The board of directors at Stellar Diamonds has recommended a merger with Newfield Resources, both of which operate in Sierra Leone.
On Monday (February 12), the board of directors at Stellar Diamonds (LSE:STEL) recommended a merger with Newfield Resources (ASX: NWF), both of which operate in Sierra Leone.
Highlights are as follows:
- Stellar is a diamond development and exploration company focused on West Africa. Stellar’s projects are located within the major diamond producing areas of Sierra Leone and Liberia. Stellar is interested in the high-grade and high-value Tongo-Tonguma Project through the Tongo exploration licence owned by Stellar and the Tribute Mining Agreements with Octea Mining Limited which holds the Tonguma Licence.
- NWF Resources Limited 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.
- NWF has today lodged a prospectus for an underwritten rights issue to raise approximately A$30 million (“NWF Rights Issue”) and announced a general meeting (“NWF GM”) seeking, amongst other things, NWF Share Authority for the issue of the NWF Shares pursuant to the NWF Conditional Placement. Completion of the NWF Rights Issue is conditional on, inter alia, completion of the Scheme. If the Scheme becomes Effective, the proceeds of the NWF 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 of a US$3 million loan from NWF (“Loan”), all conditions precedent in respect of the Tribute Mining Agreements with Octea Mining Limited (“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 NWF Rights Issue and NWF Conditional Placement, the enlarged NWF Group will have approximately A$40.56 million in cash before transaction costs.
- The boards of NWF and Stellar 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 believe that the Combination and the NWF 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, NWF’s 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, Chief Executive Officer of Stellar, will be invited to join the NWF Board as an executive director. It is intended that Stellar’s Chief Operating Officer, Rowan Carr, and other senior staff, including the Tongo project manager and plant/metallurgical manager, will be retained by NWF after completion of the Scheme.
- NWF is admitted to the official list of ASX and NWF Shares are quoted on ASX. On completion of the Combination, the New NWF Shares, NWF Conditional Placement Shares and the Rights Issue Shares will also be admitted to official quotation trading on the ASX.
- It is the intention that the New NWF Shares will be held in an issuer sponsored account. Stellar Shareholders who wish to trade their New NWF Shares should refer to paragraph 14 of Part II of this announcement for further details of how the New NWF Shares may be traded by Stellar Shareholders upon the Scheme becoming Effective.