TIDMBOD
RNS Number : 2862N
Botswana Diamonds PLC
29 September 2021
29(th) September 2021
Botswana Diamonds PLC
("Botswana Diamonds" or the "Company")
Botswana Diamonds acquires control of the Thorny River
Project
Highlights
-- Botswana exercises it's pre-emption right to acquire control of Vutomi
-- Control of Vutomi gives BOD the opportunity to develop the Thorny River Project
-- Thorny River is an advanced stage kimberlite exploration
property located at the eastern side of a kimberlite dyke and blow
system spanning Klipspringer Mine, 15km to west, and the iconic
Marsfontein Mine, 4km to the west.
-- Plans are in place to re-activate the mining of the
Marsfontein gravels and dumps which are also controlled by
Vutomi.
Following outside interest in acquiring Vutomi Mining the South
African associate company of Botswana Diamonds, the board of
Botswana has today exercised its pre-emptive right to acquire the
outstanding third-party interests in Vutomi Mining (Proprietary)
Limited ("Vutomi Mining") and Razorbill Properties 12 (Proprietary)
Limited ("Razorbill") (together "Vutomi") (the "Acquisition").
Vutomi holds the mineral rights to the Thorny River Diamond
Project ("Thorny River" or the "Project") as well as other
exploration assets.
The consideration for Vutomi comprises 56,989,330 new ordinary
shares in the Company which, at the closing mid-market price on
28(th) September 2021 of 1.10p per share, is valued at GBP627k.
The Company has agreed that immediately on completion of the
Acquisition, the Company will sell 26% of Vutomi for a deferred
consideration of US$316,333 to the Company's local South African
Empowerment partner, Baroville Trade and Investments 02 Proprietary
Limited ("Baroville"), in order to comply with South African
requirements on empowerment ownership, which will be funded by a
loan from Botswana Diamonds. On completion, the Company will own
76% of Vutomi.
The acquisition of Vutomi is conditional on, inter alia,
customary regulatory and competition authority approvals in South
Africa, including MPRDA Section 11 approval for the transaction,
which are expected to complete during the first half of 2022.
Vutomi and Razorbill are currently owned by, among others, James
Campbell (a director of the Company) and the other directors of
Vutomi. These shareholders are related parties as defined by the
AIM Rules and accordingly, the transaction has been treated as a
related party transaction pursuant to AIM Rule 13.
James Campbell, Managing Director , commented:
"Since working on Thorny River thirty years ago, we recognised
potential for discoveries on a kimberlite system spanning 20km.
Recent drilling vindicated this view and indicates potential for
additional nearby discoveries."
"Following a third party offer for Vutomi, Botswana Diamonds has
exercised its pre-emption rights. This transaction streamlines
exploration activities and involves the local community as
supportive stakeholders in this development."
John Teeling, Chairman , commented:
"We are very positive on the production opportunities for the
Thorny River properties owned by Vutomi. An outside company made an
offer for Vutomi. Rather than accept the offer we exercised our
pre-emptive right to acquire the outstanding shares. In turn we
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".
Background on Vutomi's projects
Vutomi's South African projects will be advanced in tandem with
ongoing Botswana-based exploration programmes, and may have
potential for early commercial diamond mining.
Vutomi's flagship project, Thorny River, spans the Frischgewaagt
and Hartbeesfontein farms, which are located within the Limpopo
Province of South Africa approximately 300km north of Johannesburg.
The Project area encompasses the eastern extent of a kimberlite
blow/dyke complex, along which the former Marsfontein and
Klipspringer diamond mines occur. Both operations were once mined
by a De Beers / SouthernEra joint venture. Thorny River is 4km east
of the Marsfontein Mine, whose diamond grade and quality returned
the entire capital investment in only four days.
Thorny River consists of a 4km long kimberlite blow/dyke system,
where Vutomi has undertaken detailed ground geophysics,
macrodiamond and microdiamond sampling and extensive core and
percussion drilling programmes over the project area. We
encountered Kimberlite intersections in the blow/dyke system of
between 1 and 19 metres.
A sample equivalent to 305.38 dry tonnes of kimberlite and host
rock was taken from Thorny River in December 2017 from a 42-metre
trench on Frischgewaagt, along the strike of the dyke. 512 diamonds
weighing 62.883 carats were recovered from this sample following
treatment through an independent integrated processing facility,
which comprised crushing and re-crush circuits, a Dense Media
Separation ('DMS') plant and grease and x-ray technology for final
recovery.
Data generated from the sample was assessed together with the
results of a 2015 sampling campaign, as well as microdiamond work,
to derive an estimated (modelled) macro grade. The modelling
considered host rock dilution, metallurgical process efficiencies
and the various diamond size frequency distributions with the
result being an estimated Total Content grade range of 46-74 carats
per hundred tonne (cpht - at a bottom cut-off ('BCOS') of +1 mm).
These correlate with the published resource grade of the
neighbouring Klipspringer Mine of 49 cpht (BCOS of +1mm).
The valuation of the diamonds recovered indicated the parcel
average to be US$89/ct in the +11 diamond sieve class, which
compares favourably with US$77/ct achieved in the same diamond
sieve class from the 2015 sampling campaign. The average published
diamond values achieved by Klipspringer were US$130/ct (at a BCOS
of +1mm). However, the diamonds recovered were insufficient to
produce a modelled diamond valuation; therefore the 2016 modelled
diamond value of US$259/ct (at a BCOS of +2mm) continues to
apply.
Gem quality diamonds comprised approximately two thirds of the
value of the parcel. Less than 40% of the parcel illustrated medium
or high fluorescence and less than 10% of the stones were chipped
or broken. Yellow stones were also present and there was a small
population of unusual colours which were near fancy.
Geophysics and drilling programmes on Frischgewaagt over the
last twelve months, including a 9-hole drilling campaign, have
uncovered two interconnected blows (named the River and River
Extension), and the thickest kimberlite intersection to date of 19m
was encountered in these programmes.
Background to the Acquisition
The Acquisition was triggered by an external offer to the
third-party shareholders in Vutomi. As the Company is the largest
shareholder in Vutomi and the operator and recent exploration
results have been particularly encouraging, the Board considered
that Thorny River is a key asset which it did not want to cede
control over. Under the existing shareholder agreements, the
Company had the right to match any offer made for the third-party
owned interest in Vutomi. The Company agreed to match the external
offer which valued the third-party shareholders interest in Vutomi
at US$640,000 assuming full dilution of the third-party
shareholders on conversion of the Company's outstanding convertible
funding which it had provided to Vutomi. The final diluted interest
of the third-party shareholders in Vutomi, some of whom
subsequently matched the Company's convertible funding, was 54.06%
and the external offer was pro-rata adjusted for this interest.
The number of Consideration Shares was fixed at an issue price
of .85p per new ordinary share and which valued the third-party
interests at GBP484k. The Company's share price has subsequently
continued to reflect the progress at Thorny River and, based on the
current price of 1.10p per ordinary share, values the Consideration
Shares at GBP627k.
Share Sale Agreement
Under the Share Sale Agreement entered into between the Company
and its partners in Vutomi, the Company's wholly-owned subsidiary
Kukama Diamonds Investments Limited ("Kukama") has today
conditionally agreed to acquire the outstanding third-party
interests in Vutomi Mining and Razorbill.
The consideration for Vutomi comprises 56,989,330 new ordinary
shares in the Company which, at the closing mid-market price on
28(th) September 2021 of 1.10p per share, is valued at GBP627k.
There are no lock-in arrangements, but the consideration shares
will be issued in two equal tranches (three months apart) following
Completion. Completion is subject to a number of conditions (with a
long stop date of 22 September 2022 unless otherwise agreed between
the parties) including:
-- Section 11 regulatory approval for the transaction in terms of the South African MPRDA
-- the Takeover Regulation Panel of South Africa granting an
exemption in terms of section 119(6) of the South African Companies
Act for the sale of the empowerment partner's shares by Kukama to
Baroville.
-- the Financial Surveillance Department of the South African
Reserve Bank granting the necessary approvals pursuant to South
African Exchange Control Regulations.
-- Conclusion of a contract exploration agreement between the
Company and Vutomi in consultation with the sellers covering site
activities between the signature and closing date.
BOD expects the conditions to be fulfilled and the transaction
to complete during Q2 2022.
The Company has further agreed that, immediately on completion
of the Acquisition, the Company will sell 26% of Vutomi for a
deferred consideration of US$316,333 to the Company's local South
African Empowerment partner, Baroville, in order to comply with
South African requirements on empowerment ownership, which will be
funded by a loan from Botswana Diamonds.
On completion, the Company will own 76% of Vutomi.
The Company has separately agreed to sell its interests in Evoid
to Red Sky Trust ("Red Sky"). Evoid is currently dormant and holds
the Mooikloof prospecting licence and Palmietgat prospecting
licence on which very limited work has been carried out to date.
Red Sky has agreed that as soon as Evoid has the available cash to
do so, Evoid will settle the outstanding shareholder loans provided
by the Company to Evoid and which amounts to ZAR320,374 (equivalent
to approximately GBP16,000). There is no further consideration
payable. Any consideration received from the sale to Baroville and
Red Sky will be retained for working capital.
Related Party transaction
Vutomi Mining and Razorbill are currently owned by, among
others, James Campbell (a director of the Company) and the
directors of Vutomi Mining and Razorbill. Furthermore, the
beneficial owner of Red Sky is Charl Nienaber, a director of Evoid.
These individuals are related parties as defined by the AIM Rules
and accordingly, the transaction has been treated as a related
party transaction pursuant to AIM Rule 13.
The related parties, and the consideration shares to be issued
to them, are set out in the following table:
Table 1: Related Party Consideration Shares to be issued on the
Acquisition of Vutomi Mining and Razorbill
Related Party Status Number of Value of Consideration
Consideration Consideration shares as
Shares Shares (Note a % of the
1) current issued
share capital
---------------- --------------------- --------------- --------------- ----------------
Director of the
James Campbell Company and Vutomi 9,491,955 GBP104,412 1.2%
John Shelton Director of Vutomi 9,491,955 GBP104,412 1.2%
Charl Nienaber Director of Vutomi 11,559,044 GBP127,149 1.46%
Dennis Kekana Director of Vutomi 11,334,161 GBP124,676 1.43%
---------------- --------------------- --------------- --------------- ----------------
Note:
1. Based on the last closing mid-market price of 1.10p per Botswana Diamonds ordinary share
As described above, the Company has separately agreed to sell
its interests in Evoid to Red Sky which has agreed that as soon as
Evoid has the available cash to do so, Evoid will settle the
outstanding shareholder loans provided by the Company to Evoid and
which amounts to ZAR320,374 (equivalent to approximately
GBP16,000). There is no further consideration payable.
As a related party transaction, the Independent Directors of the
Company, being the Board of the Company other than James Campbell,
having consulted with the Company's nominated adviser, consider
that the terms of the transaction are fair and reasonable insofar
as all shareholders are concerned. In reaching this view, the
Independent Directors have taken into account that the price of
Vutomi has been set independently by a third-party offer which
triggered the Company's pre-emption rights, Vutomi (and
particularly the Thorny River Project) is a key asset for the
Company, and the offer enables the Company to buy-out the
controlling interest in Vutomi in new ordinary shares at a discount
to the Company's own carrying value of Vutomi in its last published
accounts.
Evoid has a nominal value as it is currently dormant and holds
the Mooikloof prospecting licence and Palmietgat prospecting
license on which very limited work has been carried out to
date.
Further AIM Disclosures
The financial statements for the year ended 28 February 2021 for
Vutomi Mining, Razorbill and Evoid are set out in Table 2
below:
Table 2:
As at 28 February Vutomi Mining Razorbill (ZAR'000) Evoid (ZAR'000)
2021 (ZAR'000)
(Note 2)
Total assets 6,876 1,652 538
-------------- -------------------- ----------------
Net assets / (liabilities)
(Note 1) 6,874 1,445 533
-------------- -------------------- ----------------
Profit / (loss) before 2,059 nil nil
taxation
-------------- -------------------- ----------------
Notes:
1. Treating shareholder loans as equity
2. Evoid is dormant
3. Current exchange rate GBP1.00: ZAR20.1
Botswana Diamond originally acquired its 40% interest in Vutomi
through its wholly-owned subsidiary, Kukama, in accordance with an
Option and Earn-in Agreement signed with Vutomi as announced in
February 2017. The Company paid an exclusivity and option fee of
GBP122,000, with GBP61,000 in cash and GBP61,000 in the Company's
Ordinary Shares at the then market price of 1.9p per Ordinary
Share, and thereafter agreed to earn into Vutomi in three phases,
the last of which was not completed. The first and second 12-month
phases required the Company to pay GBP215,000 and GBP366,000 in
order to fund exploration activities in return for 15% and 25% of
Vutomi respectively. More recently a separate agreement for funding
of exploration resulted in the Company's interest in Vutomi
increasing from 40% to 45.94%.
Forward Looking Statements
Certain statements in this announcement, are, or may be deemed
to be, forward looking statements. Forward looking statements are
identified 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
reflect 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
Ciara Wylie +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.
APPIX 1
Glossary
Kimberlite : an igneous rock, typically formed under high
pressure and temperature, which sometimes contains diamonds.
Ct: A carat is 0.2 grams and the name is derived from the fruit
of the carob seed, a seed commonly found in the Kimberley area of
South Africa, one of the most prolific historical diamond producing
areas.
CPHT : Carats per Hundred Tons. A unit of measure which defines
the grade of a kimberlite.
APPENDIX 2
The following disclosure is made in accordance with Article 19
of the EU Market Abuse Regulation 596/2014.
1 Details of the person discharging managerial responsibilities
/ person closely associated
a) Name James Campbell
------------------- -------------------------------------------------------
2 Reason for the notification
----------------------------------------------------------------------------
a) Position/ Managing Director
status
------------------- -------------------------------------------------------
b) Initial Initial Notification
notification
/Amendment
------------------- -------------------------------------------------------
3 Details of the issuer, emission allowance market participant,
auction platform, auctioneer or auction monitor
----------------------------------------------------------------------------
a) Name Botswana Diamonds PLC
------------------- -------------------------------------------------------
b) LEI 213800UEF1WVQZIZRA91
------------------- -------------------------------------------------------
4 Details of the transaction(s): section to be repeated
for (i) each type of instrument; (ii) each type of transaction;
(iii) each date; and (iv) each place where transactions
have been conducted
----------------------------------------------------------------------------
a) Description Ordinary Shares of 0.025p each ("Ordinary Shares")
of the financial
instrument,
type of
instrument
Identification GB00B5TFC825
code
b) Nature of Issued as consideration
the transaction
------------------- -------------------------------------------------------
c) Price(s) Director Issue price Volume(s)
and volume(s) ---------------- ------------- ----------
James Campbell [GBP1.10] 9,491,955
---------------------------------------------------
d) Aggregated
information
- Aggregated 9,491,955 Ordinary Shares
volume
- Price [1.10p]
e) Date of 28(th) September 2021
the transaction
------------------- -------------------------------------------------------
f) Place of Outside a trading venue
the transaction
------------------- -------------------------------------------------------
ENDS
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END
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