LONDON: Botswana Diamonds (BOD) has agreed to acquire the KX36 Diamond discovery in Botswana, along with two adjacent Prospecting Licences and a diamond processing plant. These interests are part of a package held by Sekaka Diamonds.

BOD is acquiring 100% of the shares of Sekaka. The vendor is Petra Diamonds. The consideration comprises a cash payment of US$300,000 and a 5% royalty on future revenues.  The cash consideration is payable on a deferred basis with US$150,000 payable on 31 August 2021 and the balance on or before 31 August 2022. The acquisition is subject to customary regulatory approvals.

James Campbell, Managing Director, commented: “KX36 is the most significant diamond discovery in Botswana since Orapa and Jwaneng. KX36, together with its associated Prospecting Licenses, adds scale to the Company’s Sunland and Maibwe JV properties in the Kalahari.  Botswana Diamonds will refine resource estimates of KX36, and development options.  The Sekaka exploration database adds to Botswana Diamonds’ extensive database, improving our diamond exploration programme, particularly in the Kalahari where we are currently focused.”

John Teeling, Chairman, commented: “This is an important step forward for BOD. KX36 is a very significant diamond discovery and potentially offers upside potential – as do the two contiguous prospecting licences. You rarely, if ever, find a kimberlite pipe on its own and further exploration may find more kimberlite pipes. KX36, located deep in the Kalahari, presents challenges, but the greatest challenge of all is overcome – finding a significantly sized high-grade deposit.  We have evaluated options on KX36 and believe we can add value to the discovery.”

Botswana Diamonds has entered into a sale of shares agreement with Petra Diamonds Limited and Kalahari Diamonds Limited on 18 July 2020 to acquire the entire issued share capital of Sekaka currently held by Kalahari Diamonds, a wholly-owned subsidiary of Petra.

Sekaka is Petra’s exploration vehicle in Botswana and holds three Prospecting Licenses in the Central Kalahari Game Reserve in Botswana, PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

Sekaka also holds a recently constructed, fit-for-purpose bulk sampling plant on site. The sampling plant includes crushing, scrubbing, dense media separation circuits and x-ray recovery modules within a secured area. The acquisition includes an extensive database, built up over 15 years of exploration.

The transaction consideration comprises a deferred cash payment of US$300,000 of which US$150,000 is payable on or before 31 August 2021 and the balance in cash on or before 31 August 2022.  The Company intends to fund the cash consideration through an issue of new ordinary shares at such time.  In addition, Petra is entitled to a 5% royalty on the sale of diamonds that are commercially produced from KX36. The royalty is also payable on diamonds from any kimberlite discovered from Sekaka’s data.  BOD has the option to buy-out the royalty for a cash payment of US$2 million.

The long-stop date for fulfilment of the Conditions Precedent is 31 August 2020, which may be extended by mutual agreement of the two parties.

BOD plans to conduct a new exploration programme focused on the KX36 pipe and intends to spend approximately US$100,000 per annum in each of the next three years.  No exploration activities are currently possible under the current lockdown restrictions in place in Botswana as a result of Covid-19.

Sekaka’s extensive diamond exploration database contains the results of work undertaken since 2005.  The data include data in respect of airborne (including the Falcon survey) and ground magnetics (including gravity and EM), in addition to heavy mineral sampling.  BOD believes that the information contained in the database will provide substantial support to its future kimberlite exploration activities in Botswana.

Sekaka currently is undertaking no exploration activity and is effectively dormant. At acquisition by Botswana Diamonds, Sekaka will have no employees and will be acquired free of historic liabilities, the most significant of which is the intercompany loan balance owed by Sekaka to its parent Petra, which will effectively be extinguished on acquisition by its assignment to Botswana Diamonds for a nominal consideration.