KIM kimberley diamond company nl.

sydney morning herald

  1. 1,124 Posts.
    almost confirm take over play, now at what price............mmm

    THE STRUGGLING miner Kimberley Diamond could be rescued by a takeover offer after it yesterday entered a trading halt to review a "potential corporate transaction".

    Industry speculation has centred on a takeover bid from London-listed Gem Diamonds valuing the Australian miner at a premium to its current $225 million market value, although other possibilities could not be ruled out.

    It is believed Gem had a close look at Kimberley earlier this year, but reports of the rumours led to a share price spike which made a takeover offer look less attractive.

    Kimberley executives could not be reached for comment, but a spokesman said the company was expected to make an announcement about a potential corporate transaction tomorrow.

    Gem was not in a trading halt last night, but London Stock Exchange rules do not require an acquirer to cease trading ahead of a deal announcement.

    "Gem Diamonds never comments on market speculation," a Gem spokeswoman in London said. "They are an acquisitive company."

    Kimberley shares traded around $1 in February due to speculation of a potential tie-up with Gem, but the stock had fallen to 52.5c ahead of the trading halt yesterday. Kimberley shares were up 18 per cent in early trading last night in London, where a trading halt did not apply.

    Although Kimberley is Australia's second-largest diamond miner, behind Rio Tinto, its Ellendale mine is not cash flow positive and it has had difficulties with its processing plant.

    In the past month AMP and JP Morgan have ceased to be substantial holders in the company and Goldman Sachs JBWere downgraded its recommendation on the stock to "sell" after Kimberley released a disappointing quarterly report last week which did not meet its production forecasts.

    Kimberley owns 40 per cent of Blina Diamonds, which has nearby tenements and shares the same executive chairman, Miles Kennedy. Blina was not in a trading halt yesterday, but its shares rose 10.5c, or 30 per cent, to 44c.

    Australian Securities Exchange spokesman Matthew Gibbs said the volume of trading in Blina did not look particularly unusual and the market was informed that Kimberley owned 40 per cent of Blina.

    Kimberley's spokesman said Blina was not involved in any corporate activity.

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