Botswana Diamonds (BOD) is moving to buy the troubled Ghagoo mine in central Botswana for $4 million in cash from Gem Diamonds, Mining MX reported.
The acquisition will be made through its Okwa JV with Vast Resources (VAST).
BOD has conditionally agreed to acquire the wholly-owned Gem Diamonds subsidiary, pending approval from Botswana’s regulatory and competition authorities.
Irish businessman John Teeling chairs the BOD board. He is an astute businessman known for brokering Irish distillers’ monopoly in the whiskey industry by launching the Cooley Distillery and reopening the Kilbeggan Distillery after a 50-year hiatus. Kilbeggan was founded in 1757.
According to Teeling, the deal is an outstanding development for BOD, which already lists on the London Stock Exchange.
“VAST are funding the acquisition cost and initial development capital and our initial 10-percent free carry,” Teeling said. “BOD is the operator for the project and has marketing rights equivalent to our shareholding in Okwa.”
In a further statement, Teeling said BOD had acquired its 10-percent carried interest in Okwa in consideration of services provided to the subsidiary and does not have a funding commitment to Okwa or any intention of providing funding under its earn-in arrangements.
The Ghagoo mine is a 10.8-hectare kimberlite pipe in central Botswana, 300 kilometers northwest of Gaborone. It has long been a hugely troubled operation for Gem Diamonds, which bought it from De Beers in 2007.
Gem Diamonds was forced to stop operations at the mine in 2017 after two years due to insufficient output, poor diamond market conditions, and “operational issues.” It had invested about $85 million in the mine, only to recover far less than originally anticipated.
According to a statement found on Mining Weekly, Gem Diamonds CEO Clifford Elphick said the selloff aligns with the company’s strategic objective to dispose of non-core assets.
“Gem Diamonds remains focused on [enhancing] production and efficiency at the Letseng mine in Lesotho,” he said.