that sucks

even they admitted they have a bargin...........mmm



South Africa: Gem to Offer $236m for Australian Diamond Company

Business Day (Johannesburg)

20 July 2007
Posted to the web 20 July 2007

Nicola Mawson
Johannesburg

LONDON-listed Gem Diamonds said yesterday it would offer about A$300m for the Australian-listed Kimberley Diamond Company as it geared up to become a top-quality diamond producer.

Gem, which was established in mid-2005, listed in London in February this year, raising more than $600m. It has $519m in cash on hand. The company was looking to grow through organic and acquisitive activity.


Chairman and CEO Clifford Elphick said the company, which had a market capitalisation of $1,4bn, now had three active mines after its recent Letseng acquisition. The Lesotho mine was sold by 76% owner Letseng Investment Holdings to Gem last year for R879,5m.

Its latest deal took the firm a "step closer to its ambition of becoming one of the world's leading diamond producers". The deal would provide it with immediate access to additional production.

Gem would finance Kimberley with a A$10m short-term loan to fund working capital and would invest A$26m in capital as the Ellendale mine, Kimberley's primary mine in Western Australia, ramped up production.

The miner aimed to boost production at the mine from about 380000 carats to 500000 a year, said Elphick.

The company also had a mine in the Democratic Republic of Congo that was coming into production and another was expected to come on stream this year. Elphick said the company was also updating a bankable feasibility study at the Gope mine in Botswana.

Acquiring Kimberley would diversify the company's holdings in that it was currently an Afrocentric operator, he said. While Ellendale had previously faced challenges, the company was confident these challenges could be overcome.

The diamond company said that Kimberley Diamond's signature stone was the "rare, valuable and highly sought-after fancy yellow diamond ", which complemented its portfolio of "high-quality" white diamonds.

"Over time, I am confident that these fancy diamonds will achieve higher prices when sold in combination with the high-value Let seng diamonds," said Elphick.

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Gem said it had offered cash of A$0,70 for each Kimberley share, a 33% premium on the closing price on Monday, which valued the miner at A$300m, or about $236m.

Kimberley's directors, who own stakes in the company, had recommended the offer to shareholders and had agreed to vote their own shares in favour of the deal.

Gem had undertakings from shareholders owning about 14,9% of the company to accept the deal.