Lucara to Buy African Diamonds, Consolidate AK6 Ownership

 

(IDEX Online News) - African Diamonds (AFD) has agreed to Lucara Diamond Corp.’s offer to acquire all of the issued share capital of AFD is a share exchange agreement, AFD announced today (Monday).

The agreement gives AFD a value of C$82 million (US$80.8 million), a 27 percent premium to AFD’s closing price on October 1.  

According to the agreement, AFD shareholders will get 0.80 of a Lucara share and one share in Botswana Exploration plc for every share in AFD. The deal will give AFD shareholders 26.57 percent of Lucara which will hold 100 percent of the AK6 diamond mine in Botswana. 

Botswana Exploration will hold all of the interests of AFD apart from AK6. These includes $2.9 million in cash, exploration rights in Botswana at AK8, AK9 and BK5, advanced stage diamonds license applications in the Marange  area of Zimbabwe and license applications in Cameroon and indirect exposure to diamond plays in West Africa and the Democratic Republic of Congo (DRC).

Lucara's shares are listed on the TSX-V and the intent is to list in Botswana. The current market capitalization of Lucara is C$180 million. AFD is listed on AIM. Botswana Exploration will seek a double listing - on AIM and on the Botswana Stock Exchange at the conclusion of the deal. 

Lucara, in addition to a 60 percent of AK6, has a 75 percent interest in the Mothae diamond project in Lesotho. Mothae is a high diamond value, large stone kimberlite just 6.5 km from the Letseng diamond mine. 

After the board of AFD unanimously recommended the proposal, Chairman John Teeling said that the logic of this deal is compelling. “Marrying AFD and Lucara will create a C$240 million emerging diamond producer controlling 2 new kimberlite diamond mines. The new company, with strong financial backing, will be perfectly poised to exploit an expected gap in diamond supply.”