BHP Billiton Takes Hold of SouthernEra Diamonds

After a courting period that lasted months, BHP Billiton purchased 12 percent of SouthernEra Diamonds for $8 million, becoming SouthernEra's largest shareholder.

BHP Billiton is the world's largest resources company with global diamond, metals and energy mining interests.

BHP Billiton has agreed to complete a private placement with SouthernEra, at a premium, paying C$0.60 for 15,636,000 shares. Trade at the Toronto exchange closed yesterday at 0.45.

The placement is subject to regulatory and stock exchange approval.

SouthernEra says half of the money will be directed towards exploration, evaluation and potentially the development of SouthernEra's diamond properties in the Democratic Republic of the Congo (DRC).

The remaining $4 million will be used to support global exploration, a development program and general corporate purposes.

The companies agreed to explore for primary diamond deposits and all other minerals within SouthernEra's DRC exploration permits, covering in excess of 13,000 square kilometers. SouthernEra will retain a 100 percent interest in all known or discovered alluvial diamond deposits within these permit areas.

According to the agreement, SouthernEra will initially be project manager for all six permit areas and BHP Billiton can earn a 25 percent interest in a specific permit area and become project manager by completing a 300 ton bulk sample on any kimberlite discovery.

An additional 25 percent interest in that individual permit area may be earned by the completion of a pre-feasibility study.

The majority of SouthernEra's permits in the DRC lie within what is considered a 'kimberlite emplacement corridor’.

BHP owns 80 percent of Ekati, Canada’s first diamond mine. It is stepping up diamond exploration in Africa, recently deciding to fund all kimberlite and alluvial exploration at Petra's Alto Cuilo project in northern Angola.