Canadian diamond exploration company SouthernEra Diamonds Inc.’s (TSX: SDM) shares were up 10 cents, or by 34 percent, to close at 39.5 cents on the Toronto Stock Exchange Friday, as AIM-quoted Mwana Africa PLC launched a hostile bid to take over the company, in a move aimed at creating the largest diamond miner in the Democratic Republic of the Congo.

Mwana Africa’s shares however closed down nearly eight percent, or 2.75 pence, at 40.5p on the London’s AIM market as the company offered CAN$69.7 million to solidify its position in Africa.

Mwana said it would offer one of its own shares for every 2.3333 SouthernEra shares, giving an implied value of C$0.42 a share, or a 42 Percent premium based on Thursday’s closing prices, and the deal would give Mwana control of an area that produced the world’s fourth-largest Diamond, the 890 carat “Incomparable”, recovered by a young girl from rubble in the early 1980s.

The diamond reportedly took four years to cut into its polished state.

Mwana already holds 16.5 million SouthernEra shares, a 9.92 percent stake, in the company. In addition, the company has entered into lockup agreements with JP Morgan and OZ Management for an additional 22.14 per cent.

Under the proposed deal, SouthernEra shareholders would end up holding about 20.6 per cent of Mwana and the offer represented a 42.4 percent premium to the same shareholders, the company said Friday.

“Mwana’s strategy is to develop into a major resource group on the African continent, exploiting opportunities across different countries and commodities, and focusing on being one of the most efficient and low cost producers in Africa,” said the company’s chairman, Oliver Baring.

He said the strategy included partnering with “industrial majors” one new projects and also being a preferred “vehicle for African investors and entrepreneurs”.

“The proposal to merge Mwana and SouthernEra will allow for management of Mwana to apply its skills to the projects owned by SouthernEra in the DRC and Angola,” Baring said. “We believe that Mwana’s management has the drive, commitment and experience to ensure that SouthernEra’s various opportunities, in particular the Badibanga and Tshikapa projects in the Kasai region and Camfusa project Angola, are developed in an economical and expeditious manner.”

SouthernEra Diamonds runs the world’s fourth-most active diamond-exploration programme, with exploration in Canada, Australia, Gabon, the DRC, Zimbabwe and South Africa.

The company also operates the Klipspringer diamond mine in South Africa and maintains an 18 per cent stake in the Camafuca diamond project in Angola.

Mwana holds exploration and production assets in a range of commodities in the DRC, Ghana and Zimbabwe, and the company says it has been actively building an African diamond exploration and production business.

Its assets include producing nickel and gold mines in Zimbabwe, gold exploration projects in Ghana and gold, zinc and copper-cobalt projects in the DRC.

Mwana, formerly known as African Gold PLC, has been building its diamond production business in the DRC in recent months.

Last May it acquired 20 percent of Société Miniere de Bakwanga (MIBA), the mineral rich country’s leading diamond producer that is based in Mbuji Mayi, a move that signalled its entrance into the diamond industry and significantly strengthened its interests in the country.

The company is also looking at merging with Australian and the DRC-based diamond exploration company Gravity Diamonds in a deal that is expected to be sealed in the second half of the year.

“The diamond concessions of MIBA, Gravity and SouthernEra are contiguous in the DRC,” said Baring. “We believe that, developed together, they would form a solid foundation for a major African diamond exploration and production business.”