BK11 Diamond Mine sale flops
Staff Writer | Thursday September 15, 2016 18:00
In a statement released this week, Firestone Diamonds Plc said the sale will no longer proceed as Tango Mining has failed to raise the capital within the agreed timelines.
Firestone had previously postponed the deadline three times to allow Tango more time to raise the cash.
“Tango Mining Limited has not been able to meet the conditions of the conditional sale agreement, for the disposal of the company’s Botswana operations to Tango Mining (the ‘disposal’). Accordingly, the agreement has lapsed and the disposal will not proceed,” Firestone said.
The company’s Botswana operations, including Firestone’s interest in the low-grade high-value BK11 mine, are currently under care and maintenance.
Whilst Firestone is currently focused on the completion and commissioning of its Liqhobong Diamond Mine in Lesotho, the company said it remains committed to seeking ways of advancing or unlocking the shareholder value from its Botswana assets.
Firestone forecast to have cash of approximately $9 million as at the end of December 2016, which does not include the $15 million standby facility available to the company or the proceeds of the disposal.
“Accordingly, the company believes that there will be no impact on the company’s cash position as a result of the disposal not proceeding,” stated the company.
The BK11 mine is a diamond-bearing, champagne glass-shaped kimberlite pipe with a surface area of 8.7 hectares.
The pipe is located in the Orapa/Letlhakane kimberlite district, which is one of the world’s most prolific diamond producing areas.
Production from the estimated remaining seven years of open-pit mining is forecast to yield approximately 569,610 recovered carats with the aggregate life of mine gross revenues from the BK11 mine being $188 million and an expected post tax discounted net present value of $40 million.
The BK11 mining licence was granted in July 2010. Approximately 11.5 million tonnes of kimberlite was planned to be mined, resulting in a total production of approximately a million carats over a 10-year mine life. Firestone began mining operations at BK11 in the third quarter of 2010.
In February 2012, the mine began to experience technical problems in respect to the BK11 Treatment Plant’s ability to successfully liberate diamonds due to the absence of secondary and tertiary crushing circuits.
Firestone de-listed from the Botswana Stock Exchange in 2013, citing operational challenges and weak demand for the precious stones.
The British-company suspended operations at BK11 in 2012, leaving 143 workers jobless.