Gaborone: Botswana Diamonds has agreed to fund an exploration project in South Africa in return for a 72 percent stake in mine developer Vutomi.

As part of the deal, Botswana Diamonds will pay Vutomi a total of $1.2 million (GBP 942,000) in cash, of which $724,269 will be used to fund exploration. Botswana Diamonds will also issue 100 million ordinary shares each worth $0.003 (GBP 0.0025) to Vutomi shareholders, which translates into a payment of $311,648 in equity.

Vutomi owns more than 20 kimberlites in the Limpopo, North-West and Free State provinces of South Africa, Botswana Diamonds said. The flagship project, the Frischgewaagt mine in the Limpopo province, is adjacent to Marsfontein, a former De Beers deposit. A sampling program at Frischgewaagt yielded 247 carats in 2016, with an average value of $180 per carat.

“We know already from the exploration work that we have kimberlites and that they contain diamonds,” said John Teeling, chairman of Botswana Diamonds. “Now we need to see whether there are enough diamonds of the right quality to deliver a viable mine. The indications are good.”

The remaining 28 percent of Vutomi will continue to be held by the company’s partners through South Africa’s Black Economic Empowerment program.