Diamond firm near €16m merger

WEST African Diamonds (WAD) – the John Teeling-chaired mining company – is close to finalising a merger deal, which would grow its market value from £3m (€3.3m) to £15m (€16.3m) and increase its annual production rate by 400%.

The deal – understood to be with an unnamed privately-owned diamond company based in western Africa – virtually amounts to a majority takeover of the company. WAD’s existing management will retain 25% of the enlarged company, but would remain as managers of the on-the-ground production, while the new investors would take over the corporate management of the enlarged entity.

Last week, WAD – which has its shares listed on London’s AIM market – reported a slight widening of its full year losses – for the 12 months to the end of April – £246,465 compared to £220,066 from the previous year. Then, Mr Teeling said that the company would grow through mergers and acquisitions, while continuing to develop its own reserves. He added that earlier discussions, with a number of companies, had come to nothing.

However, a new deal is believed to be about 85% close to completion. WAD ultimately wants to increase its market capitalisation to nearer £50m to attract more institutional investors and will look to continue to expand its assets in the region around Guinea and Sierra Leone, through acquisition.

WAD has also recently expanded capacity at its Bomboko diamond mine in Guinea. It is understood that WAD’s prospective new partner operates a diamond mine four times the size of the Bomboko asset.

Meanwhile, WAD’s sister company, African Diamonds (from which WAD spun off two years ago) is also close to completing a significant deal. In conjunction with a strategic partner it is looking to buy out the 70% of the AK6 diamond mine in Botswana owned by South African company, DeBeers.

The Dublin-headquartered company is keen to significantly expand its near 30% stake in the mine, gain greater control of its diamond capacity and product marketing and have a more hands-on role in the development of the mine. The company hopes to bring the AK6 diamond mine on stream by 2011.

The talks between African Diamonds and a new strategic partner are ongoing, but are understood to be at an advanced level and could be completed within the next week.

© Irish Examiner Ltd. All rights reserved

Irish Examiner live news app for smartphones lets you quickly access breaking news, sport, business, entertainment and weather. appstoregoogle play
Irish Examiner ePaper app gives you the entire newspaper delivered to your phone or tablet for as little as 55c a day. epaper
Home

More From The Irish Examiner