[miningmx.com] — AN UNSOLICITED bid has been made for AIM-listed junior miner African Diamonds, which owns a 40% stake in the AK6 kimberlite project near De Beers’ huge Orapa mine in northern Botswana.
African Diamonds released a statement to the London Stock Exchange on Thursday, advising that “it has received an unsolicited proposal regarding a potential offer to acquire the entire issued and to be issued share capital of the company.
“The board of African Diamonds does not consider the proposal as currently constituted to be one it would recommend to shareholders, and there can be no certainty that an offer will be made for African Diamonds.’
African Diamonds CEO James Campbell told Miningmx: “We have received an unsolicited offer, in which the business rationale makes sense but the price does not. We are now in negotiations.’
Campbell refused to comment on the identity of the bidder for the company.
The most likely candidate is TSX-listed Lucara Diamonds, which owns the other 60% stake in AK6.
Lucara took control of AK6 in November last year, when it bought out De Beers’ 71% stake through a deal which subsequently allowed African Diamonds to increase its share in the project to the current 40%.
African Diamonds also owns 100% of two other kimberlite pipes – AK8 and AK9 – situated in close proximity to AK6.
Lucara has stated its intention of “aggressively’ developing the AK6 mine. The company also holds a mining licence over the Mothae kimberlite pipe, situated close to Gem Diamond’s operating Letseng mine in Lesotho.
Lucara has started a prefeasibility study on Mothae and so far processed 100,000 tonnes of kimberlite for diamond valuation purposes.
The African Diamond share price has shot up during August from about 28 pence to current levels of around 40p.
On current planning the AK6 mine should start production in the first quarter of 2011, treating ore at a rate of 2.7 million tonnes (mt) per year which will ramp up to 4.2mt/year in 2014.
The capital cost of the first phase of the project is estimated at $120m.
