Mwana Africa continues move on SouthernEra Diamonds

Mwana is continuing with its plan to tender BHPB’s SouthernEra holding following the latter not exercising its right of first refusal to take up the stake.

WINDHOEK - 

Mwana Africa PLC says it will go ahead with tendering BHP Billiton's 9.05 percent stake in SouthernEra Diamonds Inc to the company after the Canadian diamond miner failed to exercise the right-of-first-refusal (ROFR) within the prescribed period.

SouthernEra had until May 22, last week, to exercise the ROFR following the announcement on May 8 by Mwana that the company had entered into an additional lock-up agreement with BHP Billiton to acquire 15,684,000 SouthernEra Diamond Inc common shares, representing approximately 9.05 percent of the outstanding common shares, for exchange for shares in the company.

Mwana said BHP Billiton had advised that it is free to tender its 9.05 percent SouthernEra stake. Under the shareholders' agreement between BHP and SouthernEra, BHP said it has triggered SouthernEra's ROFR.

By Wednesday SouthernEra had not exercised its ROFR and Mwana's chairman Oliver Baring was saying that his company would go ahead with a formal offer for the company, this which he said would be announced "in the coming few weeks".

"By not exercising their ROFR, they (SouthernEra Diamonds) are signalling that they want to accept our offer," Baring told Mineweb.

He said the offer will be made as a take-over bid circular, which will contain the full terms and conditions, including details of how the offer may be accepted.

Mwana already held 16.5 million SouthernEra shares, a 9.92 percent stake in the company. The company said it now controls 68,884,830 SouthernEra shares or about 39.76 percent of the company including the lock-ups, adding that SouthernEra shareholders have agreed to tender 52,427,330 shares or about 30.26 percent.

In March Mwana launched a hostile bid to take over SouthernEra, in a move aimed at creating the largest diamond miner in the Democratic Republic of Congo. It offered one of its own shares for every 2.3333 SouthernEra shares, giving an implied value of C$0.42 a share and said it would pay CAN$69.7 million for the company.

Last week, SouthernEra rejected the takeover bid saying the offer proposed "significantly" undervalued the company.

The company runs the world's fourth-most active diamond-exploration programme, with exploration in Canada, Australia, Gabon, the DRC, Zimbabwe and South Africa.

It also operates the Klipspringer diamond mine in South Africa and maintains an 18 per cent stake in the Camafuca diamond project in Angola.

Patrick Evans, Chairman of the Special Committee of SouthernEra, said, "The Mwana Proposal has come shortly before a period of expected significant risk reduction and associated value enhancement for the Company. A bulk sample at the Badibanga alluvial project is currently underway along with the drilling programme by BHP on the DRC Kimberlite JV. In addition, drilling has commenced on the company's recently acquired diamondiferous kimberlite BK-16 in Botswana."

However Wednesday Mwana's Baring said the offer had not changed.

"We are not going to increase the offer," he told Mineweb. "Ever since we made an offer to SouthernEra, its share price has more than doubled. Its shares are trading at over US$0.60, currently."

Baring said his company is after consolidating its presence in Africa and is eyeing SouthernEra's properties in the DRC and Angola, where it wants to control an area that produced the world's fourth-largest diamond, the 890 carat "Incomparable", recovered by a young girl from rubble in the early 1980s that reportedly took four years to cut into its polished state.

The company has also entered into lock-up agreements with JP Morgan Asset Management (UK) Limited and OZ Management, L.L.C., both on behalf of certain funds managed, in addition to the lock-up with BHP Billiton.

As part of its position solidifying strategy, last year it acquired 20 percent of Société Miniere de Bakwanga (MIBA), the DRC's leading diamond producer which is based in Mbuji Mayi, in a move that signalled its entry into the diamond industry and significantly strengthened its interests in the country.

Mwana is also looking at merging with Australian and the DRC-based diamond exploration company Gravity Diamonds in a deal that is expected to be sealed in the second half of the year.

It holds exploration and production assets in a range of commodities in the DRC, Ghana and Zimbabwe, and the company says it has been actively building an African diamond exploration and production business.

Its assets include producing nickel and gold mines in Zimbabwe, gold exploration projects in Ghana and gold, zinc and copper-cobalt projects in the DRC.

Mwana, formerly known as African Gold PLC, has been building its own diamond production business in the DRC in recent months.

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Related Links ARTILCES:  Mwana enters lock-up agreement with BHP for SouthernEra Diamonds  Mwana launches hostile bid for SouthernEra Diamonds   SouthernEra recovers 3,124 diamonds over 174 cubic metres in DRC  OTHER PAGES:  DIAMONDS AND GEMS AFRICA

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