Vast Resources has revealed its intention to pull out from the previously announced acquisition of Gem Diamonds Botswana, the owner of the Ghaghoo diamond mine in Botswana.

However, the UK-based company did not disclose the reason behind its decision.

In August 2021, Okwa Diamonds, which is the company’s joint venture (JV) with Botswana Diamonds (BOD), signed a $4m deal to acquire Gem Diamonds Botswana from Gem Diamonds.

The consideration for the deal was to be funded by Vast Resources.

Botswana Diamonds has an initial carried interest of 10% in Okwa Diamonds, which it earned through its services to the joint venture.

The company said that it currently does not have a funding commitment to Okwa Diamonds and also has no plans to provide additional funding under its earn-in arrangements.

The Ghaghoo diamond mine is the main asset of Gem Diamonds Botswana and has been under care and maintenance since 2017 owing to unfavourable market conditions. The fully permitted mine is located in central Botswana.

The deal also covers mine infrastructure, fit-for-purpose processing plant and camp.

Vast Resources said that it has informed both Botswana Diamonds and Gem Diamonds of its intention not to move ahead with the acquisition.

However, Botswana Diamonds has confirmed its intent to Gem Diamonds of closing the deal as early as possible.

The company is also said to have identified an alternative financing partner, which will replace Vast Resources, subject to any required approvals.

Gem Diamonds stated: “The parties are working together towards a mutually beneficial outcome and have therefore agreed to extend the Longstop Date under the Sale Agreement from 31 January 2022 to 31 March 2022 to allow BOD to secure an alternative financing partner and to obtain any approvals that are required.”

The Ghaghoo diamond mine is located near the south-eastern border of the Central Kalahari Game Reserve. It was acquired by Gem Diamonds in 2007 from De Beers and Xstrata.

The diamond mine consists of a 10.4ha kimberlite pipe, and had an in-situ value of $4.9bn, as of 1 January 2014.