Stellar Diamonds and Newfield Resources have reached agreement on the terms of a recommended all-share offer by Newfield Resources to acquire the entire issued and to be issued share capital of Stellar Diamonds.
Highlights of the combination:
Stellar Diamonds is a diamond development and exploration company focused on West Africa.
Its projects are located within the major diamond producing areas of Sierra Leone and Liberia.
Stellar Diamonds is interested in the high-grade and high-value Tongo-Tonguma project through the Tongo exploration licence owned by Stellar Diamonds and the Tribute Mining Agreements with Octea Mining which holds the Tonguma Licence.
Newfield Resources is an Australian exploration company listed on the ASX market with a focus on a number of diamond exploration licences in Sierra Leone and several gold projects in Western Australia.
Newfield has lodged a prospectus for an underwritten rights issue to raise approximately A$30 million and has announced a general meeting seeking, amongst other things, Newfield Resources Share Authority for the issue of the Newfield Resources Shares pursuant to the Newfield Conditional Placement.
Completion of the Newfield Rights Issue is conditional on, inter alia, completion of the Scheme.
If the Scheme becomes effective, the proceeds of the Newfield Resources Rights Issue would mainly be used to advance the high-grade and high-value Tongo-Tonguma Project in Sierra Leone into commercial production and to repay the Stellar CLNs.
Following receipt by Stellar Diamonds of a US$3 million loan from Newfield, all conditions precedent in respect of the Tribute Mining Agreements with Octea Mining (Octea), which set out the economic terms for development of the Tongo-Tonguma Project, have been satisfied or waived and the transaction has been completed as announced on 1 March 2018.
Subject to the scheme becoming effective, completion of the Newfield Resources Rights Issue and Conditional Placement, the enlarged Newfield Resources Group will have approximately A$40.56 million in cash before transaction costs.
The boards of Newfield Resources and Stellar Diamonds believe that a combination of the two groups would create an enlarged and well-funded diamond development group with a number of highly prospective licences in Sierra Leone and Liberia and an experienced management team with combined 100+ years of diamond sector experience.
The boards of NWF and Stellar Diamonds believe that the combination and the Newfield Resources Financings provide the potential to generate significant long-term value to the shareholders of both companies through bringing the high grade Tongo-Tonguma Project into commercial production.
In addition, Newfield exploration to date in Sierra Leone has generated positive results that indicate undiscovered kimberlites in its licence areas and bulk sampling from some alluvial deposits have resulted in diamond sales attracting over US$450 per carat.
Furthermore, Stellar’s historical exploration in its Liberian licences also suggests the presence of undiscovered kimberlites in areas of known diamond diggings.
On completion of the combination, Karl Smithson, CEO of Stellar Diamonds, will be invited to join the Newfield Resources board as an executive director.
It is intended that Stellar Diamond’s COO, Rowan Carr, and other senior staff, including the Tongo project manager and plant/metallurgical manager, will be retained by Newfield Resources after completion of the Scheme.
Newfield Resources is admitted to the official list of ASX and shares are quoted on ASX.