Del Gatto financing Sierra Leone diamond mine

Rob Bates

The Del Gatto Diamond Finance Fund recently signed an agreement to supply working capital for the Tongo diamond mine in Sierra Leone.

Instead of the mine giving the tender house the goods, we are able to do what a bank would never do: We value the diamonds when we get them out of the ground,” says the fund’s CEO and founder Chris Del Gatto. “That gives the mine built-in financing and built-in cash flow. They can get their money in seven to 10 days instead of two months. They can continue to operate without their business being disrupted in any way.”

Afterward, we memo the tender house, and they pay us,” he says.

Tongo, comprising two adjacent mining licenses covering a combined area of 134 square kilometers in eastern Sierra Leone, is currently owned by Newfield Resources Limited, a company listed on the Australian Stock Exchange.

Prior to being purchased by Newfield, it was owned by Koidu Holdings, the controversial company owned by Beny Steinmetz.

Del Gatto says that even some diamond mines are struggling with the same financing issues as the rest of the industry.

Banks still don’t want to give credit to the diamond industry,” Del Gatto says. “Even some smaller and decent-sized mines can’t get bank financing. The industry is not big enough for the reputational risk. Because the product is portable and high value, it will always be considered a high-risk industry.”

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Source JCK Online