirements, Panex has made a facility of US$2.8 million available to the 
Company.   The Company has diamond inventory of 2,800 carats that will be sold 
in mid February 2010 and further sales of diamond production are planned. 
Together with these diamond sales, the Loan will fund the ramp up of production 
at Cassanguidi and pay other operating expenses for a period of around three 
months. A production rate of approximately 4,500 carats per month is planned to 
occur at Cassanguidi in April 2010 and management expects the Company to become 
self financing at this level of production. Thereafter, a ramp up to the 
projected steady state production of 6,000 carats per month targeted for June 
2010 will start generating positive cash flows to the group for general working 
capital requirements and loan repayments. 
 
Summary Terms of the Loan 
 
The Loan is to be advanced and repaid in South African Rand. The Loan will incur 
interest at South African Bank Prime rate (currently 10.5%) and is repayable by 
30 November 2011. 
 
Panex will have the option to convert the Loan at any time into new ordinary 
shares in the Company ('Shares') at a price of 1.5p per Share against the drawn 
down amount. 
 
Related Party Transaction 
 
Panex is a mineral exploration company in which a trust associated with Rob 
Still, the Company's Deputy Chairman, is a substantial shareholder. Pursuant to 
Rule 13 of the AIM Rules for Companies, the provision of the Loan therefore 
constitutes a related party transaction. The Board of Pangea (excluding Rob 
Still), having consulted with Ambrian Partners Limited, the Company's Nominated 
Adviser, considers that the terms of the Loan are fair and reasonable insofar as 
its shareholders are concerned. 
 
Chief Executive Boris Kamstra said "With the processing plants able to treat 
30,000m3 per month, we needed to augment the mining fleet to have sufficient 
capacity to deal with inevitable breakdowns. The new excavator and additional 
front end loader and trucks will add a significant buffer to the current fleet 
which puts us in a position to attain our targeted production." 
 
Further information: 
 
+----------------------+------------------------+-----------------------+ 
| Pangea DiamondFields | Ambrian Partners       | Walbrook PR Ltd       | 
| plc                  | Limited                |                       | 
|                      |                        |                       | 
+----------------------+------------------------+-----------------------+ 
| Boris Kamstra        | Richard Brown /        | Louise Goodeve / Leah | 
|                      | Richard Greenfield     | Kramer                | 
+----------------------+------------------------+-----------------------+ 
| T: +27 11 438 4100   | T: +44 (0) 20 7634     | T: +44 (0) 20 7933    | 
|                      | 4700                   | 8780                  | 
|                      |                        |                       | 
+----------------------+------------------------+-----------------------+ 
Notes to Editors: 
 
About Pangea Diamondfields PLC 
 
Pangea DiamondFields plc (AIM: PDF) is an emerging diamond producer and 
exploration company with a portfolio of eight projects each with multiple 
resource targets, located in the Central African Republic, Democratic Republic 
of the Congo, South Africa and Angola. The Company aims to minimise risk by 
diversifying its projects geographically. 
 
PDF listed on AIM in October 2006 and is led by a strong management team, with a 
track record for creating shareholder value in mineral exploration. 
 
 For more information on PDF, please visit: 
http://www.pangeadiamondfields.com/ 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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