Vast Resources PLC (AIM:VAST) has agreed to buy Gem Diamonds Ltd (LSE:GEMD)’s Botswana subsidiary, owner of the Ghaghoo diamond mine, for US$4mln (£2.9mln) in cash.
The acquisition will be made through Okwa Diamonds (Pty) Ltd, a joint venture between Vast, which has a 90% interest, and Botswana Diamonds PLC (AIM:BOD).
Vast said the acquisition of Ghaghoo will provide it with in a high quality and previously producing diamond asset benefiting from world-class infrastructure and capable of generating material revenues in the near term.
Ghaghoo, the first underground diamond mine in Botswana, has been on care and maintenance since March 2017.
Ghaghoo has an indicated resource of 79.39 million tonnes with an average grade of 19.51 carats per hundred tonnes and a diamond value of US$242 per carat, according to a 2014 resource estimate prepared for Gem Diamonds.
"The proposed acquisition of the Ghaghoo mine in Botswana is a highly compelling opportunity for Vast to deliver diamond production in a relatively short period, benefitting from a fully equipped mine that has US$250mln of investment, infrastructure and a significant resource of quality gems that include large stones and fancy colours,” said Andrew Prelea, chief executive of Vast.
“Importantly Ghaghoo is substantially de-risked both from an exploration and development perspective.”
Vast said it does not intend to undertake any new equity raisings to fund the acquisition, but is engaged with third party financiers to support the development of Ghaghoo into production.
Gem Diamonds said the sale of the mine was in line with its strategic objective to dispose of non-core assets and to focus on the Letšeng mine in Lesotho.
In August 2017, Gem Diamonds said it had received an offer for the mine, but later that year announced that the talks had been unsuccessful.
As at 31 December 2020, the gross assets of Gem Diamonds Botswana were US$3.5mln and the loss attributable for 2020 was US$3.3mln.
Vast also announced today that it has appointed Nigel Wyatt as an independent non-executive director with immediate effect.