West African Diamonds is on the verge of merging with Stellar Diamonds, which owns the diamond assets of African Aura Mining Inc.
African Aura, which was formed through the merger of Aim-quoted Mano River Resources and TSX-V-quoted African Aura Resources, owns 59.6% of Stellar, which raised £3.05m through a pre-IPO placing in February 2009. Stellar has diamond interests in Sierra Leone and Guinea, which was the original core business of Mano River. These interests include the Kono joint venture with Petra Diamonds, which owns 51% of the jv.
The assets of the two companies appear to fit well in geographic terms because WAD has interests in Sierra Leone and Guinea.
The two parties have signed heads of terms. This deal will be classed as a reverse takeover of WAD.
Shares in WAD have been suspended at 3.875p each, down 0.25p on the day. That values the company at £3.49m. The February 2009 placing valued Stellar at around £15m.
WAD, which is run by John Teeling, had £242,000 in the bank at the end of April 2009. That won’t last long – it is less than last year’s cash outflow - so the cash that Stellar has in the bank will help both parts of the business.
The reversal into WAD appears to be an efficient way of Stellar obtaining its long sought after quotation.
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