The Birmingham-based natural resources team at law firm Cobbetts has advised on the £10.4 million acquisition of jewel firm Stellar Diamonds by the AIM-listed West African Diamonds.

The reverse takeover of Stellar, which has a portfolio of diamond exploration projects and producing mines in Guinea and Sierra Leone, marks one of only a handful of resources quotations on AIM in the last two years, with the enlarged group, to be renamed Stellar Diamonds, completing a £5 million fundraising at the same time.

The synergies created by combining the companies’ complementary assets are expected to boost liquidity and assist in building one of West Africa’s leading diamond explorers and producers.

Shares in the enlarged company began trading on AIM on February 22, with a market capitalisation of aboutd £19.4 million.

Corporate partner, Charles Bond, led the deal team for Cobbetts, supported by Dominic Prentis and Kate DaSilva.

Mr Bond said: "The junior resource sector continues to present some good consolidation opportunities, and merging these two companies will provide Stellar Diamonds plc with a strong platform from which to grow both organically and via further acquisitions. We look forward to working with the enlarged group going forward.

"This transaction indicates that confidence is gradually returning to the natural resources sector as diamond prices and demand for base and precious metals continue to rise. It also reinforces the fact that AIM remains a strong platform for ambitious mining and exploration companies looking to raise funds to grow."

The deal comes two weeks after Cobbetts entered the Middle East and North Africa market with the launch of an office in Cairo.