BRC Diamond Corporation (BRC) and Diamond Core Resources Limited (Diamond Core) have entered into an agreement to merge the two companies to create the new entity. Current BRC shareholders will hold approximately 53% of the new company, with the balance in the hands of Diamond Core shareholders.

Silverstreams1

Construction in progress
at the Silverstreams plant

BRC is a Canadian-based diamond exploration company active principally in the DRC. It was one of the first companies to identify emerging diamond opportunities in the country, and today has a commanding land position, directly controlling almost 8 500 squ km and retaining a further 11000 squ km through option agreements on three separate exploration properties. These properties are located in some of the most prospective diamond regions of the country.

Diamond Core is part of a South African-based group of companies whose objectives are to conduct systematic greenfields diamond exploration programmes, and to develop assets others consider uneconomic or marginal by using its technical skills, entrepreneurial spirit and lowcost operating structure. Diamond Core is focused on, and currently active in, the North Cape province of South Africa.

Dr. Michiel ‘Mike’ de Wit, President and CEO of BRC, says the merger is unique in bringing together complementary assets, management teams and shareholders. “By combining our two companies we will accelerate growth and capitalise on the strengths of each business in exploration and development of both kimberlite and alluvial deposits,” he adds. “We will be positioned as a leading, growthfocused diamond explorer in Africa with an outstanding endowment of mineral licences and the managerial and technical skills to bring these to production.”

Silverstreams2

An aerial view of the
Paardeberg East site

Diamond Core CEO Theo Botoulas is of the opinion that his company’s early stage ground can benefit from the strength of the BRC geological team. “Similarly, from an operational standpoint, we are enthusiastically looking forward to applying our production expertise to designing, constructing and operating recovery plants on BRC’s properties in the Democratic Republic of Congo (DRC),” he says.

FOCUS ON GROWTH
The merger aims to create a growth-focused African diamond explorer, with significant production potential, that will benefit from:

  • Key landholdings and infrastructure in proven diamondproducing regions of South Africa, and in prospective diamond districts of the DRC
  • A pipeline of advanced alluvial exploration projects with recently commissioned bulk sampling plants, as well as early-stage exploration opportunities, on prolific alluvial terraces
  • A spread of kimberlite projects, including well-defined bodies moving into bulk sampling programmes and numerous drill targets across extensive prospective areas
  • Management depth with an aggregate of more than 100 years of diamond industry experience, and
  • Access to global capital markets, given listings on two key resource stock exchanges and share registers with strong institutional compositions.
Theo Botoulas

Diamond Core CEO
Theo Botoulas

On completion of the merger, the new company will have a broad suite of landholdings in South Africa and the DRC with an excellent spread of near-production projects and early stage exploration ground across both kimberlite and alluvial areas. BRC DiamondCore’s near term objectives will be to focus on generating cash flow and maximising value from its various alluvial and kimberlite projects, which include: Silverstreams, Uitdraai, De Kalk, Paardeberg East, Skeyfontein, Sanddrift, Muishoek, Koa Valley, Strydpan and Kuiltjiespan, in South Africa.

Main projects in the DRC are Kwango River, Lubao and Tshikapa. BRC’s projects in the DRC include both whollyowned permits and those held under option agreements with local partners. After taking into account a required 5% government interest upon conversion to exploitation permits, BRC expects to retain an economic interest of between 80% and 95% for the significant majority of its permit holdings.

LOGISTICS IN PLACE
An important factor is that both BRC and Diamond Core can benefit from existing in-country operations which have good relationships with local communities, various government departments and all necessary service providers. This will enable the new BRC DiamondCore merger to make use of existing logistical capabilities throughout southern and central Africa. Management believes that these relationships and this expertise will allow for compressed planning and development times relative to competitors.

Mike de Wit

President and CEO of
BRC Dr. Mike de Wit

In order to accelerate the expected synergistic benefits of the combination — as well as demonstrate the commitment to this venture — BRC and Diamond Core are entering into an engineering services agreement with immediate effect. In terms of this agreement, Diamond Core will assist in the scoping, design and construction of a bulk sampling diamond plant for BRC’s use on its Kwango River project and elsewhere in the DRC. By constructing and commissioning this modular plant in South Africa, and providing operator training before air- freighting it to the DRC, the companies expect a significant reduction in lead time to commissioning an operation in central Africa. This will fast-track development of the DRC projects ahead of the planned merger.

The future growth strategy of the new company is in the process of being articulated and more clearly defined, but will concentrate on the following five key areas:

  • Structure of the merged entity into separate kimberlite and alluvial exploration divisions, each with its own clearlydefined objectives, business plan and budget
  • Analysis of the exploration portfolio of the merged entity to focus optimally and prioritise the various projects
  • Identification and acquisition of additional exploration rights in prospective areas in close proximity to the current portfolios in both South Africa and the DRC
  • Alignment and optimisation of the administration structures and systems of both companies
  • Identification and analysis of potential acquisition targets which would supplement the current portfolio of alluvial and kimberlite assets, and where the technical and managerial skills of the merged entity would add value.