Friday, May 25, 2007

Steinmetz buys Sierra Leone diamond mine

Steinmetz, the Geneva-based diamond company, has acquired the Sierra Leona diamond mining company Koidu Holdings for $18.25 million.

Energem Resources Inc. said last week it had sold its 40% stake in Koidu Holdings, which owns and operates the Koidu kimberlite diamond mine and Tongo Fields exploration area in Sierra Leone to BSGR (Beny Steinmtez Group Resources), raising its stake in Koidu to 65%. The remaining interest is held by Magma Diamond Resources Limited, which is also part of the Steinmetz Group.

In a statement, Energem said it had achieved a fair price after “protracted negotiations” with BSGR, representing a $6 million premium over the funds invested by Energem since the recommencement of operations in 2003.

It said the need for the Koidu mine to proceed with a capital program of in excess of $45 million for underground development, would require substantial further investment by Energem without any prospect of cash flow to Energem for at least three years.

Other reasons given for the sale were “ongoing dissatisfaction with the cost structure and overheads of the operations” and the fact that it had a 5 year exclusive marketing agreement with Steinmetz Diamonds.

Link to Mining Diamond News: Steinmetz buys Sierra Leone diamond mine