Fresh P50m bid for BK11 mine
Staff Writer | Friday May 26, 2017 15:07
Promoters of the mine, Firestone Diamonds this week announced that they have entered into a conditional option agreement for the potential disposal of its Botswana operations, which include its interest in the BK11 mine, to Amulet Diamond Corporation for a total potential consideration of $5.1 million (P51 million) in cash.
Led by former De Beers chief executive officer, Gareth Penny and local diamond company Diacore, a consortium of private investors are eyeing Firestone’s assets in Botswana. “Pursuant to the agreement, Amulet, a Canadian special purpose vehicle formed for the purpose of the disposal by a group of private investors led by Gareth Penny and Diacore Diamond Group, a multinational diamond company with diversified interests in the diamond industry, will acquire an option, effective from June 01, 2017 for a period of up to 14 months to acquire Firestone’s wholly owned subsidiary Firestone Diamonds and its 90% interest in Monak Ventures, which hold Firestone’s interests in Botswana, for a total consideration of $5.1 million in cash.
Pursuant to the agreement, $0.1 million is payable immediately with the balance, being $5.0 million, to be placed in escrow no later than 10 days following the exercise of the option,” Firestone said. Citing operational challenges and weak market demand for the precious stones, the British company suspended operations at BK11 in 2012, leaving 143 workers jobless.
At the time it was closed, BK11’s mining licence was held by Monak Ventures, whose shareholders included, Paul Paledi, Tshekedi Khama, Tim Wilkes and Polite Kutjwe.
Firestone Diamonds Botswana exclusively provides certain technical and financial services to Monak Venture (Pty) Ltd and also leases certain mining equipment to Monak Ventures.
Firestone has previously said the disposal of the Botswana operations, including the BK11 mine, would enable them to focus solely on their flagship asset, the Liqhobong Diamond Mine, in Lesotho.
Under the terms of the new deal, Amulet will fund the construction and operation of a bulk sample plant and the carrying out of a bulk sample programme at the BK 11 mine during the option period to further assess the deposit.
As at June 30, 2016, the aggregate net assets for the Botswana companies was $4.1 million and for the year ended June 30, 2016, the companies achieved an aggregate loss of $2 million before foreign exchange losses on conversion from local currencies.
The proceeds of the disposal will be used by Firestone for general working capital purposes. Firestone believes that the mine has 11.5 million tonnes of production in the mine plan, over a mine life of 10 years, at an average grade of 8.5 carats per hundred tonnes.