Botswana Diamonds PLC (BOD) in an update on its proposed diamond exploration and development activities in Zimbabwe said that the Company and VAST Resources plc (Vast) have formulated the terms of a new agreement with regard to their proposed joint venture in the Chiadzwa/Marange area of Zimbabwe.

In October 2018, Botswana Diamonds had announced that it had concluded an agreement with Vast for the development of Vast's Heritage concessions in the Marange Diamond Fields (the Heritage Concession Agreement), and that a separate agreement would cover the joint development of diamond properties outside of the Marange Diamond Fields.

“Vast subsequently entered into a joint venture agreement with Chiadzwa Mineral Resources (Pvt) Ltd, a Zimbabwe company owned by the Chiadzwa Community Development Trust (the Chiadzwa Community JV), in relation to an area of diamond prospectivity  known as the Chiadzwa Community Diamond Concession within the Marange Diamond Fields, and established a new company, Katanga Mining (Pvt) Ltd (Katanga), for the purpose of  operating the Chiadzwa Community JV,” BOD explained. “Katanga intends to conclude a joint venture agreement with Zimbabwe Consolidated Diamond Company (ZCDC) for the purposes of exploring and mining at the Chiadzwa Community Diamond Concession and marketing the diamonds derived from the operation.”

As a result of the changes in the area likely to be licenced by Vast Resources, BOD and Vast   entered into the New Agreement which replaces the Heritage Concession Agreement, the Company stated.

BOD summed up the principal terms of the new agreement, and in their words, they are:

• A new company (Newco) has been formed to hold the interests of Vast in the Chiadzwa Community JV and Katanga.
• When the detailed agreement between Katanga and ZCDC becomes effective, Botswana Diamonds will be issued with new shares representing 2.5% of Newco.
• In consideration for the issue of the Newco shares, BOD has agreed to provide for 5 years its management know-how at no charge (with a minimum of 40 hours per month) to Vast and Newco for exploration, mining, processing and marketing in relation to the Chiadzwa Community Diamond Concession.
• Vast will provide all capital requirements for the project commencement on a loan account to Newco, up to a maximum of US$10 million.

Further, if BOD wishes to sell or dispose of its interest in Newco, the New Agreement grants Vast the right (but not the obligation) to acquire BOD's interest in Newco at fair value.

John Teeling, Chairman of BOD, commented, "Zimbabwe is opening up to investment. The country is rich in resources and has significant diamond potential. Vast Resources is at an advanced stage in finalising an agreement with the Central Authorities on a package of ground in the Chiadzwa / Marange area. This is a revised package from that on which Botswana Diamonds and Vast Resources had previously agreed to cooperate. In the light of this development, our previous agreement with Vast has been revised on new terms acceptable to the board. We look forward to the diamond agreement being concluded and to work starting on what is highly prospective ground. Botswana Diamonds is also studying additional opportunities in Zimbabwe."