Botswana Diamonds has entered into an option and earn in agreement with Vutomi Mining Pty and Razorbill Properties 12 Pty – collectively known as Vutomi – a private diamond exploration and development firm in South Africa.
Vutomi has a portfolio of over twenty high interest kimberlites, many of which are diamondiferous spanning the Limpopo, North-West and Free State Provinces of South Africa.
These kimberlites are housed in ten prospecting rights encompassing over 50,000 hectares of ground.
The flagship project, Frischgewaagt, is in the Limpopo Province 300km north of Johannesburg and is immediately adjacent to the Marsfontein Mine which was previously operated by De Beers.
This mine operated for only two years in the 1990s but the diamond grade and quality was such that the entire capital cost was repaid in four days.
Under the terms of the agreement, Botswana Diamonds has agreed to pay Vutomi a total of £942,000 in cash, of which £581,000 will be used to fund exploration activities.
In addition, the company will issue 100 million ordinary shares to Vutomi shareholders.
The agreement will be executed in three phases after which the company will own 72% of Vutomi.
The remaining 28% will continue to be held by Vutomi’s Black Economic Empowerment.
Chairman John Teeling said: “The opportunity to collaborate with Vutomi is too good an opportunity to pass up.
“With luck and good work we could, within one year, take this late-stage exploration project to a level where we will have a good idea of commerciality.
“We are currently drilling the prime prospect and will have better indications of size and grade within the next quarter.
“We know already from the exploration work that we have kimberlites and that they contain diamonds.
“Now we need to see whether there are enough diamonds of the right quality to deliver a viable mine.
“The indications are good.”
Story provided by StockMarketWire.com