Disposal of BK11 Mine hits snag
Brian Benza | Tuesday October 6, 2015 18:00
It emerged this week that Tango Mining Limited has told Firestone Diamonds that it was unable to pay $0.3 million (P3 million) into an escrow account as a deposit for the company’s assets.
The deposit was the fulfillment of the first part of the conditional sales agreement between the two companies announced in July.
“Tango Mining has now formally requested an extension to the agreed upon timetable in order to complete its fundraising activities in relation to the full sales amount of $7.65 million (P77 million).
“Firestone will update the market when the parties have reached agreement on the revised terms and timelines or if discussions with Tango Mining are terminated,” said Firestone CEO Stuart Brown.
BK11’s mining licence is currently held by Monak Ventures, whose shareholders include Paul Paledi, Tshekedi Khama, Tim Wilkes and Polite Kutjwe.
Firestone Diamonds Botswana exclusively provides certain technical and financial services to Monak Ventures and also leases certain mining equipment to Monak Ventures.
Monak Ventures is in turn owned 90 percent by Firestone Diamonds Ltd while the remaining 10 percent is held by Tema Thuo.
Firestone had previously said the disposal of the Botswana operations, including the BK11 mine, would enable it to focus on its flagship asset, the Liqhobong Diamond Mine in Lesotho, where it would commence production during the fourth quarter of 2016.
Before the closure of the disposal, Tango had 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 de-listed 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.