Botswana Diamonds has entered into an option and earn-in agreement with Vutomi - a private diamond exploration and development firm in South Africa - and will invest £942,000 ($1.16 million) in cash, of which £581,000 ($719,000) will be used to fund exploration activities, in exchange for 72% of Vutomi. 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. In addition, Botswana Diamonds will issue 100 million ordinary shares of 0.25p each ($0.003) ("Ordinary Shares") to Vutomi shareholders, or $311,648 in equity. The Agreement will be executed in three Phases after which they will own 72% of Vutomi, while he remaining 28% will continue to be held by Vutomi's Black Economic Empowerment ('BEE') partners.
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. According to Botswana Diamonds, this mine operated for only two years in the 1990s but the diamond grade and quality was such that the entire capital cost was repaid in four days. Vutomi have already undertaken detailed ground geophysics and sampling and are currently in the process of a core and percussion drilling program which will give both BOD and Vutomi a better indication of size and grade. The sampling program, which was undertaken in 2016, yielded a rough diamond value of US$180/ct from 247 carats. James Campbell, the Company's recently appointed Managing Director, introduced Botswana Diamonds to Vutomi. As a minority shareholder of Vutomi, he is precluded from voting on any matter relating to the Agreement.
John Teeling, Chairman of BoD, said, "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 ... Let me reconfirm, he adds, "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."