Pangolin Diamonds Corp. has signed an option agreement with Makanwu Civil Blasting (PTY) Ltd. (MCB), a private company in the Republic of Botswana; by which  MCB has granted Pangolin “the sole and exclusive option” to “earn up to a 75% interest” in MCB’s AK10 Diamond Project located in the Central District of Botswana.

Dr. Leon Daniels, President and CEO of Pangolin, commented: “I am extremely pleased with this transaction. The AK10 kimberlite has been under evaluated and the opportunity exists potentially to uncover and develop another AK6 Karowe Mine.” This assertion is probably based on the fact that the AK10 kimberlite is only four kilometres NNE from the Karowe Mine.

Pangolin explained that Dr. Daniels, one of the world’s-renowned kimberlite exploration geologists, co-founded African Diamonds PLC in 2002, with the sole purpose of acquiring kimberlites that De Beers originally discovered and that he believed could be economical.   “The joint venture between African Diamonds PLC and De Beers included the group of kimberlites in the area that De Beers had under evaluated,” Pangolin elaborated . “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 colour and clarity.”

The Agreement looks at an elaborate and phasewise increase in the sharing of equity which on  the completion of Phase 1  begins with an  equity interest distribution in the Project as: 51% by Pangolin and 49% by MCB; and under certain conditions worked out, depending on the extent of funding in Phase  2, upto 75% for the funding partner and 25% for the non-contributing party of Phase 2 of the JV.  

There is a one-time opportunity for the non-contributing party to buy back a 10% equity stake at a predefined cost to the buyback party, it is envisaged. 

“In the event that one of the parties does not want to contribute to the final commercial development of the Project, the other party may elect to sole fund the development of the Project,” Pangolin elaborated.  “The non-contributing party will then be diluted until its participating interest has been diluted to below 10% and its participating interest will be reduced to a fixed net profits interest of 5%.”