Lab-grown diamond producer completes funding deal
This financing was in addition to the $2.5 million in growth funding that Scio Diamond received from Heritage Gemstone Investors (HGI) in December 2014 to double production capacity and refinance debt.
The offering, a direct private placement of common shares to accredited investors, started in July 2014 and was fully subscribed in December 2014. These funds have supported ongoing business operations and product development since July 2014.
Five Scio Diamond board members – Karl Leaverton, Bruce Likly, Bern McPheely, Lewis Smoak and Ben Wolkowitz – participated in the offering, demonstrating confidence in the company's new management team. In 2014, Scio Diamond elected a new board of directors, hired a new executive team and developed a new business plan.
"These two funding sources will provide sufficient capital to support Scio Diamond through cash flow break even, which we expect in 2015," said Jonathan Pfohl, Scio Diamond CFO.
A portion of the funding from HGI was used to refinance a $1.5 million loan. Scio Diamond was able to significantly reduce its borrowing costs by obtaining a new interest rate of 7.25% to replace the original loan rate of 18%. The rest of the funds from HGI were earmarked to double production capacity by buying new production platforms in a larger size. The HGI-Scio Diamond relationship will include a second funding phase from HGI in 2015 to further increase the company's production capacity.
"Scio Diamond is now well positioned to meet growing market demand for lab-grown diamonds," explained Gerald McGuire, president and CEO, Scio Diamond. "Our investors and board members are confident in our ability to be a leading diamond supplier."
About Scio Diamond
Scio Diamond employs a patent-protected chemical vapor deposition (CVD) process to produce high-quality, single-crystal colorless, near colorless and fancy colored diamonds for the jewelry market in a controlled laboratory setting. Lab-grown diamonds are chemically, physically and optically identical to "earth-mined" diamonds. Scio's technology offers the flexibility to produce lab-grown diamonds in size, color and quality combinations that are rare in earth-mined diamonds. Scio also delivers diamond materials for advanced industrial, medical and semiconductor applications. www.sciodiamond.com
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This press release contains forward-looking statements that may involve known and unknown risks, uncertainties and other factors which may cause actual performance to be materially different from future performance expressed or implied by such statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words "may," "will," "should," "could," "would," "forecast," "potential," "continue," "expect," "anticipate," "estimate," "believe," "intend," "or "project" or the negative of these words or other variations or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections will come to pass. Actual results could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.
SOURCE Scio Diamond