US jeweller Tiffany targets Sierra Leone`s diamonds
Target Resources, an alluvial diamond and gold mining company in Sierra Leone, has clinched a US$5 million marketing deal with jewellery retailer Tiffany & Co. a few days after signing an agreement with UK’s MinEx Group to execute a mining plan for its 4,200-acre diamond mining leases.
Target Resources [AIM:TGT], a diamond and gold miner operating in Sierra Leone, is up 3 to 25.50 pence after US jeweller Tiffany & Co agreed to invest US$5 million in a deal that will grant the world's second largest luxury jewellery retailer a five-year exclusive marketing agreement for Target's precious stones.
The investment, announced Monday, will take the form of a five-year subordinated debt. New York-based Tiffany will have the right of first refusal on Target's output at market price and will then sell, on Target's behalf, the diamonds it does not wish to keep for its own use, according to a Regulatory News Services statement.
"We are delighted to receive this vote of confidence both in the quality of our stones and in the way we mine them from what is arguably the world's most prestigious diamond retailer," said Freddy Hager, Chairman of Target.
James Fernandez, Chief Financial Officer of Tiffany said, "This investment in Target is consistent with our policy of selectively investing in diamond miners who ethically mine high quality stones. Sierra Leone is a well-known source of high quality rough stones and Target's production to date has been encouraging."
London-based Target, which held an initial public offering in July, has a market capitalisation of £23.386m.
Through its subsidiary Milestone Trading Ltd it is focused on the recovery of alluvial diamonds and gold in Sierra Leone's Kono district that hosts a producing mine and two others under construction, which are characterised by the presence of kimberlitic dykes and pipes, as well as large river and alluvial deposits.
The agreement with Tiffany is the second Target Resources has signed in less than seven days.
On September 11, it announced that it planned raise US$15 million in debt or additional equity after signing an agreement with UK-based mining and engineering consultants, the MinEx Group, to execute its mining plan for its 4,200-acre diamond mining leases in Sierra Leone.
The money would be used to fund the acquisition of equipment and infrastructure MinEx needs to complete the mining plan, said Target's Chief Executive Officer, Nissim Levy, and that the company was currently in active discussions with lenders and investors to raise the amount.
As per the deal, MinEx would provide management for the operations for a three-and-a-half year period. And in return, it would be entitled to a percentage of Target's diamond and gold revenues, after deducting local operating costs, at a level which is in line with standard market practice.
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