Botswana Diamonds agrees to buy most of Vutomi

Botswana Diamonds announced on Monday that it has entered into an option and earn-in agreement with Vutomi Mining and Razorbill Properties 12 - collectively known as Vutomi - a private diamond exploration and development firm in South Africa.

The AIM-traded firm described it as “a new strategic development for Botswana Diamonds”, saying advanced projects in South Africa would be developed in tandem with the ongoing Botswana-based exploration programme.

It said there was potential for commercial diamond mining in the short to medium-term.

Under the agreement, Botswana Diamonds has agreed to pay Vutomi a total of £942,000 in cash, of which £581,000 will be used to fund exploration activities.

In addition, the company will issue 100 million ordinary shares of 0.25p each to Vutomi shareholders.

The agreement will be executed in three phases, Botswana Diamonds said, after which the company will own 72% of Vutomi.

It confirmed the remaining 28% will continue to be held by Vutomi's Black Economic Empowerment partners.

“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,” the Botswana Diamonds board said in a statement.

“These kimberlites are housed in ten prospecting rights encompassing over 50,000 hectares of ground.”

It said 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.”

Botswana Diamonds said the Frischgewaagt project consists of a minimum 4km long kimberlite dyke/blow system.

“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 £221k.