RE: RNS6 Feb 2017 11:38
Botswana Diamonds (BOD.L) – SPECULATIVE BUY*: Vutomi Option
Market Cap: £6.1m; Current Price: 1.8p
Earn into advanced diamond project, located in South Africa
Botswana Diamonds has entered into an option and earn in agreement with Vutomi Mining and Razorbill Properties 12 (collectively called Vutomi) to acquire advanced kimberlite projects located in South Africa.
Vutomi owns 10 prospecting rights covering 50,000ha of ground that contains 20 kimberlites, many of which are diamondiferous, located in the Limpopo, North-West and Free State Provinces of South Africa.
The Flagship project is Frishgewaagt, located in the Limpopo Province and adjacent to the Marsfontein Mine previously operated by De Beers. Frishgewaagt contains a 4km long dyke and blow system. A detailed ground based geophysics and a sampling programme has been completed and a diamond and percussion drill programme is currently underway improve the understanding of diamond grade and size. The previous sampling returned an average rough diamond value of $180/ct from 247cts. All mining permits are in place at the project.
n Botswana Diamonds has the option to acquire a 72% interest in Vutomi, in stages (outlined in next bullet below), for a total of £942,000 in cash, £581,000 of which is spent on the project, and 100m shares. The balance of Vutomi will be owned by the Company’s Black Economic Empowerment partners.
n Botswana Diamonds will pay Vutomi an exclusivity and option fee of £122,000 within 60 days, £61,000 in cash and £61,000 in shares at 1.9p. Following this, Botswana Diamonds will have 12 months to invest £215,000 on exploration to earn 15% of the Vutomi and will gain the exclusive right to fund the projects. Botswana Diamonds will then have an additional 12 months to fund an additional £366,000 on exploration to earn an additional 25% interest in Vutomi. Once this is completed Botswana Diamonds will have 9 days to issue the balance of 96.8m shares and settle Vutomi’s shareholders loan accounts of £300,000 in cash to earn an additional 32%.
n On the commencement of the agreement Vutomi will establish a technical committee made of 2-4 representatives of both Botswana Diamond and Vutomi. James Campbell will be appointed to the technical committee.
Northland Capital partners view: Very positive news for Botswana Diamonds giving the Company access to an advanced exploration project, with near-term production potential, at low initial acquisition cost and the opportunity to earn a majority interest should the result prove to be positive. The Company will also continue its efforts on its earlier stage exploration projects located in Botswana as it looks to advance this exciting new interest.
Dr Ryan D. Long +44 (0)20 3861 6621
rlong@northlandcp.co.uk
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