Ghaghoo mine is a 10.8ha kimberlite pipe in central Botswana, 300km north-west of Gaborone
Okwa Diamonds has signed an agreement to acquire Gem Diamonds Botswana that holds the fully permitted Ghaghoo diamond mine for $4m.
Located in central Botswana, the diamond mine is currently under care and maintenance.
Okwa Diamonds is a joint venture between mining company Vast Resources (VAST) and diamond exploration firm Botswana Diamonds.
The transaction is expected to be completed during the latter part of this year, subject to relevant regulatory and competition authority approvals in Botswana.
Discovered in 1982 by Falconbridge Mining, the Ghaghoo mine is a 10.8ha kimberlite pipe in central Botswana, 300km north-west of Gaborone. Gem Diamonds bought the mine from De Beers and Xstrata in May 2007.
The acquisition also includes mine infrastructure, fit-for-purpose processing plant and camp and the transaction amount will be funded by VAST.
Botswana Diamonds managing director James Campbell said: “Working with our joint venture partner VAST, we have completed thorough due diligence on Ghaghoo.
“We believe there are significant opportunities to improve Ghaghoo’s operating and financial performance through both the application of new and optimisation of existing technologies along with a strongly recovering diamond market.
“Gem Diamonds’ advanced underground mine development and the surface infrastructure already in place, means a return to production is potentially possible with an overall objective to target a return to name plate capacity of 1.25 million tonnes yearly.”
Botswana Diamonds and VAST have jointly carried extensive internal and third-party due diligence work on Ghaghoo, indicating a significant potential upside in both the potential diamond grade and value as well as various operational efficiencies.
Preparation of an updated feasibility study, which will focus on producing a detailed underground mine plan, will be the next stage for the diamond mine.
Botswana Diamonds chairman John Teeling said: “Our joint venture enables us to acquire an interest in an advanced mining project at minimal initial cost. Ghaghoo is one of the largest available diamond resources, and is contiguous with our KX36 project which should potentially create synergies between operations.
“Ghaghoo and KX36 are both located in the Central Kalahari, which is our core area of focus in Botswana. VAST are funding the acquisition cost and initial development capital, and our initial 10% free carry. BOD is the operator for the project and has marketing rights equivalent to our shareholding in Okwa. This is a very good development for BOD.”