Newfield Resources Ltd (ASX:NWF) subsidiary Sierra Diamonds Limited (SDL) has signed a conditional and non-binding terms sheet with the Africa Finance Corporation (AFC) for a secured debt facility worth US$50 million.
This financing will be specifically designated for the ongoing development of the Tongo Diamond Mine in Sierra Leone, paving the way for its transition into commercial production.
It will enable a production ramp-up at Tongo to accelerate, along with construction of the designed 50 tonnes per hour processing plant and final recovery, and will help to advance the Tongo Dyke-1 kimberlite into development and production.
"Significant milestone"
NWF executive director Karl Smithson said: “We are delighted to have signed the terms sheet with the AFC, representing a significant milestone for the company.
"The due diligence progress preceding this terms sheet has been extensive and we are pleased with the progress made to date.
"Due diligence is ongoing, led by the AFC and its independent consulting groups concerning technical, financial, environmental and social aspects of the company and the Tongo Mine development.
“The Board of Directors are of the opinion that the terms sheet is a crucial step forward and provides a framework for the parties to align on the financing terms for the project."
Infrastructure for Africa
AFC is a well-established multilateral financial institution playing a pivotal role in driving private sector-led infrastructure investments across Africa. It has built its reputation on delivering high-quality infrastructure assets across the continent and promoting sustainable economic growth.
Its expertise spans the core infrastructure sectors of power, natural resources, heavy industry, transport and telecommunications, offering essential services to communities and industries alike.
With a membership of 40 countries, AFC has invested US$11.5 billion across the African continent since its establishment.
The collaboration between Sierra Diamonds Limited and AFC marks a significant step forward for Newfield Resources. The US$50 million secured debt facility will provide the necessary financial resources to advance the development of the Tongo Diamond Mine.
As the project progresses towards commercial production, the partnership aims to unlock the mine's immense potential and contribute to the economic growth and prosperity of the region.
Leveraging AFC's expertise and financial support, Sierra Diamonds Limited hopes to accelerate the development process, ensuring that the Tongo Diamond Mine reaches its operational goals efficiently.
Recent operations have focused on stope mining of the eastern segment of the Kundu ore reserve, with plans to establish development towards the west of Kundu underway.
Diamond market still buoyant
The company’s first diamond sales of 5,200 carats in the Antwerp diamond market in May 2022 achieved an average sales price of US$262 per carat, which exceeded the modelled reserve price of US$222 by more than 18%.
A second diamond sale of more than 7,000 carats is now planned for the middle of this month.
The company figures that, although market conditions have softened recently, the longer-term fundamentals support a robust market for rough diamonds, which is underpinned by decreasing global diamond production.