- Burgundy Diamond Mines (BDM) has secured an option to acquire the Ellendale Diamond Project from Gibb River Diamonds (GIB)
- The company’s total consideration to Gibb River will consist of $6.7 million cash and 16 million fully paid ordinary shares
- Burgundy has already paid the first option payment, consisting of $1.7 million cash and four million issued company shares
- Burgundy Diamond Mines is down 5.13 per cent and trading at 37 cents per share
- Gibb River Diamonds is up 7.14 per cent and trading at 9 cents per share
Burgundy Diamond Mines (BDM) has secured an option to acquire the Ellendale Diamond Project from Gibb River Diamonds (GIB).
The two diamond-mining companies have signed an Option Deed, allowing Burgundy the choice to eventually purchase 100 per cent of the Ellendale and Blina projects in Western Australia’s Kimberley region.
The projects, collectively referred to as the Ellendale Diamond Project, includes the tenements over the historical Ellendale diamond mine, and the Blina alluvial diamond deposit to the north-west. The Ellendale diamond mine is well-known for its production of iconic yellow diamonds, while the Blina deposit is highly prospective for diamond production.
The potential acquisition of these projects would give Burgundy Diamond mines the opportunity to accelerate its production of high-value diamonds within the two-year option period.
Burgundy’s Managing Director and CEO, Peter Ravenscroft, expressed the company’s delight at successfully securing this transaction.
“It is in one of our focus jurisdictions of low-risk diamond countries; it provides us potential for early cash-flow to underpin our expansive growth strategy, and it focuses on the production of high-value coloured stones in the same way as our Naujaat diamond project in Canada,” he said.
“We look forward to working with Gibb River through an orderly transition period, and are pleased to have been able to provide Gibb River shareholders with significant upside value in the issue of Burgundy shares as a part of the transaction,” he added.
Burgundy’s total consideration to Gibb River will consist of $6.7 million cash and the issue of 16 million fully paid ordinary shares in Burgundy Diamond Mines. The consideration will be paid in three increments.
With the formal agreement now executed, the company has already paid the first incremental option payment. This consisted of $1.7 million paid in cash, and the issue of four million Burgundy shares to Gibb River.
On the one-year anniversary of the grant of options, Burgundy will pay $1 million in cash, and issue five million company shares to Gibb River. Once the company finally exercises the option to buy the Ellendale Diamond Project, Burgundy will pay Gibb River the remaining $4 million cash, and issue the last seven million company shares.
Burgundy will also pay Gibb River a 1.5 per cent gross revenue royalty on diamonds and other minerals which are obtained from the tenements, while it remains the registered holder of those tenements.
Burgundy Diamond Mines is down 5.13 per cent, trading at 37 cents per share at 12:13 pm AEDT.
Gibb River Diamonds is up 7.14 per cent, trading at 9 cents per share at 11:56 am AEDT.