Scio Diamond Technology Corporation, manufacturers of lab-grown diamonds,  announced yesterday that it has entered into an agreement with Heritage Gemstone Investors (HGI) for funding of $2.5 million. This will enable Scio to double its production of lab-grown diamonds, and also to refinance debt.

Apart from this initial amount, the two companies also worked out terms for a second phase of funding from HGI in 2015 to further increase Scio’s production capacity “by up to 10 times”.

Bruce Likly and Lewis Smoak, Scio Diamond board members, have also increased their equity investment in the company. This follows investments the two individuals made in the company in October. Another board member, Karl Leaverton, also invested in the company in December.

The company said in a press note that “The funding from HGI will be used to refinance a $1.5 million loan from Platinum Capital Partners at more favourable terms, reducing Scio Diamond’s borrowing costs by more than 10 per cent. The doubling of capacity will come from the purchase of additional production platforms in a larger size.”

“Scio Diamond has been a pioneer in developing the technology behind the success in lab-grown diamonds,” noted Vivian Wong from HGI. “We believe the company is well-positioned to be a major factor in expanding the market for lab-grown diamonds.”

“Our growth strategy is designed to take advantage of both near-term and future market opportunities that we believe will make Scio Diamond the leader in lab-grown diamonds,” said Gerald McGuire, President and CEO, Scio Diamond. “Our investors and board members believe strongly that lab-grown diamonds are a promising growth market. These investments illustrate the high level of confidence that they have in Scio’s management team and business plan.”

In its fiscal year ending March 31, 2014, the company increased net revenue by more than $500,000 over 2013. The company reduced operating expenses from $8.1 million to $5.6 million from 2013 to 2014, the company declared.

In 2014, SCIO also developed a new business plan, by adding “fancy” coloured diamonds to its product lineup, along with colourless stones for jewellers and cutting devices and electronics for manufacturers.

Citing Frost & Sullivan’s 2014 market assessment of grown diamonds, Scio said that lab-grown diamonds, are a growing portion of the world diamond market (estimated at US$ 72 billion by the World Diamond Council) and expected to increase by 50% per year CAGR through 2018.