JOHANNESBURG (miningweekly.com) – Aim-listed Firestone Diamonds has inked a deal that will see it offloading its Botswana operations, including its interest in the BK11 mine, in the Orapa kimberlite field, to Toronto-listed Tango Mining – a new entrant in the Southern African diamond mining market – for $8-million.

Firestone said in a statement on Thursday that the net assets of the Botswana companies were, in December, valued at $10.7-million, while the Botswana companies had incurred a loss of $700 000 before foreign exchange losses on conversion from local currencies for the year ended June 30.

The proceeds of the disposal would be used by the company to provide general working capital to Firestone as it continued with the construction and development of its Liqhobong mine, in Lesotho.

Under the terms of the agreement, Tango would acquire Firestone's wholly-owned subsidiary Firestone Diamonds Botswana, as well as its 90% interest in Monak Ventures, which held Firestone's interests in Botswana.

Tango would immediately pay $350 000 in cash, while $300 000 would be placed in escrow as a deposit by no later than September 30. The remainder would be received upon completion of the deal.

Completion of the agreement remained subject to Tango raising the balance of the consideration, being $7.35-million; the parties gaining approval from the Botswana Competition Authority; the parties obtaining Botswana Ministerial approval for the transfer of the controlling interest in Monak; and Tango receiving the requisite approvals from the TSX in respect of the disposal.

Tango had also agreed to pay into escrow the ongoing cost of BK11's care-and-maintenance programme from the date of the agreement up to the earlier of the date of completion of the disposal and the drop dead date, up to a maximum of $40 000 a month. 

Miner Tango had, until October, been solely devoted to gold exploration in Nicaragua before a “transformational” deal in the last quarter of the year had resulted in the company acquiring African Star Minerals – a company that held a 100% interest in the Oena diamond project, in South Africa’s Northern Cape, where bulk sampling operations started in February this year.

It also held four toll treatment contracts in respect of four producing collieries located within the Ogies and Highveld coalfields, in Mpumalanga, and the Kliprivier coalfield, in KwaZulu-Natal.