The Okwa Diamonds JV between Botswana Diamonds and Vast Resources has agreed to acquire Gem Diamonds Botswana for $4m from Gem Diamonds.

The primary asset of Gem Diamonds’ Botswana subsidiary is the Ghaghoo diamond mine, which has a mining licence for 25 years until 21 December 2036.

The Ghaghoo diamond mine is a 10.8ha kimberlite pipe in central Botswana, 300km north-west of Gaborone. Its diamond assortment is said to include ‘high-value’ coloured diamonds such as orange and blue stones.

The agreed sum would be paid in two instalments with the first instalment of $2m payable five days after suspensive conditions are fulfilled. The second instalment is payable on or before 31 December 2021.

Vast holds a 90% stake in Okwa Diamonds while Botswana Diamonds owns the remaining 10%.

Vast will fund up to $15m for the acquisition and bring the mine to the production phase while Botswana Diamonds will have the right to contribute to earn up to a further 20%.

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According to the JV terms, Botswana Diamonds will serve as the operator for the Ghaghoo mine until a management team is in place.

Vast CEO Andrew Prelea said: “The proposed acquisition of the Ghaghoo Mine in Botswana is a highly compelling opportunity for Vast to deliver diamond production in a relatively short period, benefitting from a fully equipped mine that has $250m of investment, infrastructure and a significant resource of quality gems that include large stones and fancy colours.”

Botswana Diamonds managing director James Campbell said that the mine is expected to have a nameplate capacity of 1.25Mtpa once it returns to production.

The acquisition is subject to approvals from relevant regulatory and competition authorities in Botswana, among others.

Gem Diamonds placed the mine under care and maintenance in February 2017 due to weak market conditions.