Gem Diamonds Sells Ellendale to Goodrich Resources for $15 Million

(IDEX Online News) – Gem Diamonds is selling the Ellendale diamond mine to Goodrich Resources in a cash transaction of AU$14.3 million (US$14.9 million). Ellendale is an important source of yellow diamonds.

Under the conditions of the agreement, Gem Diamonds will sell to Goodrich 100 percent of the shares in Gem Diamonds Australia Holdings, together with the loans provided by Gem Diamonds.

The deal includes an upfront payment of AU$3.1 million (US$3.2 million) with the remaining balance to be paid in installments in the year following completion of the agreement.

In addition, Gem Diamonds will receive a further cash reimbursement for surplus working capital and agreed capital expenditure incurred between the signing of the sale agreement and the effective date of December 31, 2012.

The transaction is expected to be completed in January, after Goodrich completes its due diligence process, which must be done prior to December 31.

As of June 30, the gross assets attributable to Ellendale were US$114.2 million and the profits attributable for the year ended December 31, 2011 were US$3.1 million.

"The sale of Ellendale, at a value that we feel is appropriate given the relatively short life of mine of the E9 pipe, is consistent with our aim of refocusing our management and capital resources on our core assets and long term growth projects," said Gem Diamonds CEO Clifford Elphick.