The agreement includes the disposal of Firestone Diamonds’ interest in the BK11 mine to Amulet Diamond Corporation for a total potential consideration of US$5.1 million in cash.
Pursuant to the option agreement, Amulet Diamond Corporation will acquire an option to acquire Firestone Diamonds’ wholly-owned subsidiary Firestone Diamonds (Botswana) and its 90% interest in Monak Ventures which holds Firestone Diamonds’ interests in Botswana, for a total consideration of $5.1 million.
Pursuant to the option agreement, $0.1 million is payable immediately to Firestone Diamonds with the balance, being $5.0 million, to be placed in escrow no later than 10 days following the exercise of the option.
If Amulet Diamond Corporation exercises the option during the option period, completion of the disposal is subject to, inter alia, satisfaction of the following conditions within 12 months of the date of the exercise of the option: the parties gaining approval from the Botswana Competition Authority; and the parties obtaining Botswanan ministerial approval for the transfer of the controlling interest in Monak Ventures to Amulet Diamond Corporation.
Furthermore Amulet Diamond Corporation will fund the construction and operation of a bulk sample plant and the carrying out of a bulk sample programme at the BK11 mine during the option period to further assess the deposit.
In addition, Amulet Diamond Corporation will, during the option period and, in the event it exercises the option, from the time it exercises the option up and until completion of the disposal, pay the ongoing cost of BK11's care and maintenance programme up to a maximum of $30 000 per month.
Firestone Diamonds will also be entitled to retain 10% of the proceeds from diamonds sold from the bulk sampling programme during this period.
As at 30 June 2016, the aggregate net assets for the Botswana companies was $4.1 million and for the year ended 30 June 2016, the Botswana companies achieved an aggregate loss of $2.0 million before foreign exchange losses on conversion from local currencies.
The proceeds of the disposal will be used by Firestone Diamonds for general working capital purposes.