Last checked at (Sharecast News) - Botswana Diamonds announced on Wednesday that, following outside interest in acquiring its South African associate company Vutomi Mining, it had exercised its pre-emptive right to acquire the outstanding third-party interests in Vutomi and Razorbill Properties.
The AIM-traded firm said Vutomi held the mineral rights to the Thorny River Diamond Project, as well as other exploration assets.
It said the consideration for Vutomi comprised 56,989,330 new shares in the company which, at the closing mid-market price on 28 September of 1.1p per share, was valued at £0.63m.
The company said it had agreed that, immediately on completion, it would sell 26% of Vutomi for a deferred consideration of $0.32m to its local South African empowerment partner Baroville Trade and Investments 02, in order to comply with South African requirements on empowerment ownership, which would be funded by a loan from Botswana Diamonds.
On completion, the company would own 76% of Vutomi.
"Since working on Thorny River 30 years ago, we recognised potential for discoveries on a kimberlite system spanning 20 kilometres," said managing director James Campbell.
"Recent drilling vindicated this view and indicates potential for additional nearby discoveries."
Campbell explained that, following a third-party offer for Vutomi, Botswana Diamonds had exercised its pre-emption rights.
"This transaction streamlines exploration activities and involves the local community as supportive stakeholders in this development."
The acquisition of Vutomi remained conditional on customary regulatory and competition authority approvals in South Africa, including MPRDA Section 11 approval for the transaction, which was expected to complete during the first half of 2022.
"We are very positive on the production opportunities for the Thorny River properties owned by Vutomi," said chairman John Teeling.
"An outside company made an offer for Vutomi.
"Rather than accept the offer, we exercised our pre-emptive right to acquire the outstanding shares."
Teeling said that in turn, it then sold sufficient shares to a local South African group to ensure compliance with black empowerment regulations.
"The unsolicited outside offer reinforced our belief that there is something worthwhile in Thorny River.
"We acted to preserve shareholder value."
At 1005 BST, shares in Botswana Diamonds were up 2.73% at 1.13p.
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