Australian gem producer Kimberley Diamonds has accepted a £131 million bid from Clifford Elphick’s Gem Diamonds.

Fully listed Gem, whose boss Elphick is a former luminary of the Oppenheimer empire, made the offer, worth the equivalent of 30p a share, to further its stated ambition to become the world’s largest diamond producer. Africa-focused Gem says the ‘fancy yellow diamonds’ from Kimberley’s Ellendale deposit in Western Australia complements its own output from Lesotho.

Kimberley's chairman Miles Kennedy and his board have recommended the Gem offer and shareholders representing 14.9 per cent of the equity have already agreed to sell, even though the bid is well below what some analysts argued Kimberley, which also has a stake in fellow Aussie gem play Blina, was worth and 38 per cent below Kimberley’s peak price of 49p a year ago.

A key part of the deal, pitched at a third more than Kimberley's recently depressed price, is that Gem is to provide Kimberley with a £4.3 million short-term loan facility and plans further capital investment of more than £10 million to ramp up production at Ellendale.

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