TIDMBOD
RNS Number : 3900J
Botswana Diamonds PLC
23 August 2021
23(rd) August 2021
Botswana Diamonds PLC
("Botswana Diamonds" or the "Company")
Joint venture acquisition of Ghaghoo diamond mine in
Botswana
Botswana Diamonds plc ("BOD") is pleased to announce that Okwa
Diamonds Pty Ltd, a joint venture with Vast Resources plc ("VAST")
in which Botswana Diamonds has an initial 10% carried interest, has
today conditionally agreed to acquire Gem Diamonds Botswana Pty Ltd
("GDB"), a wholly owned subsidiary of Gem Diamonds Ltd ("Gem
Diamonds"), for a cash consideration of US$4 million. GDB's primary
asset is the fully permitted Ghaghoo diamond mine in central
Botswana which is currently under care and maintenance.
BOD has an initial free carried interest of 10% in Okwa Diamonds
Pty Ltd ("Okwa") for the first US$15 million of expenditure by
Okwa, which is being funded by VAST (including the acquisition cash
consideration). Thereafter, BOD will not be diluted below 2.5% of
Okwa. BOD can also earn up to a further 20% interest in Okwa
through funding 20% of expenditure. Under the terms of the joint
venture with VAST, BOD will be the operator of the Ghaghoo mine
until such time as an agreed management team is in place.
The acquisition of GDB is conditional, inter alia, on relevant
regulatory and competition authority approvals in Botswana and is
expected to complete during the latter part of 2021.
Highlights
-- Ghaghoo is a 10.8 Ha kimberlite pipe in central Botswana,
300km north-west of Gaborone which is currently on care and
maintenance
-- The kimberlite pipe has a reported SAMREC compliant Indicated
Resource of 79.3 million tonnes at an average grade of 19.5 cpht
and diamond value of $242/ct (2014 data)
-- Diamond assortment includes high-value fancy-coloured
diamonds, such as orange and blue stones
-- Conditional acquisition by joint venture, Okwa, of a fully
permitted diamond mine including mine infrastructure,
fit-for-purpose processing plant and camp, for US$4m to be funded
by VAST
-- Ghaghoo is currently under care and maintenance the intention
is to return the mine back into being a commercially successful
diamond-producing asset
-- Botswana Diamonds has an initial 10% carried interest in Okwa
and has been appointed as the operator
James Campbell, Managing Director , commented: "Working with our
joint venture partner VAST, we have completed thorough due
diligence on Ghaghoo. We believe there are significant
opportunities to improve Ghaghoo's operating and financial
performance through both the application of new and optimisation of
existing technologies along with a strongly recovering diamond
market. Gem Diamonds' advanced underground mine development and the
surface infrastructure already in place, means a return to
production is potentially possible with an overall objective to
target a return to name plate capacity of 1.25 million tonnes
yearly."
John Teeling, Chairman , commented: "Our joint venture enables
us to acquire an interest in an advanced mining project at minimal
initial cost. Ghaghoo is one of the largest available diamond
resources, and is contiguous with our KX36 project which should
potentially create synergies between operations. Ghaghoo and KX36
are both located in the Central Kalahari, which is our core area of
focus in Botswana. VAST are funding the acquisition cost and
initial development capital, and our initial 10% free carry. BOD is
the operator for the project and has marketing rights equivalent to
our shareholding in Okwa. This is a very good development for
BOD."
Background on Ghaghoo
Ghaghoo is a 10.8 hectare kimberlite pipe located in the Central
Kalahari of Botswana and was discovered in 1982 by Falconbridge
Mining (later Xstrata) and evaluated in joint venture with De Beers
up to 2007. Gem Diamonds acquired Ghaghoo from De Beers and Xstrata
in May 2007. Gem Diamonds continued to evaluate the project and a
study was undertaken in 2010 to determine the most viable way in
which to exploit the deposit. A Mining License was awarded to GDB
in 2010. Further work on the kimberlite was deemed appropriate, and
Gem Diamonds embarked on underground development to bulk sample the
pipe in 2011/2012 through a decline shaft, and this developed into
commercial production in 2015.
GDB is the holder of mining licence 2010/97L issued in terms of
Section 41 of the Botswana Mines and Minerals act which grants GDB
a mining licence for 25 years until 21 December 2036. The
Government of Botswana does not have any equity in GDB but a
royalty of 10% is payable to the Government of Botswana on all
diamonds produced and sold.
Operations were based on a small underground mine that was
ultimately not profitable due largely to the poor diamond market
conditions at that time and operational issues. Accordingly, in
February 2017, Gem Diamonds placed the mine on care and maintenance
after recovery of just under 150,000 carats of diamonds.
There is extensive infrastructure on-site including a diamond
processing plant comprising an autogenous mill, dense media
separation plant ("DMS"), x-ray recovery and sort house. BOD's due
diligence has identified that there is a small low-grade kimberlite
stockpile and DMS tailings of up to approximately 80,000 m3 and
which may contain up to 60% kimberlite.
A resource estimate for Ghaghoo, which uses a bottom cut-off of
+1.5mm was prepared by Venmyn with an effective date of 1 January
2014. This estimate had a reported SAMREC compliant Indicated
Resource of 79,390,000 tons with an average grade of 19.51 cpht and
diamond value of $242/ct and an Inferred Resource of 28,777,000
tons with an average grade of 17.52 cpht and an average diamond
value of $239/ct.
Share Sale Agreement
Under the Share Sale Agreement entered into between BOD, VAST,
Okwa and Gem, Okwa has conditionally agreed to acquire GDB, a
wholly owned subsidiary of Gem Diamonds, for a cash consideration
of US$4 million (the "Purchase Price"). In addition, the Purchase
Price will be adjusted upwards or downwards by an amount equal to
net current assets (excluding agreed inventory items) as per the
final balance sheet of GDB to be prepared on the effective date
(being the tenth business day following the date on which the last
condition has been satisfied) - this amount is expected to be
minimal.
Completion is subject to a number of conditions (with a long
stop date of 31 January 2022 unless otherwise agreed between the
parties) including:
- written confirmation of requisite financing undertakings from
a bank acceptable to Gem Diamonds guaranteeing payment of 80 per
cent of the Purchase Price;
- Okwa providing a replacement guarantee of US$3 million in
terms of section 38 of the Mines and Minerals Act with accompanying
evidence of acknowledgement and consent by the Government of
Botswana of the cancellation of the Gem Diamonds' Guarantee;
- written approval from:
(a) the Government of Botswana approving the transaction in
accordance with section 50 of the Mines and Minerals Act; and
(b) the Competition Authority of Botswana approving the
transaction in accordance with the provisions contained in Part X
of the Botswana Competition Act (CAP 46:09).
BOD expects the conditions to be fulfilled and the transaction
to complete during Q4 2021. Under the Share Sale Agreement, the
consideration is payable in two instalments. The initial payment of
US$2 million is to be paid five days prior to the effective date
and the second payment by 23 December 2021, unless the initial
payment has not already been made, in which case the full amount of
US$4 million will be payable 5 five days prior to the effective
date.
BOD and VAST as shareholders of Okwa have severally guaranteed
the obligations and performance of Okwa under the Share Sale
Agreement in proportion to their respective shareholdings in Okwa
from time to time. The replacement guarantee under the Mines and
Minerals Act is a guarantee for the rehabilitation obligation on
closure of the mine which has been independently assessed at
BWP34,332,195 (approximately US3 million) on sudden closure.
Joint Venture with VAST
BOD and VAST are the shareholders in Okwa, which was established
as a special purpose vehicle to carry out due diligence and acquire
GDB. Conditional on completion of the Share Sale Agreement, BOD and
VAST have agreed the terms of shareholders agreement. On completion
of the acquisition, the board of Okwa will constitute a technical
subcommittee for oversight of the operation of the mine and to
determine funding requirements and VAST will be entitled to appoint
two directors (of which one will be Chairman) and BOD will be
entitled to appoint one director.
VAST is responsible for funding Okwa with the first US$15
million of funding required for the purposes of carrying out due
diligence, acquiring GDB and placing the mine back into production.
BOD has a 10% free carry in consideration of the services it has
provided to Okwa up to maximum total expenditure of US$15 million
(including the acquisition consideration) and may not be diluted
below 2.5% thereafter. BOD also can earn-in up to a further 20%
interest in Okwa (thereby increasing its total interest to 30%)
through funding 20% of expenditure.
Under the joint venture agreement, the parties have agreed that
BOD will be responsible for leadership and technical advice until
the mine reaches steady state production and will be appointed
(subject to agreement of the relevant documentation) as the
operator of the Ghaghoo mine until such time as an agreed
management team is in place. BOD will oversee the recruitment of
the operational team which will be directly employed by Okwa. BOD
also has diamond marketing rights equivalent to its shareholding in
Okwa.
The shareholder agreement contains standard rights of
pre-emption over each parties' shareholding and shareholder loans
and drag and tag rights in the event of the sale of Okwa to a third
party.
Ghaghoo development plans
BOD and VAST have jointly undertaken extensive internal and
third-party due diligence work on Ghaghoo including technical
(Paradigm Project Management), financial, legal (Khan corporate
law), diamonds (QTS Kristal Dinamika) and mine potential
(Interlaced) which indicates that there is significant potential
upside in both the potential diamond grade and value as well as
various operational efficiencies. A detailed risk assessment was
also carried out which included the resource, mining method (in
particular with respect to the ingress of sand into the first
underground mining level) and infrastructure.
The next stage is expected to include the preparation of an
updated feasibility study which is chiefly focused on producing a
detailed underground mine plan as much of the other work has
already been done. Continuation of the underground mine plan was
determined as the most commercial option in PPM's desktop study and
is line with the terms of the currently awarded Mining License.
A sinkhole, caused by the partial collapse of a portion of the
crown pillar possibly due to over mining, covers an area on the
first level of eight in the kimberlite pipe and limits the access
to this particular zone of higher-grade kimberlite. Upper
production levels will need to have reduced stope extraction so as
to better manage the crown pillar and thereby reduce any potential
further sand ingress into the underground workings. The changes to
the mine plan are not expected to delay access to first ore as
there are existing pre-developed crosscuts in place.
The Ghaghoo mine will also need to be de-watered. A rare large
earthquake with an epicentre approximately 40km east of Ghaghoo in
2017 resulted in the rupture of the underground water seal leading
to a large influx of water into the underground workings. A site
visit indicated that the water seal has been repaired and that this
has significantly reduced the water ingress into the underground
workings and which should result in a mine dewatering time to about
4 months.
Preliminary work has also started on investigating alternative
technologies in the diamond sorting area to improve diamond
recovery. The re-commissioning programme for the plant will need to
include an audit of the DMS operating parameters and optimisation
of the autogenous mill to help minimise any loss of diamonds to the
DMS tailings.
Sampling is planned on the DMS tailings to assess the diamond
potential of the tailings and to establish a Total Content Curve
("TCC") for the kimberlite. The results of this exercise will be
used as an input to the feasibility study and could possibly
provide the potential for an upgrade in the resource estimate.
The economic performance (and long-term viability) of the mine
will also depend on significantly lower unit power costs, such as
conversion of the existing diesel generators to solar power or feed
from the national grid, together with improvements in road access
and potential fiscal concessions.
Further AIM Disclosures
In GDB's audited annual financial statements for the year ended
31 December 2020, GDB reported a loss before taxation of Pula
35,818,687 (equivalent to approximately GBP2.3 million). As at 31
December 2020, GDB had audited total assets of Pula 37,355,879
(equivalent to approximately GBP2.4 million) and total liabilities
of Pula 45,858,060 (equivalent to approximately GBP3.0
million).
BOD has acquired its 10% carried interest in Okwa in
consideration of the services it has provided to Okwa and does not
currently have a funding commitment to Okwa nor does BOD currently
intend to provide further funding under its earn-in arrangements.
BOD's interest in Okwa will be accounted for as an investment .
Under the joint venture agreement, while BOD will be appointed
(subject to agreement of the relevant documentation) as the
operator of the Ghaghoo mine, the operational team will be directly
employed by Okwa and BOD may recharge identified executive
management costs to Okwa.
Forward Looking Statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identi ed by their use of terms and phrases such as "believe",
"could", "should" "envisage", "estimate", "intend", "may", "plan",
"will" or the negative of those, variations or comparable
expressions, including references to assumptions. These
forward-looking statements are not based on historical facts but
rather on the Directors' current expectations and assumptions
regarding the Company's future growth, results of operations,
performance, future capital and other expenditures (including the
amount, nature and sources of funding thereof), competitive
advantages, business prospects and opportunities. Such forward
looking statements re ect the Directors' current beliefs and
assumptions and are based on information currently available to the
Directors. A number of factors could cause actual results to differ
materially from the results discussed in the forward-looking
statements including risks associated with vulnerability to general
economic and business conditions, competition, environmental and
other regulatory changes, actions by governmental authorities, the
availability of capital markets, reliance on key personnel,
uninsured and underinsured losses and other factors, many of which
are beyond the control of the Company. Although any forward-looking
statements contained in this announcement are based upon what the
Directors believe to be reasonable assumptions, the Company cannot
assure investors that actual results will be consistent with such
forward looking statements.
This release has been approved by James Campbell, Managing
Director of Botswana Diamonds plc, a qualified geologist
(Pr.Sci.Nat), a Member of the Geological Society of South Africa, a
Fellow of the Southern African Institute of Mining and Metallurgy,
a Fellow of the Institute of Materials, Metals and Mining (UK) and
with over 35-years' experience in the diamond sector.
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 as it forms part of
UK Domestic Law by virtue of the European Union (Withdrawal) Act
2018.
The pers on who arranged the release of this announcement on
behalf of the Company was James Campbell.
A copy of this announcement is available on the Company's
website, at www.botswanadiamonds.co.uk
Enquiries:
Botswana Diamonds PLC
John Teeling, Chairman +353 1 833 2833
James Campbell, Managing Director +27 83 457 3724
Jim Finn, Director +353 1 833 2833
Beaumont Cornish - Nominated Adviser
Michael Cornish
Roland Cornish +44 (0) 020 7628 3396
Beaumont Cornish Limited - Broker
Roland Cornish
Felicity Geidt +44 (0) 207 628 3396
First Equity Limited - Joint Broker
Jason Robertson +44 (0) 207 374 2212
Blytheweigh - PR +44 (0) 207 138 3206
Megan Ray +44 (0) 207 138 3553
Rachael Brooks +44 (0) 207 138 3206
Said Izagaren +44 (0) 207 138 3206
Naomi Holmes +44 (0) 207 138 3206
Teneo
Luke Hogg +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
Ross Murphy +353 (0) 1 661 4055
www.botswanadiamonds.co.uk
Beaumont Cornish Limited, which is authorised and regulated in
the United Kingdom by the Financial Conduct Authority, is acting as
nominated adviser to the Company in relation to the matters
referred herein. Beaumont Cornish Limited is acting exclusively for
the Company and for no one else in relation to the matters
described in this announcement and is not advising any other person
and accordingly will not be responsible to anyone other than the
Company for providing the protections afforded to clients of
Beaumont Cornish Limited, or for providing advice in relation to
the contents of this announcement or any matter referred to in
it.
Glossary
Crown Pillar : A crown pillar, defined as a rock mass situated
above an uppermost stope of the mine, can be one of two types: a
"surface crown pillar" and "crown pillar between open pit and
underground".
Dense Media Separation plant : Dense medium separation (DMS) is
a process whereby particles are sorted primarily on the basis of
their densities. Particles with a wide range of densities are
introduced into a medium suspension of a given density. Particles
that are lighter than the medium density rise. These are commonly
referred to as floats.
Indicated Resource : An 'Indicated Diamond Resource' is that
part of a Diamond Resource for which quantity, grade, value,
densities, shape and physical characteristics of the deposit are
estimated with sufficient confidence to allow the application of
Modifying Factors in sufficient detail to support mine planning and
evaluation of the economic viability of the deposit. Geological
evidence is derived from adequately detailed and reliable
exploration, sampling and testing and is sufficient to assume
geological and grade continuity between points of observation. An
Indicated Mineral Resource has a lower level of confidence than
that applying to a Measured Mineral Resource and may only be
converted to a Probable Mineral Reserve (SAMREC).
Inferred Resource : An 'Inferred Diamond Resource' is that part
of a Diamond Resource for which quantity, grade and average diamond
value are estimated on the basis of limited geological evidence and
sampling. Geological evidence is sufficient to imply, but not
verify, geological and grade continuity. An Inferred Diamond
Resource has a lower level of confidence than that applying to an
Indicated Diamond Resource and must not be converted to a Diamond
Reserve. It is reasonably expected that the majority of Inferred
Diamond Resources could be upgraded to Indicated Diamond Resources
with continued exploration (SAMREC).
Carat (ct) : a unit of weight for precious stones and pearls,
equivalent to 200 milligrams.
ENDS
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
AGRKZGZRNZRGMZM
(END) Dow Jones Newswires
August 23, 2021 02:00 ET (06:00 GMT)
Botswana Diamond (AQSE:BOD.GB)
Gráfico Histórico do Ativo
De Jan 2025 até Fev 2025
Botswana Diamond (AQSE:BOD.GB)
Gráfico Histórico do Ativo
De Fev 2024 até Fev 2025
