LONDON (Alliance News) - Richland Resources Ltd shares rose on Tuesday after two of its directors and one of its significant shareholders agreed to supply an unsecured loan facility to the company worth USD500,000 to keep the company ticking over.
Richland shares were up 31% to 1.64 pence per share on Tuesday.
The miner of the Capricorn Sapphire mine in Australia said the facility will provide working capital and financial flexibility whilst the company's sales channels are built and expanded further, adding the funds also will ensure the company gets the "best possible prices" for its gemstone production.
"We believe that this facility is the most attractive financial solution to bridge the potential funding gap while we further develop our sapphire sales and marketing channels," said Chief Executive Bernard Olivier.
Richland began producing in the second half of 2015 and is still ramping up operations. The miner updated the mineral resource at the Capricorn Sapphire mine earlier this month, adding 8.0 million carats to the overall resource.
The 12-month facility will carry an interest rate of 10% per annum, payable quarterly in arrears. Early repayment of the facility is possible, as long as the lenders receive a minimum interest payment of 7.5%, the company said.
Non-Executive Chairman Edward Nealon and Non-Executive Nicholas Sibley are providing the bulk of the loan by contributing USD300,000, each contributing USD150,000 each. The other USD200,000 is being supplied by long-term shareholder Ashwath Mehra, the second largest shareholder in Richland with a 5.1% stake.
"The board believes that the loan facility represents the most attractive funding option at this time and avoids equity dilution for the company's shareholders," said Richland.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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