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(Alliance News) - Botswana Diamonds PLC and Vast Resources PLC on Monday said their joint venture, Okwa Diamonds Pty Ltd, has acquired the Ghaghoo diamond mine in Botswana for USD4 million.
Ghaghoo diamond mine is a 10.8 hectare kimberlite pipe in central Botswana, South Africa, currently under care and maintenance. It is Gem Diamonds Ltd's primary asset under the subsidiary of Gem Diamonds Botswana Pty Ltd.
Okwa's purchase of the mine is conditional on relevant regulatory and authority approvals in Botswana and is expected to complete towards the end of the year.
Okwa Diamonds was founded by mining and resource development company Vast and diamond project company Botswana Diamonds as a special purpose vehicle company to acquire Gem Diamonds' Botswana arm. Vast holds the majority 90% share in Okwa Diamonds.
The USD4 million sum is payable in two instalments of USD2 million each. The first instalment will be payable five days after suspensive conditions are fulfilled and the second on or before December 31.
Gem Diamonds said it will "use the sale proceeds for general corporate purposes".
Botswana Diamonds holds a 10% initial free carried interest in Okwa Diamonds for its first USD15 million of expenditure.
Vast will fund the acquisition and bring the mine into steady state production up to a maximum of USD15 million without any reduction in Botswana Diamond's share. Botswana Diamond's will have the right to contribute to earn up to a further 20%.
Under the terms of the joint venture, Botswana Diamonds will be Ghaghoo mine's operator until a management team is agreed and in place.
"The proposed acquisition of the Ghaghoo Mine in Botswana is a highly compelling opportunity for Vast to deliver diamond production in a relatively short period, benefitting from a fully equipped mine that has USD250 million of investment, infrastructure and a significant resource of quality gems that include large stones and fancy colours," said Vast Chief Executive Andrew Prelea.
Ghaghoo's diamond offering includes orange and blue stones. The joint venture's intention is "to return the mine back into being a commercially successful diamond-producing asset," said Botswana Diamonds.
Shares in Botswana Diamonds were down 0.6% at 1.07 pence in London on Monday. Shares in Vast were up 1.4% at 7.10p. Shares in Gem Diamonds were down 1.2% at 61.46 pence.
By Josie O'Brien; josieobrien@alliancenews.com
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