Timis snubs bid for stake in diamonds venture

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The Independent Online

Frank Timis, the controversial businessman, has rejected an offer of £105m for his 34 per cent stake in Sierra Leone Diamond Company.

The rebuff came as it emerged that the bidder, Audley Capital Advisors, an investment vehicle run by the activist shareholder Julian Treger, had increased its stake in SLDC from 4.2 to 6 per cent.

Mr Timis had been offered 275p a share for his stake. SLDC shares closed at 193p yesterday, up 19.5p, valuing the company at £214m. At 275p a share, SLDC would be worth £305m. The company floated at 75p in February 2005.

SLDC said that Audley had made an offer for Mr Timis's stake, and it wanted to buy a further 20 per cent, which would give it a majority stake in the company.

In a statement, SLDC said: "Mr Timis has advised the SLDC board and written to Audley ... stating that he is a long-term holder of the shares and neither Mr Timis nor TDC [the trust which holds the stake] have any interest in selling the shares."

Mr Timis has concentrated on SLDC since being ousted last year from Regal Petroleum, a much-hyped oil exploration company, only to find that its most promising well was dry.

SLDC owns licences to explore for diamonds over a vast area - covering roughly half of Sierra Leone.

It is just about to start seeing cash flows, with its first sale of diamonds expected to fetch $15m (£8.3m) in the next few weeks.

Diamond mining is not developed in Sierra Leone, despite the company's rich potential.

Currently all diamond activity is done through alluvial mining, the age-old method whereby surface-level material is sifted for diamonds using pans.

SLDC is using alluvial mining to provide cash while it looks for the source of those diamonds - which would be contained in hard rock further up river.

In a recent research report, Canaccord, the broker, predicted that existing projects would see SLDC achieving cash flow of $150m a year.