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(Alliance News) - Botswana Diamonds PLC on Thursday announced it has agreed terms for a new agreement with Vast Resources PLC which would replace the Heritage concession agreement between the two firms.
Back in October 2018, Botswana Diamonds concluded an agreement with Vast to develop Vast's Heritage concessions in Zimbabwe's Marange diamond fields. At that time, it was decided that a separate agreement would be reached covering joint development of diamond properties outside the Marange fields.
Following this, Vast entered a joint venture with Chiadzwa Mineral Resources Private Ltd, a Zimbabwe firm owned by the Chiadzwa Community Development Trust. This joint venture agreement covered the Chiadzwa Community diamond concession, also located in the Marange fields.
A new company, Katanga Mining Private Ltd, was created in order to operate the Chiadzwa joint venture. Katanga is intended to conclude a joint venture agreement with Zimbabwe Consolidated Diamond Co for the exploration and mining of the Chiadzwa concession and the marketing of diamonds from the operation.
Reflecting the area which will likely be licenced by Vas, Botswana Diamonds and vast have inked a new agreement replacing the Heritage concession agreement.
The new agreement's principal terms are the formation of a new company which will hold the interest of vast in the Chiadzwa Community joint venture and Katanga, as well as the intent to issue new shares representing 2.5% of this new company to Botswana Diamonds once the detailed agreement between Katanga and Zimbabwe Consolidated Diamond Co becomes effective.
Further, in consideration for shares in the new company, Botswana Diamonds will "provide for 5 years its management know-how at no charge (with a minimum of 40 hours per month) to Vast and Newco for exploration, mining, processing and marketing in relation to the Chiadzwa Community diamond concession". Vast will provide all capital requirement for the project commencement on a loan account to the new company, up to USD10 million.
Should Botswana Diamonds decide to sell or dispose of its interest in the new company, Vast will have the right to acquire that interest at fair value.
Botswana Diamonds Chair John Teeling said: "Zimbabwe is opening up to investment. The country is rich in resources and has significant diamond potential. Vast Resources is at an advanced stage in finalising an agreement with the Central Authorities on a package of ground in the Chiadzwa / Marange area. This is a revised package from that on which Botswana Diamonds and Vast Resources had previously agreed to cooperate. In the light of this development, our previous agreement with Vast has been revised on new terms acceptable to the board.
"We look forward to the diamond agreement being concluded and to work starting on what is highly prospective ground. Botswana Diamonds is also studying additional opportunities in Zimbabwe."
Shares in Botswana Diamonds closed down 0.3% at 0.85 pence in London on Thursday, while Vast Resources' shares closed up 1.1% at 0.33p.
By Anna Farley; annafarley@alliancenews.com
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