Proposed Acquisition of Stellar Diamonds


 

TIDMWAD 
 
RNS Number : 1694G 
West African Diamonds PLC 
27 January 2010 
 
 
 
 
 
27th January 2010 
West African Diamonds plc 
("WAD" or the "Company") 
 
 
 
 
Proposed Acquisition of Stellar Diamonds Limited 
Placing to raise GBP5.0 million 
Posting of Admission Document 
Notice of General Meeting 
 
 
Further to the announcement made on 26 October 2009, the Directors of WAD 
announce that an AIM Admission Document in relation to the proposed acquisition 
of Stellar Diamonds Limited ("Stellar") (the "Acquisition") is being posted to 
shareholders today. It is expected that WAD shares will be restored to trading 
from 7.00am today. 
 
 
The Acquisition will constitute a reverse takeover of the Company under the AIM 
Rules and requires the prior approval of the Company's existing shareholders. If 
the resolutions are passed, it is expected that readmission of the Company (as 
enlarged by the Acquisition) to AIM will take place and that trading in its 
shares will commence on 22 February 2010. 
 
 
RBC Capital Markets and Astaire Securities have completed a successful placing 
for the Company to raise gross proceeds of GBP5.0 million (the "Placing"), 
conditional on completion of the Acquisition and the readmission. The Placing 
was led by RBC Capital Markets and included Astaire Securities as joint Broker. 
The Company has appointed RBC Capital Markets as its Nominated Adviser and Joint 
Broker with effect from today and Astaire Securities shall continue to act as 
Joint Broker. 
 
 
The Placing will comprise an offer of new ordinary shares of 5p each ("the 
Placing Shares") to institutional and other investors. A total of 25,000,000 
Placing Shares will be issued at 20p per share (taking into account a proposed 5 
for 1 consolidation of the existing ordinary share capital). 
 
 
A circular and notice convening a general meeting of the Company to be held at 
midday on 19 February 2010 at 71 Queen Victoria Street, London EC4V 4DE is 
included in the Admission Document. 
 
 
Rationale for the Acquisition 
 
- Corporate and Operational Synergies: The Company will have a number of 
opportunities to harness corporate and operational synergies, thus allowing the 
operational cost base per carat to be reduced. 
- Accelerated Growth Strategy: Revenue streams from two producing alluvial mines 
will reduce financial risk, increase cashflow and will enhance growth 
possibilities. 
- Strong Project Pipeline: The Company will have four high grade kimberlite 
projects at various stages of development. 
- Strong Management Team: the Proposed Board has significant experience in the 
West African mining industry and a proven track record of developing mines. 
 
 
 
Use of Proceeds 
 
 
The proceeds from the Placing will be utilised to capitalise existing producing 
mines, accelerate its production ramp up, and advance key kimberlite development 
and exploration projects. 
 
 
Principal terms of the Acquisition 
 
 
Under the terms of the Acquisition Agreement, the Company has agreed to acquire 
the entire issued and to be issued share capital of Stellar for a consideration 
equating to approximately three times the value of WAD, represented by an 
approximate 75:25 split of the share capital in the enlarged group prior to the 
issue of Placing Shares - 75 per cent. being attributable to consideration 
shares to be allotted to Stellar shareholders and 25 per cent. being 
attributable to ordinary shares currently held by WAD shareholders. 
 
 
Prior to the Placing but assuming the share consolidation has taken place, a 
total of 53,598,496 consideration shares will be issued and allotted to the 
shareholders of Stellar on the basis of 1.005 new ordinary shares in the Company 
for each Stellar share. 
 
 
Based on the number of Existing Ordinary Shares in issue as at the date of this 
announcement (being 89,947,519) and the mid-market price of 3.875p per Existing 
Ordinary Share on 26 October 2009 (the date that trading on AIM in such shares 
was suspended), the total consideration for the Acquisition is therefore 
approximately GBP10.4 million of consideration shares. 
 
 
Completion of the Acquisition Agreement is conditional, inter alia, upon 
approval of the Acquisition and certain other matters by WAD shareholders and 
the Placing Agreement becoming unconditional (save as for admission). 
 
 
 
 
John Teeling, Chairman, commented: 
 
 
"This is a good deal for WAD shareholders and the board is pleased to support 
it. The enlarged group will be on a stronger financial footing due the placing 
and the cashflow from two producing mines. The West African diamond mining 
industry is underdeveloped and fragmented. Stellar Diamonds will be well 
positioned to exploit opportunities in the area". 
 
 
 
 
Karl Smithson, Proposed CEO of the enlarged group, commented: 
 
 
"We are extremely pleased to have progressed with the Acquisition and Placing 
and look forward to working together with the WAD team to create value for all 
shareholders." 
 
 
 
 
Copies of the Admission Document are available on the Company's website 
(www.westafdiamonds.com) or from RBC Capital Markets, 71 Queen Victoria Street, 
London EC4V 4DE. 
 
 
Enquiries: 
 
 
West African Diamonds plc 
James Campbell                                                Tel: +27 83 457 
3724 
 
 
Stellar Diamonds Limited 
Karl Smithson Tel: + 44 (0)20 7299 4212 
 
 
RBC Capital Markets 
Martin Eales / Daniel Conti                                  Tel: +44 (0) 20 
7653 4000 
 
 
Astaire Securities 
Jerry Keen / Charles Vaughan                              Tel: +44 (0) 20 7448 
4400 
 
 
Pelham Bell Pottinger 
Charles Vivian / James MacFarlane                          Tel: +44 (0) 20 7337 
1500 
 
 
College Hill 
Nick Elwes    Tel: +44 (0) 20 7457 2020 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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