DiamonEx shifts focus to coal

Staff Writer | Tuesday December 6, 2011 00:00

DiamonEx sold its Lerala Mine to UK-based Mantle Diamonds Limited in April, with directors stating that they were eagerly looking for resource and mining prospects in other mineral categories.

The Sechaba deal, which is currently being finalised, will grant DiamonEx access to more than 968 million tonnes of coal near the Morupule Power Station, giving the Australian former diamond miner a new lease of life. In a statement, DiamonEx directors says the purchase of Sechaba was through the offer of about 2.3 billion shares to Shumba Resources Limited, the coal project's holding company.

The deal will result in shareholders of Shumba Resources taking up approximately 60 percent of DiamonEx.

Shumba Resources is majority owned by Botswana citizens, who are expected to directly receive some or most of the 2.3 billion shares under the deal.

Once the deal and all terms are finalised, the Australian company plans to commence capital raising and seek re-quoting on the Australian Securities Exchange (ASX) from where it suspended its trading in 2009.

The company's ASX suspension and subsequent de-listing from the Botswana Stock Exchange were all related to an operational collapse brought on by the global recession. Re-listing on the ASX is in line with DiamonEx's stated plans after the April sale of Lerala.

'Once that is completed (a new mining deal), the directors will re-capitalise the company to meet the immediate capital requirements of that project, and simultaneously apply to the ASX to have its shares re-quoted,' the directors said earlier this year.

'At this stage, the directors are unlikely to seek to have the company's shares re-listed on AIM once re-quoted on the ASX, although there is a possibility that the company may apply to the Botswana Stock Exchange for re-listing of its shares.'

DiamonEx CEO Mark Gray says the Shumba deal involved the purchase of three prospecting licences that include the Sechaba project, totalling 750 square kilometres of prime coal ground in central and northern Botswana. Of these three licences, only Sechaba's mineralisation has been determined to a greater extent, with an estimated 968 million tonnes of coal having been identified through previous drilling programmes.

'The Sechaba Project is just 30km from Botswana's coal-fired power station, Morupule A, which has 90MW of installed capacity, and also Morupule B currently under construction and adding an additional 600MW,' says Gray in a statement.

'The other two exploration licences cover around 500km2 of area and are known, based on historical exploration data, to contain coal, although they have not yet been explored sufficiently.'

Finalisation of the Sechaba deal is dependent on several factors, among them approval by DiamonEx shareholders and due diligences by both the Australian and Botswana companies on each other.