Australia-based Burgundy Diamond Mines (BDM) has signed a binding share purchase agreement (SPA) to acquire Canada-based Arctic Canadian’s assets, including the entirety of Ekati Diamond mine, for nearly $136m.
Burgundy will acquire a 100% stake in Arctic Canadian Diamond Company (ACDC), (vendor) and 100% of the common shares of Arctic Canadian Diamond Marketing (ACDM).
ACDC owns 100% of all businesses, assets and other interests comprising the producing Ekati mine in Canada’s Northwest Territories.
ACDM is responsible for the management of the supply chain, sorting, preparation, marketing and sales of rough diamonds from the Ekati mine.
The deal consideration will be settled through $21m in Burgundy ordinary shares and a deferred $15m cash payment in December 2023 to the vendor.
Burgundy will also repay the majority of ACDC’s outstanding debt of $100m.
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Arctic Canadian expects the sale to result in a significant recapitalisation of the firm and allow for continued operations for the Ekati Diamond Mine, which has been in production for nearly 25 years.
The firm currently has around 1,100 employees.
Arctic Canadian chief financial officer Kristal Kaye said: “This equity-based investment by Burgundy will greatly improve the financial foundation of the company and our goal of extending mine life at Ekati while continuing to provide employment opportunities for many people in Northern communities.”
Burgundy anticipates the acquisition of Ekati mine to complete its strategy to become ‘truly vertically integrated’ across the diamond value chain.
The ‘transformational’ acquisition is said to make the firm the largest ASX-listed diamond company and one of the largest listed diamond companies across the globe.
Burgundy CEO Kim Truter said: “The acquisition of Ekati is complementary to Burgundy’s vertically integrated business model where it can directly produce rough fancy-coloured diamonds at Ekati and then cut and polish them in our facilities in Perth to go into high-end jewellery designs.”
Upon completion of the acquisition, Burgundy intends to optimise the performance of the Ekati mine and extend its operations, among other activities.
Burgundy plans to complete an equity raising of up to $150m through a conditional placement to support the acquisition.