TSXV-listed Pangolin Diamonds Corp. has signed an option agreement to earn up to a 75% interest in the diamondiferous AK10 diamond project located in Botswana, situated just 4 km from the now famous AK06/Karowe mine.
The option agreement is with Makanwu Civil Blasting (MCB), a private company incorporated under the laws of the Republic of Botswana.
“I am extremely pleased with this transaction. The AK10 kimberlite has been under evaluated and the opportunity exists potentially to uncover and develop another AK06 Karowe mine,” says Dr Leon Daniels, President and CEO of Pangolin Diamonds.
In 2002 Daniels co-founded African Diamonds for the sole purpose of acquiring kimberlites De Beers originally discovered and that he believed could be economical. He is one of the world’s-renowned kimberlite exploration geologists and identified the opportunity. The joint venture between African Diamonds and De Beers included the group of kimberlites in the area that De Beers had under evaluated.
This group included the AK6 kimberlite located in the Orapa Kimberlite Field. In 2010, Lucara Diamond Corporation purchased AK6 for approximately US$120 million. The Karowe mine on the AK6 kimberlite continues to be mined by Lucara Diamond Corporation and is one of the world’s leading producers of very high value diamonds and is known for containing rare large Type IIa diamonds with spectacular color and clarity.
AK10 is located in the prolific Orapa Kimberlite Field in Botswana. Botswana is the second largest producer of diamonds, both by value and carats. In 2016, the Orapa Kimberlite Field produced 8.85 million carats and contains 83 known kimberlite bodies of which eleven are currently mined, scheduled to be mined or have been mined.
These include: AK01, AK02 and AK07 (Orapa, Debswana), AK06 (Karowe, Lucara Diamond Corporation), BK01, BK09, BK12 and BK15 (Damtshaa, Debswana), DK01 and DK02 (Letlhakane, Debswana) and BK11 (Firestone Diamonds PLC). The mineralisation and results on the aforementioned kimberlites are not necessarily indicative of the results on the AK10 kimberlite.
The AK10 kimberlite pipe was originally discovered in 1968 from airborne magnetics by De Beers who established it is diamondiferous. The compositions of the garnets from AK10 are consistent with the kimberlite having sampled the diamond stability field.
It has been modelled to be 6 hectares in size and is close to surface with only 9 metres of cover. It has excellent infrastructure close by with road access, and the main power grid is less than 1.5 km away.
Option and joint venture agreement
At the completion of Phase 1 (described in the AK10 Workplan below) the equity interests in the project will be as follows:
- Pangolin 51%
- MCB 49%
If Pangolin decides to proceed to a joint venture (JV), and in the event that both Parties agree to fund Phase 2 of the JV, the percentages will remain the same.
If one of the parties elects not to fund Phase 2 of the JV and the other party elects to sole fund (i.e. contribute 100% of the cost of Phase 2 of the JV), the sole funding party will increase its percentage in the project to 75%. At the completion of Phase 2 of the JV, the equity interest in the project would then be:
- 100% contributing party to phase 2 JV 75%
- Non-contributing party to phase 2 JV 25%
The 12-month ‘option period’ work programme will consist of, but not be limited to, the following:
- Compile and assess all available historical exploration data over the Area of Prospecting Licence 166/2017;
- Conduct geophysical surveys over areas of interest which may include ground magnetic, gravity and VLF surveys;
- Conduct aerial photography surveys to establish a base case environment;
- Conduct a soil sampling programme over Prospecting License 166/2017 or parts thereof;
- Drilling, if necessary, of holes to determine the extent of the kimberlite;
- Pitting, if necessary, of near surface kimberlite to a maximum depth of 30m of kimberlite intersection;
- Analyse kimberlite indicator minerals to establish a diamond window signature for any kimberlite within Prospecting License 166/2017;
- Process any kimberlite recovered through drilling or pitting to recover diamonds from the kimberlite;
Any diamonds recovered from the 12-month option period work programme will be considered as part of the 500 carats required to be produced under Phase 1 of the JV if Pangolin exercises its option to proceed to Phase 1 of the JV; and
Pangolin shall be solely responsible to fund all costs associated with the planned 12-month work programme. During such time, Pangolin will make a determination whether the potential mineralisation of the kimberlites is of such a level that Pangolin will elect to commence the formal JV relationship described.