JOHANNESBURG (miningweekly.com) - Aim-listed Stellar Diamonds is in advanced negotiations regarding a possible share offer for the entire issued and to-be-issued share capital of the company by Australian exploration company Newfield Resources (NWF).
Under the terms of the offer, Stellar's shareholders and the holders of rights over Stellar ordinary shares will receive in aggregate 95.5-million shares in NWF, which will equate to about 16.4% of the enlarged share capital of NWF.
Based on the closing share price of A$0.29 per NWF share on January 31, the terms of the possible offer imply a value of 12.7p per Stellar share, representing a premium of 452% to the closing price of Stellar's shares of 2.3p on January 31.
The making of any offer would be conditional, unless otherwise waived by NWF, on NWF securing underwriting for a A$30-million nonrenounceable rights issue, the proceeds of which will mainly be used to advance the Tongo-Tonguma project, in Sierra Leone, into production.
Further, the completion of any offer will be subject to the receipt of any necessary shareholder approvals from NWF in addition to being subject to approval from Stellar's shareholders and admission of the consideration shares to trading on the ASX.
The offer aims to merge the business interests of NWF and Stellar in Sierra Leone and bring the necessary funding to advance the high-grade and high-value Tongo-Tonguma project, which Stellar holds through its own licences and the tribute mining and revenue share agreements with Octea Mining.
"A combination of the two companies would create an enlarged and well-funded diamond development company focussed on Sierra Leone which can generate significant long-term value to the shareholders of both companies through bringing into commercial production the 4.5-million-carat Tongo-Tonguma project," said Stellar.