In a deal that should boost Botswana's mining industry, the International Finance Corporation (IFC) on Friday made a C$5-million (P34 million) equity investment in Tsodilo Resources.
The funds from the World Bank subsidiary will be used to advance exploration at the Canada-based firm's Ngamiland diamond and base metals project in northwest Botswana.
Tsodilo Resources Limited is a diamond, base and precious metal exploration company concentrating its exploration efforts on the southern portion of the Angola/Congo craton in northwest Botswana.
A statement from the Toronto-listed company says the IFC could provide additional funding during the exploration, feasibility study and development stages.
The World Bank subsidiary will also cooperate with the mining company to ensure that exploration and the mine's development are undertaken in an environmentally and socially sustainable manner.
"We look forward to drawing on IFC's guidance and expertise to help ensure that the progress at Ngamiland follows globally recognised best practices for the mineral exploration industry, the environment, and for working with local communities," Tsodilo CEO, James Bruchs, says in the statement.
IFC global head of mining, William Bulmer, adds that its investment is in line with the bank's strategy of supporting early-stage exploration companies with financing and advice.
The deal involves the non-brokered private placement of 2,702,702 units of the company that will consist of one common share priced at C$1.85(P12.58) and one purchase
The IFC is now the second-largest shareholder in Tsodilo, holding a 12-percent stake in the company.
Diamond mining contributes more than 50 percent of Botswana's tax revenues. This has prompted the government to intensify its efforts to diversify the economy and promote mining for other resources.
Tsodilo Resources claimed last year that it had encountered copper, nickel and cobalt sulfide mineralisation within its licence blocks in Botswana that resembled deposits in the copper-rich Lufilian Arc of Zambia.
The company's prospecting licences are held through its Botswana-registered subsidiary companies, Newdico and Gcwihaba Resources.
Newdico holds 10 diamond prospecting licences covering an area of some 9,400 square kilometres in the northern Ngamiland.
Tsodilo has a 95-percent stake in Newdico while Trans Hex Group, a South African diamond mining and marketing company, holds the remaining 5 percent.
Exploration in the Newdico Ngamiland project area is at an advanced stage, with completion of kimberlite indicator mineral sampling on a regional scale and ground geophysical surveys focusing on two primary areas within the larger licence area.