Gem Diamonds in talks with Lucara

Finance

Publishing Date: 21 Mar 2011 10:07am GMT
Author: Mining Journal

Gem Diamonds Ltd says it is in very early stage discussions with Lucara Diamond Corp over a merger.

A statement read: “The company confirms that as part of its ongoing review of potential value enhancing opportunities, it is in preliminary discussions with Lucara regarding a possible merger.”

In its recent financial results Gem said it continues to monitor opportunities outside of its current asset portfolio.

Lucara has a market capitalisation of approximately US$400 meaning the new company could carry a value of over US$1 billion.

Gem said the transaction would currently be deemed a reverse takeover by Lucara because of its higher published reserves. Gem says it expects to publish an updated an updated statement of reserves and resources to include its Botswana project Gope by the time of the release of an interim management statement in April.

Lucara owns the Mothae trial mining operation in Lesotho and plans this year to bring the AK6 kimberlite mine in Botswana into production. Gem owns the Letšeng mine in Lesotho, Ellendale in Australia and plans to build an underground mine at Gope.