Gem Diamonds in talks with Canadians

One of the City of London's highest profile rainmakers was looking at another windfall today, after his client Gem Diamonds said it is in merger talks.

Ian Hannam of JP Morgan Cazenove is advising the FTSE 250 outfit in discussions with Canada's Lucara Diamond Corp, the latest deal for a man best known for merging NTL and Virgin Media and indeed bringing together JP Morgan with the blue-blooded investment bank.

Gem released a statement following weekend press talk, confirming its plans.

It used the standard form of words: "These discussions are at a very early stage and there can be no certainty the contemplated merger will occur."

No terms were mentioned, but the shares moved up 4%, 10.9p to 280.9p. At that price Gem is valued at £388 million.

Gem said it expects to publish an updated statement of reserves and resources to include its Botswana project Gope at or before the release of its April trading statement.

Last October, Lucara agreed to buy AIM-listed exploration company African Diamonds for £51 million in a deal to enable both companies to benefit from the AK6 diamond discovery in Botswana.

Bloomberg reported over the weekend that Gem and Lucara have been in negotiations since February.