Kimberley diamonds shine for Goodrich Resources

Goodrich Resources has entered a $14.4 million deal to purchase the Ellendale diamond mine in the Kimberley from UK-based Gem Diamonds.

Goodrich announced today it had entered a share sale agreement with Gem, which will see it acquire the company’s subsidiary Gem Diamonds Australia, which holds the Ellendale mining lease, along with intercompany loans provided by Gem.

The transaction will include an upfront payment of $3.1 million, with a further $11.2 million to be paid in instalments over 12 months.

Goodrich said it would fund the acquisition through a capital raising to be announced later this week.

The Ellendale mine produces half of the world’s supply or rare fancy yellow diamonds, with a mineral resource totalling 91.3 million tonnes at an average grade of 4.35 carats per hundred tonnes.

An exclusive off-take agreement with international jeweller Tiffany & Co accounts for around 80 per cent of the mine’s revenue.

The mine generated sales revenue of $US57.6 million in the six months to June 30.

Goodrich chairman Alex Alexander said the project presented a significant value-adding opportunity for shareholders.

“We intend to complement the existing mining operation with an aggressive exploration programme on Ellendale’s highly prospective ground, aimed to increase the reserves and the life of the mine,” Mr Alexander said in a statement.

The transaction is expected to be complete by January 2013.

At close of trade today, Goodrich shares had gained 7.1 per cent, to finish at 15 cents.