Kimberley Diamonds has agreed to acquire Mantle Diamonds, including the Lerala diamond mine, in Botswana.
Under the binding heads of agreement, Kimberley would issue some 13.5-million new shares to Mantle shareholders for full ownership of the company.
As part of the acquisition, Mantle's portfolio of exploration projects in Canada and Finland will be added to Kimberley's exploration opportunities.
Mantle's wholly-owned Lerala diamond mine, which is currently on care and maintenance, features five diamondiferous kimberlite pipes totalling some 6.66ha in size, along with a 230 tonnes per hour processing and recovery facility.
The mine has a 15-year permitted license covering an area of 21.86km².
Between February and July 2012, the mine produced 73,403 carats from 0.26-million tonnes of ore at 28.2 carats per hundred tonnes (cpht).
The project has an estimated remaining resource of 12.18-million tonnes at 25.52 cpht.
The improvements to the mine, which include the purchase of a new diamond sorter and optical waste sorter, are expected to cost $10m and Kimberley Diamonds said it is in the process of reviewing funding options.
Kimberley is planning to restart mining at Lerala in 2014, and is targeting a production of about 400,000 carats per year.
Kimberley Diamonds chairman Alex Alexander said that the acquisition provides the company with 'a foundation to grow its ambitions', including the objective to become a leading diamond producer with several operating mines supported by long-term life extension opportunities.
"We aim to consistently acquire projects with promising prospects at attractive valuations, with significant upside potential that can be realised quickly and cost-effectively," Alexander said.
"Lerale has all of these qualities and represents an important incremental step in the company's growth."
Image: Lerala production plant. Photo: Courtesy of Kimberley Diamonds.