another mine?12th March 2010
TORONTO (miningweekly.com) – JSE- and TSX-listed Rockwell Diamondsplans to buy a 74% interest in the Blue Gum diamond operation, in SouthAfrica's Ventersdorp region, from Etruscan Diamonds, the firm announcedon Thursday.
Rockwell signed a term sheet in which it offered topay a maximum of R33,5-million (about C$4,65-million) for the project,in shares valued at 6,8 Canadian cents each.
The company will also assume certain "non-material propertymaintenance obligations" effective immediately and other financialobligations when the deal is completed, it said.
The other 26% of the asset is owned by black-economic empowerment partners.
Etruscanstarted production at the Tirisano mine, located on the Blue Gumproject, in the first quarter of 2008, but scaled back operations andthen put the mine on care and maintenance later that year, after pricesand demand for rough diamonds fell sharply.
The Blue Gumdeposit, which is alluvial like Rockwell's own operations, hasindicated mineral resources of 25-million cubic metres with a grade of2,37 ct/100 m3, as well as 15-million m3 in inferred resources, with agrade of 2,37 ct/100m3.
The transaction is still subject toregulatory approvals, due diligence by Rockwell, the arrangement ofproject development financing and electric power supply negotiations.
Rockwellproduces high-value diamonds from three alluvial mines in South Africa,Holpan, Klipdam and Saxendrift, and is looking at restarting a fourth,Wouterspan, which was put on care-and-maintenance because of weakmarket conditions earlier this year.
Prices for Rockwell'sdiamonds fell sharply in late 2008 and sales ground to a halt,prompting the company to cut jobs and suspend operations at thehigher-cost Wouterspan mine, in a move to lower costs as revenueslumped.
Global diamond production slid to some 120-millioncarats last year, with an increase to 135-million forecast for 2010,RBC Capital Markets analyst Des Kilalea told the Prospectors andDevelopers Association of Canada convention this week.