Af Diamonds agree to takeover offer

Staff Writer | Tuesday October 5, 2010 00:00

According to a statement released by the company yesterday, African Diamonds, which jointly owns the AK6 project in the Boteti region with Lucara, recommended the takeover offer.

At the conclusion of the deal, current African diamonds shareholders would receive 0,80 of a Lucara share plus one share in a new company called Botswana Exploration, for every one share in African Diamonds.

After the transaction, African Diamonds, which is also listed on AIM,  would hold 26,57 percent of Lucara, which would own 100 percent of AK6 and a 75 percent stake in the Mothae diamond mine in Lesotho.

Botswana Exploration will seek listings on AIM and the BSE and replace Af Diamonds on both bourses.African Diamonds chairperson John Teeling said that marrying the two companies would create a C$240-million emerging diamond producer with strong financial backing, which would be poised to exploit an expected gap in diamond supply.

'African Diamonds shareholders win in three ways if the transaction is successful. They will hold an indirect stake in AK6 - the 26,57 percent holding in Lucara is close to the stake in AK6 held prior to the De Beers takeout, they get 26,57 percent of the Lucara interest in the high diamond value Mothae mine in Lesotho and they will get 100 percent of Botswana Exploration,' Teeling explained.

Teeling noted that African Diamonds was established in 2001 as an early-stage diamond prospector and that Botswana Exploration would assist the company in relaunching its exploration vehicle.

It is envisaged that Botswana Exploration would hold all the interests of African Diamonds apart from AK6. These interests include cash, currently at $2,9-million, exploration ground in Botswana, including AK8, AK9 and BK5, advanced-stage diamond licence applications in the Marange area of Zimbabwe and licence applications in Cameroon and indirect exposure to diamond plays in West Africa and the Democratic Republic of Congo (DRC).

The board of African Diamonds unanimously recommend the proposal and each director had entered into irrevocable arrangements to vote their shares in favour of the proposal.

'The logic of this deal is compelling. The new company, with strong financial backing, will be perfectly poised to exploit an expected gap in diamond supply.'