- Lucapa Diamond Company (LOM) is looking at raising $23 million to purchase the Merlin Diamond Project in the Northern Territory
- The mine has the potential to be the only diamond mine in Australia, following the closure of Argyle
- Lucapa has agreed to purchase Merlin from Merlin Operations for around $7.4 million in cash
- To pay for the purchase the company will be undertaking a $20 million placement, offering shares at 5 cents each, a 9.1 per cent discount to LOM’s last closing price
- Additionally, Lucapa will undertake a share purchase plan (SPP) to eligible shareholders, planning to raise a further $3 million
- On market close, Lucapa is trading at 5.5 cents per share
Lucapa Diamond Company (LOM) is looking at raising $23 million to purchase the Merlin Diamond Project in the Northern Territory.
Merlin is a strategic Australian diamond project previously mined by Rio Tinto (RIO) and Ashton Diamonds between 1999 and 2003, during which time it produced over 500,000 carats from 2.2 million tonnes.
Notably, the mine has the potential to be the only diamond mine in Australia, following the closure of Argyle in 2020.
Lucapa has agreed to purchase Merlin assets from Merlin Operations for around $7.4 million in cash and will also replace around $1.1 million financial security relating to the Merlin Tenements with the Department of Industry, Tourism
and Trade in the Northern Territory.
However, the deal is subject to the satisfaction of a number of conditions.
“This is a strategic acquisition for Lucapa which represents a value-accretive and logical step in Lucapa’s production strategy,” Managing Director Stephen Wetherall said.
“The project is well known for being Australia’s large stone producer and is a strong complementary fit with the company’s two existing niche productions in Africa that are set to produce solid returns for Lucapa in 2021,” he added.
Capital Raise
To pay for the purchase the company will be undertaking a $20 million placement, offering shares at 5 cents each, a 9.1 per cent discount to LOM’s last closing price.
Directors, Miles Kennedy, Ross Stanley, Stephen Wetherall and Nick Selby and other senior Lucapa management have agreed to subscribe for $800,000 in the placement, subject to shareholder approval.
Additionally, Lucapa will undertake a share purchase plan (SPP), planning to raise a further $3 million.
Under the SPP, eligible shareholders will be able to apply for up to $30,000 worth of shares.
On market close, Lucapa is trading at 5.5 cents per share.