Firestone Diamonds, a new diamond producer with operations focused in Lesotho, has announced that, as provided for in the contractual agreements between the parties, the group has agreed to extend the option period granted to Amulet Diamonds to purchase Firestone's BK11 asset until 31 December 2018.
BK11 is a diamond asset in Botswana, currently on care and maintenance.
Amulet is funding the construction and operation of a bulk sampling plant at the BK11 mine during the option period to further assess the deposit.
Amulet has made steady progress towards completing the bulk sampling plant but due to unforeseen equipment delivery delays, Amulet requested an extension to the option period which has been granted by Firestone.
The agreement includes the disposal of Firestone Diamonds’ interest in the BK11 mine to Amulet Diamonds for a total potential consideration of US$5.1 million in cash.
Pursuant to the option agreement, Amulet Diamonds 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 Diamonds 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 Diamonds 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.
Feature image credit: Wikimedia