In the media

Diamondcorp's acquisition of Sonop to boost profits by $20 million a year

15 August 2007

Source: Mineweb

Diamondcorp’s acquisition of Sonop Diamond Mining may boost operating profits by $20 million per year. Diamondcorp’s production will nearly double to 237,000 carats per year.

South Africa-focused miner Diamondcorp Plc is set to generate an extra $20 million in operating profit per year via its acquisition of privately owned Sonop Diamond Mining, its chief executive said.

Paul Loudon told Reuters that the deal -- which will nearly double the company's production to 237,000 carats a year -- would swing the group into profit after making a loss in 2006.

"Sonop traditionally makes operating profit of $20 million a year, while revenues are around $50 million," he said in a telephone interview on Wednesday.

He added that Sonop's mine produced around 93,000 carats a year, but at around 10 times the value per carat than Diamondcorp's existing diamonds.

"We want to build a significant diamond producing company, and acquiring Sonop is the first step in that strategy," Loudon said.

The deal was struck at $45 million in cash -- to be funded mostly by debt -- and 7.5 million new shares.

Diamondcorp shares were suspended 8.4 percent higher earlier Wednesday at 103 pence, valuing the company at 35.8 million pounds ($71.14 million).

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