DUBLIN-BASED exploration group West African Diamonds said yesterday that it had received a third-party approach that might lead to an offer for the company.
The approach has come from a privately-owned group with diamond interests. A bid of at least 20 pence a share is expected.
West African’s shares closed up 3 pence or 21.8 per cent at 16.75 pence on the Alternative Investment Market in London. The shares have been in steady decline since February 29th when they traded at 27 pence each.
The initial approach is believed to have been made about six weeks ago. A non-binding memorandum of understanding has been signed and due diligence is being conducted. A conclusion is likely within eight weeks.
It is understood that management is not involved in the bid but some members of the board will remain with the company. Founder John Teeling is expected to cut his ties with the group.
West African Diamonds also said it planned to expand its operations in Guinea but would scale down in Sierra Leone, due to a “deteriorating security situation” and disappointing results at its Plant 11 project there.
The company said it bolstered its short-term working capital through the issue of a £385,000 convertible loan at 17p a share.
West African Diamonds was a spin-off from Teeling’s African Diamonds and listed in January 2007 at 20 pence a share. It has a market cap of £5.5 million.
