Western Australian explorer Newfield Resources, known for its gold projects in WA and diamond projects in Sierra Leone, has announced a takeover offer to acquire UK-based junior Stellar Diamonds.
Stellar Diamonds is notable for a portfolio of West African projects in Liberia and Sierra Leone, where it hosts its (prospective) flagship Tongo-Tonguma kimberlite project. The company is also in the process of selling off its current assets in Guinea to BDG Capital, a move first announced in June last year then subsequently extended in August.
Two tranche placements are to be used to raise a total of $10 million for the Newfield deal; the first will be a binding commitment to raise $7 million in funds, and the second $3 million. These tranches are represented by 35 million and 14 million Newfield shares, respectively, and purchase is on the condition that Newfield secures underwriting for $30 million in funds to advance that status of its its Tongo-Tonguma project.
For the purposes of front-end engineering design (FEED) development, existing project advancement and general working capital, Stellar will also utilise a $US3 million ($3.8 million) loan from Newfield Resources, to be paid back over a period of eight months, or three months should Stellar secure an unconditional competing offer.
Stellar is currently in advanced negotiations to receive a total of 95.5 million shares in Newfield Resources (including the above-mentioned tranche shares), equating to 16.4 per cent of Newfield share capital in total. A meeting to gain Newfield shareholder approval is to be commenced in due course.
Shortly after the announcement last week, Stellar’s shares surged over 200 per cent on the London stock market from £2.31 ($4.12) to £7 ($12.49) and has since settled at £5.10 ($8.92) as of today.