Gareth Penny-Led Group To Buy Firestone Diamonds Botswana Operations
Firestone Diamonds plc has signed a conditional option agreement for the potential disposal of its Botswana operations with a group of private investors led by former De Beers Diamond Trading Company CEO Gareth Penny and Diacore Diamond Group (PTY) Limited, a multinational diamond company with diversified interests in the diamond industry.
The agreement includes its interest in the BK11 mine, to Amulet Diamond Corporation for a total potential cash amount of $5.1 million.
Firestone previously signed an agreement for the disposal of the BK11 mine and Botswana operations to Tango Mining Limited for $8.0 million in cash, but Tango failed to raise the money to complete the deal. Firestone's main holding is 75 percent of the Liqhobong diamond mine in Lesotho.
Amulet, a Canadian firm created to acquire the operations, is
It would acquire an option, effective from 1 June for a period of up to 14 months, to acquire Firestone's wholly owned subsidiary Firestone Diamonds (Botswana) (PTY) Limited and its 90 percent interest in Monak Ventures (PTY) Limited.
Following the option agreement, $100,000 is payable immediately with the balance of $5.0 million, to be placed in escrow no later than 10 days following the exercise of the option, Firestone said in a statement.
Completion of the disposal is subject to, among other things, the parties gaining approval from the Botswana Competition Authority, and the parties obtaining Botswanan ministerial approval for the transfer of the controlling interest in Monak to Amulet.
Furthermore Amulet will fund the construction and operation of a bulk sample plant and the carrying out of a bulk sample program at the BK 11 mine during the option period to further assess the deposit. In addition, Amulet will, during the option period and, in the event it exercises the option, from the time it exercises the option up and until completion of the disposal, pay the ongoing cost of BK11's care and maintenance program up to a maximum of $30,000 per month. The company will also be entitled to retain 10 percent of the proceeds from diamonds sold from the bulk sampling program (after royalties and agreed expenses) during this period.
As at 30 June 2016, the aggregate net assets for the Botswana companies was $4.1 million and for the year ended 30 June 2016, the Botswana companies posted an aggregate loss of $2.0 million before foreign exchange losses on conversion from local currencies.
The proceeds of the disposal will be used by the company for general working capital purposes.