Mantle Diamonds, the London-based┬ádiamond outfit,┬áis aiming to take-over┬áDiamonEx’s Lerala Mine in a bid to bolster its image in the industry.
In a statement released by the Australian Stock Exchange (ASX), Mantle Diamonds┬áis prepared to┬á pay US $ 3.25 million (P 21.8 million) to creditors and at the same time┬á issue┬á shares to┬á some of the┬á secured┬á┬ácreditors in a┬á move that will bring back the company to┬á sound financial position.
DiamonEx, the mid-tier miner ran into financial trouble┬áat the height of the global financial crisis that led to its suspension from┬átrading on both Botswana Stock Exchange and Australian Stock Exchange and closure of operations at Lerala mine.
Under the┬áproposed plan Mantle Diamonds is expected to bring back the company to solvency stage┬áas it is expected to restructure┬ápart of the debt by offering shares to creditors.
The biggest creditor, Botswana Public Officers Pension Fund (BPOPF),┬á is to be paid out┬á in full while other creditors will be included in a programme that┬á┬á will see the┬á company offering┬á 45,330 913┬á shares in┬á┬á an exchange.
“Once the┬ádirectors have found a project to acquire, they will recapitalize the company at that time to fund the requirement of the project. It is hoped the directors will be able to do that at the same time that they seek shareholders approval for the sale of DBL (DiamonEx Botswana Limited) and the conversion of┬ácompany debt into equity,” the statement from ASX said.
“We hope that they will be some recovery because they will be cash and┬áshare options,” Wayne Osterberg at Fleming Asset Management said on Friday.
The deal is expected to be completed by late January after┬ásatisfying┬áall conditions┬áset out in the statement issued by┬áASX.
Lerala Mine lies about 120 kilometers from Palapye ÔÇô a place earmarked for the development of the country’s second university ÔÇô and it is expected to create close to 300 new jobs directly.
At full production the mine is to produce 330,000 carats per annum over its life span of 10 years.
The mine will be an open┬ácut operation and there is┬áa provision for underground mining after 10 years.
The company has several exploration licences┬áin Tuli-block and some for areas around JwanengÔÇöwhich they have not yet acted upon them.
“The pipes that have been earmarked for mining are K2, K3 ÔÇô which is the biggest ÔÇô K4, K5 and K6.
Lerala┬áwas formerly mined by De Beers┬ábut it left because the deposits there were of a smaller scale. Further, De Beers by then did┬áuse old and second hand equipment which made it unviable.
The┬áLerala deposit has about 25-to- 30 percent gem- stone diamonds while the rest is industrial diamond.
The┬ámine will be boosted by the envisaged diamond shortage in the market and the price spikes that are being driven by China and Indian markets.
In the next 10 years diamond prices are expected to rise by 50 percent.
Mantle Diamonds┬áhas operations in┬áCanada, Finland and the DRC.