9th Jul 2015 08:52
LONDON (Alliance News) - Firestone Diamonds PLC Thursday said it has agreed to sell all of its operations in Botswana for USD8.0 million in order to address all of its focus into the Liqhobong mine in Lesotho.
Firestone has entered into a conditional agreement to sell its 100% stake in Firestone Diamonds Botswana (PTY) Ltd and its 90% stake in Monak Ventures (PTY) Ltd, both of which hold the company's Botswana operations including the BK11 mine, to Tango Mining Ltd.
The USD8.0 million consideration will be paid entirely in cash, with an initial payment of USD350,000. Before the end of September, a further USD300,000 will be placed into an escrow account as a deposit and the remaining USD7.35 million will be paid on completion of the deal.
The funds in the escrow account will be used for the ongoing cost of maintenance of the BK11 mine until the deal is completed. Any funds left in the account upon the completion of the deal will be passed on to Firestone.
The deal is conditional on Tango raising the USD7.35 million and the Botswana Competition Authority giving its seal of approval. Tango also must receive the necessary approvals from the Toronto Stock Exchange.
At the end of 2014, the two subsidiaries that hold the Botswana operations had a combined net asset value of USD10.7 million, and for the year ended June 30, 2014, the companies incurred a combined loss of USD700,000 before foreign exchange differences, it said.
The proceeds from the sale will be used to develop Firestone Diamonds' primary asset, the Liqhobong mine in Lesotho, which has over 11 million carats in reserve.
"The disposal of the Botswana operations, including the BK11 mine, enables us to focus solely on our flagship asset, the Liqhobong diamond mine, in the kingdom of Lesotho, where we will commence production during fourth quarter of 2016," said Chief Executive Stuart Brown.
Firestone shares were up 1.6% to 31.50 pence per share on Thursday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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