|
|
Stellar, Octea to Merge Sierra Leone Diamond Mines
Aug 22, 2016 3:20 AM
By Rapaport News
|
|
|
RAPAPORT... Stellar Diamonds and Octea Mining agreed to combine their
Sierra Leone projects to create the second largest diamond-mining operation in
West Africa.
Under the proposed deal, Stellar plans to amalgamate its
Tongo kimberlite project with Octea’s adjacent Tonguma asset.
Under the rules of London’s Alternative Investment Market
(AIM), the transaction would be classified as a reverse takeover and therefore require
shareholder approval. Trading in Stellar’s shares on AIM has been suspended
until an admission document outlining details of the deal is published.
The combined project would enable production of up to
250,000 carats per year of “high-value” diamonds, with mining grades of up to
290 carats per hundred tonnes of ore. The average value of rough will be $193
per carat for Tonguma and $270 per carat for Tongo, Stellar said.
“The high-grade and high-value nature of the kimberlites
compelling and the combination of operations should provide meaningful cost
synergies that will enhance Stellar’s projected operational margins,” said Karl
Smithson, Stellar’s chief executive officer. “Using the available
infrastructure at Tongo and Tonguma, we expect diamond mining operations to
commence within the first 12 months post completion of the proposed
transaction.”
The structure of the deal would see Stellar transfer shares
of its subsidiary Sierra Diamonds Ltd into a newly incorporated company which
will then acquire the shares of Octea Mining Ltd’s unit Tonguma Ltd. Stellar
would get all of the voting ‘A’ shares in the new company, while Octea would receive
all of the non-voting ‘B’ shares. Stellar will have full legal and management
control of the company and the mining operation, while Octea will receive
royalty payments of 5 percent to 10 percent of the combined revenues from Tonguma
and Tongo.
The announcement follows Stellar’s decision to reduce
its holdings in its Guinea and Liberia projects and increase focus on the
Tongo operations.
|
|
|
|
|
|
|
|
|
|
Tags:
aim, Alternative Investment Market, exploration, Karl Smithson, M&A, mergers and acquisitions, mining, Octea, Octea Mining, Rapaport News, Reverse takeover, Sierra Leone, stellar, Stellar Diamonds, tongo, Tonguma, West Africa
|
|
|
|
|
|
|
|
|
|
|