EHR inks $1m agreement to acquire Nanuk Diamonds

by Leena Thomas
Image: EHR Resources

EHR Resources (ASX: EHX) announced that it has entered into an agreement to acquire 100% of Canada-based Nanuk Diamonds Inc. from Prospect AG Trading Pty Limited.

EHX said that the A$1m acquisition will be funded through the issue of 20 million fully paid shares at an issue price of A$0.05 per share. The company reported that the acquisition reflects broader strategy focus on the upstream diamonds business.

EHX also announced that the global diamond expert, Mr. Peter Ravenscroft will join the Board.

Nanuk Diamonds Inc.

Nanuk Diamonds is the holding company and 100% owner of 625 mineral claims located East of the Ungava Bay in Northern Quebec.

Nanuk Diamonds’ mineral claims are located in the area where Twin Mining Corporation’s Torngat Project was active from 1999 to 2001, during which time bulk and infill samples of 350 tonnes had retrieved close to 2,000 diamonds, including 300 macro diamonds.

In 2017, Nanuk Diamonds acquired 570 claims in order to reassess the Torngat Project’s potential by integrating data from previous owners and exploring for new kimberlites. In 2019, 118 mineral claims with little potential were dropped and 173 additional prospective mineral claims were added.

Acquisition of Nanuk Diamonds

The company reported that it has entered into an agreement to acquire 100% of Nanuk Diamonds Inc. from Prospect AG Trading Pty Limited. It may be noted that Prospect is a company associated with Mr. Michael O’Keeffe, a director of EHX, and 9064-6316 Quebec Inc.

Terms of agreement

The company reported that the total consideration for the purchase of Nanuk Diamonds is A$1m. This will be satisfied by the issue of 20 million fully paid ordinary shares in the Company, in the Company at a deemed issue price of A$0.05 per Share payable by the issue of 10 million Shares to each of the Vendors (Prospect AG Trading and Michael O’Keeffe) as each of them owns a 50% interest in Nanuk Diamonds.

The terms state that there are no milestoned payments.

EHX said that as Mr. O’Keeffe is a director of the Company and a substantial shareholder with an interest of 11.08%, shareholder approval for the Transaction will be sought. Once shareholders approve the acquisition of Nanuk Diamonds, Mr. O’Keeffe’s shareholding in EHX will increase to 16.39%.

EHX said that the completion of the Transaction is conditional on the Company being satisfied with the results of its due diligence on the Company and its assets. The Transaction agreement also contains customary warranties and termination rights.

The Company said that it anticipates convening a meeting of shareholders towards the end of January to seek shareholder approval for the acquisition of Nanuk Diamonds, and will soon forward a Notice of Meeting to shareholders.

Appointment of Peter Ravenscroft

The company announced that the acquisition of Nanuk Diamonds by EHX is part of a broader corporate strategy related to diamonds, particularly in Canada. EHX said that a recognised expert in this field, Mr. Peter Ravenscroft, will join the board of EHX to assist with the implementation of this strategy.

Mr. Peter Ravenscroft has 40 years of experience in the international mining industry, with specific knowledge of diamonds, and a background in exploration, geostatistics, resource evaluation, and mine planning.

Management comments

EHX’s Chairman, Mr. Stephen Dennis, said: “The acquisition of Nanuk Diamonds provides an excellent, low cost, point of entry to the diamonds sector for EHX, and we look forward to progressing work at Nanuk in the northern summer of 2020, as well seeking other opportunities in diamond exploration.

We welcome Peter Ravenscroft to the EHX Board, and we are delighted to have someone with Peter’s knowledge and experience, particularly in diamonds, joining the Company to spearhead our entry into this exciting sector.”