Stellar Diamonds has struck a $10.8 million (GBP 7.7 million) takeover agreement with Newfield Resources, raising its hopes of bringing its Sierra Leone mine into production, the company said Monday.
Stellar, which operates the Tongo-Tonguma project, last week said it might not be able to access enough financing for it to remain in operation if talks fell through.
Under the deal, Stellar shareholders will receive 0.76 Newfield shares for every Stellar share they hold, representing a 154% premium to Stellar’s closing share price on Friday. Existing Stellar shareholders will own just over 8% of the combined group. Stellar stock soared 52% on Monday after the announcement.
“Not only does this come at a significant premium for Stellar shareholders, but it also secures the funding at a premium for the development of the Tongo-Tonguma project,” said Stellar CEO Karl Smithson, who will join Newfield’s board. “Furthermore, the enlarged company will have the financial and technical capacity to deliver the project, which we believe can offer long-term and sustainable cash flows to all shareholders.”