The acquisition will allow Goodrich to gain control of Gem Diamond’s Ellendale Diamond Mine in Western Australia.

Goodrich in exchange will pay Gem Diamonds $3.1m upfront cash on closure of the deal and a further $11.2m in installments spread over 12 months.

Gem Diamonds would also receive cash for working capital incurred between the date of signature and the agreement’s effective date of 31 December 2012.

Goodrich will fund the acquisition via a capital raising with the transaction expected to close by January 2013.

Goodrich chairman Alex Alexander commented that the Ellendale Diamond Project adds significant value to the company’s shareholders.

"We intend to complement the existing mining operation with an aggressive exploration programme on Ellendale’s highly prospective ground, aimed to increase the reserves and the life of the mine," Alexander added.

Kimberley Diamond Company, which holds the mining lease for the project, generated $57.6m in sales from Ellendale for the half year ending June 2012 and recovered a total 78,881 carats.

Gem Diamonds Australia is the holding company of Kimberley Diamond Company.