Firestone finds P80m buyer for BK11 Mine
Brian Benza | Friday July 10, 2015 15:25
Promoters of the mine, Firestone Diamonds announced this week that they have entered into a conditional agreement for the disposal of BK11 to a Canadian firm, Tango Mining for a total consideration of $8 million (P80 million).
In a statement released yesterday, the AIM-listed Firestone said Tango Mining would acquire its wholly owned subsidiary Firestone Diamonds Botswana and its 90 percent interest in Monak Ventures, which holds Firestone’s interests in Botswana.
According to the release, $350,000 will be paid immediately, $300,000 would to be placed in escrow as a deposit by no later than September 30, 2015 and the remainder to be received on completion.
“The disposal of the Botswana operations, including the BK11 mine, enables us to focus solely on our flagship asset, the Liqhobong Diamond Mine, in the Kingdom of Lesotho, where we will commence production during Q4 2016,” Stuart Brown, Chief Executive Officer of Firestone said.
Conditions to be fulfilled before the deal is concluded include Tango Mining raising the $7.35 million balance, the parties gaining approval from the Botswana Competition Authority as well as the parties obtaining approval from government.
Tango Mining would also need to obtain the requisite approvals by the TSX Venture Exchange, where it is listed.
Afore the closure of the disposal, Tango has also agreed to pay the ongoing cost of BK11’s care and maintenance programme, which runs up to a maximum of $40,000 per month.
When it shutdown the mine in 2012, Firestone retained 15 workers to provide care and maintenance services.
In addition to the BK11 mine, the remaining assets in the Botswana operations sale package include a five-tonnes per hour (tph) bulk sampling plant, a 25tph pilot plant; a self-contained diamond recovery grease plant.
As at December 31, 2014, the net assets for the Botswana Companies were $10.7 million and for the year ended June 30, 2014, the Botswana companies incurred a loss of $0.7 million before foreign exchange losses on conversion from local currencies.
The BK11 mining licence was granted in July 2010. Under the mine plan, approximately 11.5 million tonnes of kimberlite was planned to be mined, resulting in total production of approximately a million carats over a 10-year mine life.
Firestone began mining operations at BK11 in the third quarter of 2010.
In February 2012, BK11 began to experience technical problems in respect of the BK11 Treatment Plant’s ability to successfully liberate diamonds due to the absence of secondary and tertiary crushing circuits.
Firestone delisted from the Botswana Stock Exchange in 2013. Citing operational challenges and weak market demand for the precious stones, the British company suspended operations at BK11 in 2012, leaving 143 workers jobless.