PERTH (miningweekly.com) – ASX-listed Burgundy Diamond Mines has abandoned its plans to acquire the Ellendale and Blina diamond projects, in Western Australia, from fellow listed Gibb River Diamonds.
Burgundy in 2021 struck a two-year option agreement with Gibb River Diamonds to earn full ownership of the project for A$6.7-million in cash, 16-million Burgundy shares and a 1.5% gross revenue royalty to Gibb River.
However, the company on Monday said that it had elected not to exercise this option deed, and would now cease the development of the Ellendale project immediately.
Instead, Burgundy would focus on the completion of a $136-million deal to acquire the Ekati diamond mine, in Canada’s Northwest Territories.
The company earlier this month entered into an agreement with Artic Canadian Holdings to acquire all of the common shares of the company, as well as all of the common shares of Arctic Canadian Diamond Marketing, which is responsible for managing the supply chain, sorting, preparation, marketing and sales of the Ekati rough diamonds.
The $136-million consideration will comprise of $21-million shares in Burgundy, a deferred $15-million cash payment, which is due in December this year, and Burgundy repaying $100-million of outstanding debt.
Burgundy MD and CEO Kim Truter said the board had made the decision to abandon the development of the Ellendale project as it was in the best interests of shareholders in line with the strategic direction of the company.
Gibb River told its shareholders that the company was "very excited" about this outcome, and believed the Ellendale project had potential as a company-making standalone diamond development project.
In the meantime, Gibb River still retained nine-million shares in Burgundy.