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RAPAPORT... Stellar Diamonds entered into a bridging loan agreement for up to $2 million with YA Global Master SPV Ltd. The funding will be available for three years and provides for two initial loan tranches of principal amounts of $250,000 each. The net proceeds of the two tranches will be used to support Stellar's immediate working capital needs and operating expenses before the regular diamond exports and sales from the Baoulé project gets underway. In conjunction with the loan facility, Stellar entered into a $1.57 million (GBP 1 million) standby equity distribution facility with YA Global.
Stellar's CEO, Karl Smithson, explained that the junior miner is at an inflection point with the first sale of diamonds from Baoulé expected this month, followed by regular exports and sales expected to occur every two months thereafter. "This loan facility provides a source of bridge finance to support the working capital and operating requirements of the company while we begin to generate regular cash flow from Baoulé. There is no minimum draw down required under the terms of the standby equity agreement and the board does not currently anticipate that it will be necessary for the company to use that facility," he said.
An initial tranche of $250,000 is available to Stellar immediately, followed by a second round of $250,000 that is expected to be drawn down as necessary. Further tranches may be available if both parties mutually agree and those funds are subject to certain conditions. Each tranche is subject to an arrangement fee of 7 percent of such tranche and annual interest of 10 percent.
The first two tranches are expected to be repaid in cash, on a monthly basis over 10 months, with first payments commencing three months after the date of the first drawdown, according to Stellar.
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