Burgundy raising for diamond mine deal

Burgundy Diamond Mines is working towards raising $203 million to fund what it has deemed a ‘transformational’ acquisition of an operating diamond mine in Canada once owned by BHP.

The ASX-lister issued a re-compliance prospectus for the raising last week which has up to 773.4 million new securities on offer at 25 cents each to institutional shareholders.

Bell Potter Securities, Aitken Mount Capital Partners and Euroz Hartleys are underwriting the placement but not the follow-up share purchase plan for retail investors launched today, which will seek to raise an additional $10 million.

Most of the proceeds from the raising are set to go towards buying the Arctic Canadian Diamond Company and its Ekati diamond mine in the Northwest Territories of Canada, with about $154 million of the funds to pay down ACDC’s outstanding debt.

Consideration for the buy will also include a $37 million scrip component.

At present, Burgundy operates what it calls an ‘end-to-end’ diamond marketing business with the acquisition of an operation mine tipped to shift the company to miner status, however the company plans to continue cutting and selling the diamonds out of its commercial facility in Perth.

“The acquisition is transformational for Burgundy and is in line with its vision to become a leading -end-to-end diamond company via a vertically integrated business model,” chairman and mining executive Michael O'Keeffe said.

“Ekati delivers significant rough diamond production including highly sought-after fancy coloured diamonds that can be cut and polished in Burgundy’s commercial facilities in Perth and sold to end-customers, allowing Burgundy to capture margins along the diamond value chain.”

Mr O'Keeffe also indicated Burgundy would keep its eyes open for M&A opportunities in other ‘tier-1’ jurisdictions.

Burgundy withdrew its offer to acquire the Ellendale diamond mine in the West Kimberley region with Gibb River Diamonds earlier this year.

Mr O'Keeffe was made chairman of the company in December 2022 coinciding with the resignation of former managing director Peter Ravenscroft, who was replaced by former De Beers chief executive Kim Truter.

Investors are due to vote on the deal at an extraordinary general meeting in Sydney later this month.