LONDON (Alliance News) - Mining company BlueRock Diamonds PLC on Friday released further details of the loan which forms part of a negotiation between BlueRock and its former chief executive.
Heads of terms were agreed last Friday for the loan, which will be used as security on claims made by ex-chief Riaan Visser.
BlueRock's current Chief Executive Adam Waugh has contributed GBP181,400 to the security while Chairman Paul Beck added a further GBP50,000 for a total GBP231,400 loan. Under AIM rules, this is considered a related party transaction.
The loan has a three-year term, although it can be pre-paid in full or in part at any time. It has a 5% arrangement fee and carries an 11% interest rate per year. Of this interest, 6% must be paid in cash while the remaining 5% may be paid through a combination of cash and shares.
In addition, the loan has a 2% per month repayment premium which much be paid half in cash and half in shares.
"In the event that the company raises further funds, preference is given to repaying the loan. It will be the board's intention to repay the loan as soon as practicable," BlueRock said in a statement.
Visser intended to apply to liquidate Kareevlei Mining Ltd, BlueRock's main operating subsidiary, but agreed to halt liquidation proceedings in exchange for the creation of the security.
Visser claims to be owed ZAR3.8 million, or around GBP215,084, relating to advances and a further ZAR987,525 for the use of a generator. He must initiate recovery proceedings against BlueRock to be eligible for any amount of the security.
Last week, BlueRock said that Visser's claims remain disputed and that recovery proceedings, if made, were likely to last around 18 months.
Shares in BlueRock Diamonds were down 4.1% at 0.98 pence on Friday.