West African Diamonds announced this morning that an AIM Admission Document in relation to its proposed acquisition of Stellar Diamonds Limited from African Aura Mining has been posted to shareholders.
The Acquisition will constitute a reverse takeover of the Company under the AIM Rules and requires the prior approval of the Company's existing shareholders. If the resolutions are passed at the forthcoming AGM, it is expected that readmission of the Company to AIM will take place and that trading in its shares will commence on 22 February 2010.
According to the Company, the new company will have two producing alluvial diamond mines in Guinea (Bomboko and Mandala), an advanced stage diamondiferous kimberlite exploration project at Droujba in Guinea, a joint venture with Petra Diamonds on the Koidu dykes in Sierra Leone, a joint venture with Thunderball on the Pipe 3 kimberlite pipe and adjacent dykes in Koidu and a diamond ground on the Tongo dykes in Sierra Leone.
West African Diamonds recently completed a successful placing of GBP5.0 million, conditional on completion of the acquisition and the readmission. The Placing comprises an offer of new ordinary shares of 5p each to institutional and other investors, with a total of 25,000,000 shares being issued at 20p per share. The proceeds from the Placing will be utilised to capitalise existing producing mines, accelerate its production ramp up, and advance key kimberlite development and exploration projects.
The Company has agreed to acquire Stellar for a consideration equating to approximately three times the value of WAD, represented by a 75:25 split of the share capital prior to the issue of placing shares (75% for Stellar shareholders and 25% for WAD shareholders). The total consideration is approximately GBP10.4 million in shares. Prior to the transaction, African Aura held a 58.5% interest in Stellar Diamonds Limited. Following the deal, African Aura will have a 31.8% interest in the enlarged group.
John Teeling, Chairman, commented:
"This is a good deal for WAD shareholders and the board is pleased to support it. The enlarged group will be on a stronger financial footing due the placing and the cashflow from two producing mines. The West African diamond mining industry is underdeveloped and fragmented. Stellar Diamonds will be well positioned to exploit opportunities in the area".
The AGM will be held at midday on 19 February 2010 at 71 Queen Victoria Street, London EC4V 4DE.
