Pangea DiamondFields plc has entered into a legally binding conditional sale and purchase agreement with International Gold Exploration AB (IGE) whereby Pangea will merge its diamond interests with those of IGE by the disposal to IGE of the entire issued share capital of Efidium Limited (Efidium), which is the holding company for all operational activities of Pangea, together with all intra-group claims in favour of Pangea. The enlarged IGE will be a significant diamond exploration and mining company with resources across three African countries, together with its large existing portfolio of Nordic exploration projects and the exciting Ronnbacken Nickel Project.
The consideration for the Merger will be satisfied by the issue of 495,399,057 new fully paid ordinary shares of IGE (“IGE Shares”). On completion Pangea will hold IGE Shares representing approximately 38.4 per cent. of IGE’s enlarged issued share capital. Based on the closing mid market price of the IGE Shares on the Oslo Stock Exchange (“OSX”) as at 19 February 2010, the consideration represents a value of approximately US$47.6 million, or 1.7p per Pangea ordinary share. The consideration represents a premium of approximately 81 per cent. to the closing mid market price of Pangea’s ordinary shares on the AIM market of the London Stock Exchange (“AIM”) as at 19 February 2010.
IGE’s primary assets comprise:
(i) the R?nnb?cken nickel project in Sweden, a large low grade deposit from which a high grade Nickel concentrate (28% Ni) is currently targeted. Preliminary assessments indicate the project is viable as a consequence of superior infrastructure, potentially low mining costs and favourable minerology and Pangea believes that the project has realistic prospects for significant enhancement from ongoing evaluation and exploration; and
(ii) its diamond project portfolio, with a current focus in the development of its alluvial and kimberlite diamond assets in Angola. IGE holds four diamond concessions in Angola including the Luxinge project which is approximately 50km away from Pangea’s Cassanguidi project.
The enlarged IGE will have nine diamond projects across Angola, South Africa and the Democratic Republic of Congo. IGE’s diamond portfolio will include one project in commercial operation (Casanguidi, Angola), a second project ready for commercialisation (Luxinge, Angola) and a third project expected to commence production later this year (Bakerville, South Africa).
Boris Kamstra, Pangea’s Chief Executive Officer, will lead the management of IGE’s diamond activities following the completion of the Merger and will be supported by the full Pangea and IGE senior management teams within the merged entity.
The enlarged IGE will have a broad shareholder base including international institutional investors, senior management and a large number of retail investors. IGE will remain listed on the OSX. In order to accelerate the
development of its enlarged diamond portfolio, IGE is contemplating an equity offering in the form of a rights issue following completion of the Merger.
The outstanding conditions to the Agreement are to be satisfied by 15 April 2010 or such other date as the parties may agree.
Following completion of the Merger, it is the current intention of Pangea to distribute the IGE Shares received by it as consideration (the “Consideration Shares”) to its shareholders by way of a voluntary liquidation process. Pangea also intends to apply for cancellation of its admission to trading on AIM. Further details in respect of these intentions will be included in the circular to be sent to Pangea shareholders to convene the general meeting noted above.
Pangea’s CEO Boris Kamstra commented “The diamond operations of IGE and Pangea are an excellent fit. The combined interests will comprise a well balanced project portfolio, highly experienced exploration and operational staff and sufficient critical mass to be an important player in African diamond mining. In particular, combining our respective operations in Southern Africa creates opportunities to maximize the efficiency and reach of the merged organization”. Pangea’s Deputy Chairman, Rob Still, commented that “In recommending this effective merger with IGE to its shareholders, Pangea’s board was attracted by the resultant critical mass and synergies in the combined diamond operations, the prospects of the Ronnbacken Nickel project and the broad shareholder base, liquidity and capital markets of the Oslo exchange.
Pangea’s Chairman, Mr Bill Nairn, commented further that “In particular the board is encouraged that this merger will enable the rapid commercialisation of Pangea’s five viable diamond projects which are the result of four years of extensive and professional exploration work and evaluation by the Pangea team and believe that the new IGE will enable the potential of those projects to be reached, resulting in additional value creation for Pangea’s shareholders”.
IGE’s CEO Tomas Fellbom said “Pangea represents extensive diamond exploration and mining experience and a well established presence in Africa. The merger of the two diamond operations creates a considerable resource base and a growing cash flow from diamond mining. Within the next 12 months, we expect three diamond projects to generate revenues”.
Related posts:
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- Pangea DiamondFields Secures Short-term Bridging Loan
- Pangea DiamondFields Acquires Additional Mining Equipment for Cassanguidi
- International Gold Exploration Moving Towards Commercialisation of Alluvial Diamonds in Angola
- Boris Kamstra Takes Over Helm of Pangea DiamondFields
