Shares in Stellar Diamonds were sparkling today, having risen as much as 175 per cent after the company revealed it was in "advanced negotiations" over a possible takeover deal.
The Alternative Investment Market-listed miner said it was in talks with Australia's Newfield Resources over a possible bid that would give Stellar shareholders 12.7p per share held, a 452 per cent premium on Stellar's closing share price yesterday.
The offer is conditional on Newfield securing underwriting for a AU$30m (£16.9m) rights issue, the proceeds of which would be used to advance Stellar's 4.5m carat Tongo-Tonguma project in Sierra Leone into production.
Newfield has a number of diamond exploration licences in Sierra Leone as well as several gold projects in western Australia.
The boards of both companies believe the combination would create a well-funded, enlarged diamond development company focused on Sierra Leone.
The deal is also conditional on shareholder approval.
In the announcement, Stellar said: "Whilst the negotiations with NWF [Newfield] are very advanced at this stage and this announcement has been made with the approval of NWF, there can be no certainty that any offer will be made for the company nor as to the final terms of any offer."
At the time of writing, shares were up 156 per cent at 5.89p.