West African Diamonds shares trading restored after posting of Stellar Diamonds document

Shares in West African Diamonds (AIM: WAD) were restored to trading this morning after the company posted an AIM Admission Document in relation to the proposed acquisition of Stellar Diamonds Ltd to shareholders.

The acquisition requires the prior approval of the company’s shareholders as it constitutes a reverse takeover. If the resolutions are passed, the new company will be readmitted to AIM and trading in its shares will commence on 22 February 2010.

The recently completed £5 million placing is conditional on completion of the acquisition and readmission and will comprise an offer of new ordinary shares of 5 pence each to institutional and other investors with a total 25 million shares set to be issued at 20 pence per share. The proceeds from the placing will be used to capitalise existing producing mines, accelerate production ramp up, and advance the company’s kimberlite development and exploration projects.

WAD has agreed to acquire 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, with 75% set to be allotted to Stellar shareholders and the remaining 25% to WAD shareholders.

Stellar Diamonds’ principal shareholder is African Aura Mining Inc (AIM: AAAM; TSX-V: AAZ), which held a 58.5% interest in the company and will retain a 31.8% interest following admission of the enlarged share capital of Stellar to trading on AIM.

“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 cash flow 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,” said WAD chairman John Teeling.

The new company will have two producing alluvial diamond mines in Guinea, Bomboko and Mandala, with a resource base of over 1.5 million carats, an advanced stage diamondiferous kimberlite exploration project at Droujba in Guinea, a joint venture with Petra Diamonds Ltd (AIM: PDL) on the Koidu dykes in Sierra Leone and a joint venture with privately owned Japanese developer Thunderball Ltd on the Pipe 3 kimberlite pipe and adjacent dykes in Koidu.  http://www.proactiveinvestors.co.uk/companies/news/12648/west-african-diamonds-shares-trading-restored-after-posting-of-stellar-diamonds-document-12648.html