This morning West African Diamonds (AIM:WAD) announced an agreement to a joint venture, to develop their secondary Koidu project in Sierra Leone. Investors have welcomed the deal with privately owned Japanese developer Thunderball Ltd.
The joint venture will provide WAD with the opportunity to explore the previously neglected Koidu license while still maintaining investment in their primary development, the Bomboko project in Guinea.
West African Diamonds own the license at Koidu and under the terms of this new joint venture they will retain 20% of the project going forward, Thunderball will be the project operator and major shareholder, Thunderball will begin an intensive exploration of the licence.
In Koidu, Thunderball are mandated to explore in and around the diamondiferous Pipe 3 kimberlite, Pipe 3 is part of a 26 square kilometre licence, which also includes kimberlite dykes containing high grades of quality diamonds.
Should the subsequent exploration results justify the development of a mine, Thunderball will also take the operator role under the joint venture, West African Diamonds will be carried for all expenditure until a mine is fully developed and production has commenced.
Chairman of West African Diamonds, John Teeling commented on the deal which investors will look on as a win-win situation for both companies;
“This is a significant and very welcome development for WAD. The focus of WAD on developing our Bomboko mine in Guinea has meant less time and money have been devoted to evaluating the potential of the Pipe 3 kimberlite and surrounding areas in Sierra Leone.”
Investors in West African Diamonds reacted strongly to the news with shares in West African Diamonds jumping over 12% initially following the announcement, although the early gains subsided shortly after.