Lucara bids for African Diamonds

Finance

Publishing Date: 04 Oct 2010 11:42am GMT
Author: Mining Journal

Lucara Diamond Corp has made a C$82 million (US$80 million) offer for African Diamonds plc (AFD) which would give it the remaining share of the AK6 kimberlite project in Botswana.

Lucara has offered 0.80 of a share for each AFD share plus 1 share in Botswana Exploration plc, which will house African Diamonds’ other exploration assets.

Post the transaction, African Diamonds shareholders will own 26.57% of Lucara, which also owns Mothae diamond asset in Lesotho.

The African Diamonds board has recommended the transaction to shareholders.

Lucara shares closed at C$0.90 on Friday, valuing the share swap offer at approximately £0.445 per African Diamonds share. The exploration business includes cash (currently at US$2.9 million), exploration ground in Botswana (including AK8, AK9 and BK5), diamonds licence applications in the Marange area of Zimbabwe, licence applications in Cameroon, and indirect exposure to diamond plays in West Africa and the DRC.

Lucara and African Diamonds own 60% and 40% of AK6, respectively. Lucara is backed by the Lundin Group.

The latest open-pit mine plan, released in late-June, estimated a capital investment US$120 million for the first phase of the mine for a 2.5Mt/y plant to process ore at an average grade of 16ct/100t at a cost of US$17.20/t treated.