Pangea Diamondfields (AIM: PDF) (“Pangea”) received a muted response this morning to news that it would be merging with Oslo listed Swedish exploration and mining group IGE, which is focused diamonds, nickel and gold.
IGE will issue approximately 495 million shares to Pangea. Based on the closing mid market price of IGE shares last Friday, the all share offer values Pangea at approximately 1.7 pence per share.
Pangea noted that the share offer represented an 81% premium to its own share price on Friday, but this will be of little consolation to shareholders who have watched the share price implode from 60 pence when the company listed in October 2006 to around 1 penny now. Along the way, Pangea has diluted many shareholders into oblivion, having issued more than 2 billion shares since IPO.
As part of the merger, IGE will retain its listing in Oslo, but drop the listing on AIM. IGE is also “contemplating” a rights issue to fund further development of the combined group’s assets. While IGE is bulk sampling alluvial diamonds in Angola, its most advanced project is the Ronnbacken Nickel project in Sweden.
Disclosure: The author holds no positions in the company