African Diamonds confirms unsolicited takeover approach

This morning, after shares surged over 20% yesterday, African Diamonds (LON:AFD) confirmed that it has received an unsolicited takeover proposal from an unnamed bidder. However the offer, at an undisclosed price, fell short of the board’s valuation.

In the statement, the company said: “The board of African Diamonds does not consider the proposal as currently constituted to be one it would recommend to shareholders”.

Furthermore, African Diamonds caution that “there can be no certainty that an offer will be made for African Diamonds”
The company also noted that, as it is controlled and centrally managed outside the UK, it is not subject the City Code on Takeovers and Mergers.

In reference to its project development, the company said that it “continues to progress financing options regarding the development of AK6” and it is discussing additional financial facilities with a potential investor.

The Ak6 diamond deposit in Botswana, where mine commissioning is scheduled for this year, is African Diamonds principle asset.

An updated feasibility study, reported in June, study considered processing at an initial throughput rate of 2.5Mtpa (million tonnes per annum), increasing to 4Mtpa within 4 years. AK6’s 324m deep open-cast pit will be mined over an 11 year mine life.

AK6 is being developed through a JV between African Diamonds – with a 40% interest - and Lucara Diamond Corporation (TSX-V: LUC), an associate of the Lundin Group of companies, who own a 60% controlling stake.

In March, Lucara submitted a revised resource statement which valued the AK6 in situ indicated resource at $2.2 billion.

The deposit has 51 million tonnes at an average grade of 22 carats per hundred tonnes (cpht) - 11.2 million carats - and a further inferred resource of 20 million tonnes at 19 cpht.

Formerly, African Diamonds had been working with De Beers on the project before Lucara bought out the major South African mining group, in 2009.

African Diamonds brokered the deal between De Beers and Lucara.