Burgundy Diamond Mines, which owns the Ellendale diamond project in the West Kimberley, has made an acquisition that it believes will make it the largest diamond company on the ASX.
The ASX-listed company has entered into a binding share purchase agreement (SPA) with Arctic Canadian Holdings to acquire 100 per cent of Arctic Canadian Diamond Company (ACDC), owner of the Ekati diamond mine in Canada.
The transaction would also see Burgundy acquire Arctic Canadian’s marketing arm, which oversees the management of Ekati’s supply chain, sorting, preparation, marketing and sales.
Worth $US136 million ($204.4 million), the deal comprises $US21 million in Burgundy shares, a deferred payment of $US15 million to be made in December 2023, while Burgundy will also repay the majority of ACDC’s outstanding debt ($US100 million).
To fund the acquisition, Burgundy will conduct an equity raising to raise up to $US150 million, with the issue price yet to be determined.
The placement will be subject to a shareholder vote at Burgundy’s annual general meeting which is set to take place in late April. As the transaction requires Burgundy to re-comply with chapters 1 and 2 of the ASX listing rules, a full form prospectus will be lodged as part of the placement.
Burgundy is also planning to launch a share purchase plan, with the offer size and issue price yet to be determined.
In 2022, the Ekati mine sold 4.2 million carats of diamonds at an average price of $US117 per carat, delivering Arctic Canadian $US494 million of revenue last year.
Ekati has a current mine life of six years.
“This is an exciting and transformational acquisition for Burgundy with potential to generate significant and growing returns for our shareholders,” Burgundy chief executive officer Kim Truter said.
“The acquisition of Ekati is complementary to Burgundy; we’ve been purchasing rough fancy-coloured diamonds from Ekati in recent years, then cutting and polishing them in our facilities in Perth to go into high-end jewellery designs, as part of our vertically integrated business model.
“We view this acquisition as a wonderful marriage between Burgundy and the Arctic Companies, delivering immediate and meaningful production to our portfolio, with potential synergies to leverage and efficiencies to capitalise on in the short term.”
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