TIDMBOD
RNS Number : 0444W
Botswana Diamonds PLC
06 February 2017
6(th) February 2017
Botswana Diamonds PLC
("Botswana Diamonds" or the "Company")
Vutomi Option & Earn-In Agreement
Botswana Diamonds plc, the AIM listed diamond explorer (AIM:
BOD) is pleased to announce that it has entered into an Option and
Earn In Agreement (the "Agreement") with Vutomi Mining Pty Ltd and
Razorbill Properties 12 Pty Ltd (collectively known as 'Vutomi'), a
private diamond exploration and development firm in South
Africa.
Highlights:
-- A new strategic development for Botswana Diamonds;
-- Advanced projects in South Africa to be developed in tandem
with the ongoing Botswana-based exploration programme; and
-- Potential for commercial diamond mining in the short to medium-term.
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 1990's but the diamond
grade and quality was such that the entire capital cost was repaid
in four days.
The Frischgewaagt project consists of a minimum 4km long
kimberlite dyke/blow system and Vutomi have already undertaken
detailed ground geophysics and sampling and are currently in the
process of a core and percussion drilling programme which will give
both BOD and Vutomi a better indication of size and grade. The
sampling programme, which was undertaken in 2016, yielded a raw
diamond value of US$180/ct from 247 carats and kimberlite
intersections in the dyke/blow system have been between 1-17m.
As at 30 November 2016 Vutomi's net assets were valued at
GBP221k.
Botswana Diamonds was introduced to Vutomi by James Campbell,
the Company's recently appointed Managing Director. James Campbell
is a minority shareholder of Vutomi and is therefore precluded from
voting on any matter relating to the Agreement.
Terms of the Agreement
Pursuant to the terms of the Agreement, Botswana Diamonds has
agreed to pay Vutomi a total of GBP942,000 in cash, of which
GBP581,000 will be used to fund exploration activities. In
addition, the Company will issue 100 million ordinary shares of
0.25p each ("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 ('BEE') partners. The three
Phases are summarised below:
Exclusivity and Option Fee
Botswana Diamonds will initially pay Vutomi an exclusivity and
option fee of GBP122,000 within a period of 60 days, with GBP61,000
being paid in cash and GBP61,000 being paid in the Company's
Ordinary Shares at a price of 1.9p. A further announcement
regarding the issue of these Ordinary Shares will be made in due
course. Upon completion of this initial 60 day period, Phase 1 of
the earn-in will commence.
Phase 1
Phase 1 will last for a further 12 months, during which period
the Company will, subject to available funding, have the option to
pay Vutomi GBP215,000 to fund exploration activities to earn an
additional 15% of Vutomi. During Phase 1 Vutomi will grant the
Company the sole and exclusive right to fund exploration activities
in, on and under the Vutomi Prospecting Rights Area in order to
prepare a conceptual mining and development plan. The required
mining permits are in place.
Phase 2
Phase 2 will last for a further 12 months, during which period
the Company will, subject to available funding, have the option to
pay Vutomi GBP366,000 to fund exploration activities to earn an
additional 25% of Vutomi.
Phase 3
Phase 3 will commence within 90 days of the successful
completion of Phase 2. Pursuant to the Agreement, the Company will
have the option to issue the outstanding balance of 96.8m Ordinary
Shares, priced at VWAP, to Vutomi and, subject to available
funding, settle Vutomi's shareholders loan accounts of
approximately GBP300,000 in cash to earn a further 32% of
Vutomi.
Technical Committee
As soon as practicable following the commencement of the
Agreement, the Company and Vutomi will establish and constitute a
technical committee to oversee the exploration and development
activities (the "Technical Committee"). The Technical Committee
shall consist of no less than 2 and not more than 4 representatives
of both Botswana Diamonds and Vutomi. The Company will initially
appoint James Campbell to the Technical Committee.
Termination
At any point the Agreement will lapse if the Company does not
exercise its option regarding a specific Phase.
John Teeling, Chairman, commented: "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.
James Campbell, our new Managing Director, introduced the
project to us. He knows the area well having been actively involved
in the exploration of the adjacent Marsfontein and Klipspringer
Mines which are on the same kimberlite dyke/blow system. The
Marsfontein discovery was small, lasted only 2 years but the
payback was 4 days.
This will be our first significant investment in South Africa.
It has the right geology, the right team, good BEE partners and all
of the necessary approvals.
Let me reconfirm, however, that our principal focus remains
Botswana. The next phase of fieldwork in the Alrosa/BOD joint
venture in Orapa and Gope will begin in March 2017. We are actively
in discussions with the shareholders in the Maibwe joint venture.
The earlier very good results need verification and we have offered
to drill.
This is a very exciting time for Botswana Diamonds. James has
brought new energy, contacts and drive to our exploration
activities and I look forward to providing shareholders with
further updates as appropriate".
ENDS
This announcement contains inside information for the purposes
of Article 7 of Regulation 596/2014.
Enquiries:
Botswana Diamonds PLC
John Teeling, Chairman +353 1 833 2833
James Campbell, Managing
Director +27 83 457 3724
Jim Finn, Director
Northland Capital Partners
Limited
David Hignell/Gerry Beaney
(Corporate Finance) +44 (0) 203 861 6625
John Howes (Broking)
Dowgate Capital Stockbrokers
Limited
Jason Robertson +44 (0) 129 351 7744
Blytheweigh +44 (0) 207 138 3204
Camilla Horsfall +44 (0) 781 784 1793
Nick Elwes +44 (0) 7831 851 855
Rachael Brooks
Jonathan Garfield
PSG Plus
Colm Heatley +353 (0) 1 661 4055
Alan Tyrrell +353 (0) 1 661 4055
www.botswanadiamonds.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
February 06, 2017 02:00 ET (07:00 GMT)