Marine diamond miner Diamond Fields International (DFI-T, DMFDF-O) and Afro-Canadian explorer Moydow Mines International (MOY-T, MOY-L) have agreed to an all-stock merger deal.
Under the deal, Moydow shareholders are offered around 2.5 DFI shares for each share tendered. In all, DFI would need to issue some 75.4 million shares, bringing its total share count to about 188.5 million. Moydow shareholders would own 40% of the new Diamond Fields.
As a condition of the deal, Moydow must complete a private placement for net proceeds of at least US$1.8 million. The newly minted shares are already accounted for in the proposed exchange ratio.
The deal also carries a US$250,000 break fee payable by either company.
When the dust settles, Diamond Fields’ board would comprise three directors from each company’s current board plus a seventh director agreed upon by both companies. Moydow chief executive Brian Kiernan will assume the role of president and CEO.
Moydow owns a 2% royalty interest in Newmont Mining‘s (NMC-T, NEM-N) Ntotoroso property in Ghana, where production is scheduled for later this year. The company also holds interests in gold prospects in Ghana, a gold-antimony prospect in Newfoundland, a kimberlite license in Angola, and is earning a 60% interest in the Port Loko bauxite deposit in Sierra Leone.
DFI’s key asset is 716 sq. km worth of marine diamond concessions of the coast of Luderitz, Namibia. It also owns nickel projects in Greenland and Madagascar, and gold and diamond prospects in Liberia.
Since resuming mining with its own mining vessel, the mv DF Discoverer, in June, DFI has recovered some 11,310 carats worth of diamonds, with 9,494 carats sold for US$1.7 million. The ship is currently working in the Diaz Reef, an area known to host diamonds of larger average stone size than those recovered so far.
Diamond Fields ended the last half of 2005 by losing $2.9 million (or 3 a share), compared with year-ago net earnings of $362,172 (nil per share). Revenue from the sale of 7,846 carats worth of diamonds came to $1.4 million, down from $5.4 million on the sale of 26,250 carats in the last half of 2004.
The proposed transaction is subject to regulatory, court and Moydow shareholder approvals.
Shares in DFI were 1.5 better at 22.5 in late-afternoon trading in Toronto following the news on Mar. 1; Moydow was unchanged at 35.
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