Burgundy Diamond Mines has signed an option deed to acquire Gibb River Diamonds’ Ellendale diamond project in northern WA.
The acquisition, which will encompass an initial payment of $1.7 million and issue of 4 million shares, will give Burgundy access to the composite Ellendale and Blina projects.
Those projects are located in the Kimberley and comprise a series of mining leases, tenements under grant application and exploration licences.
Additional payments worth $5 million, 12 million shares and a 1.5 per cent gross revenue royalty will follow across three payments in the two-year option period if Burgundy chooses to exercise that option.
Burgundy Diamond Mines managing director Peter Ravenscroft said Australia was one of the company’s focuses for low-risk diamonds and that the acquisition would provide the company with potential for early cash flow to underpin an expansive growth strategy.
“We are delighted to have been able to successfully secure this transaction, which ticks many of our strategic boxes as we build out Burgundy as the world’s leading mid-cap diamond company,” he said.
“As a Western Australia-based company, we are well placed to operate in close concert with the local traditional owners, respecting the heritage and fragile environment of this important region of the country, and we are excited to be able to regenerate economic activity in the region.
“We look forward to working with Gibb River through an orderly transition period and are pleased to have been able to provide Gibb River shareholders with significant upside value in the issue of Burgundy shares as a part of the transaction.
“This allows them to share in the exciting future of Burgundy, now strengthened by the immediate potential of the development of the Ellendale diamond project.”
Shares in Burgundy Diamond Mines were trading at 37 cents as at 12pm AEDT.