Trading in Carson Gold (VSE) will remain halted for three months as the company prepares engineering and evaluation reports and carries out due diligence on two proposed acquisitions in China.
The company is acquiring China Diamond, a private company with a 50% controlling interest in the Changma diamond mine and 3,100 sq. km of prime diamond exploration ground in Shandong province.
The agreement calls for Carson to issue 25 million of its common shares to shareholders of China Diamond.
In a separate transaction, Carson can buy, for US$1.5 million and 500,000 shares, the non-cash assets of Yunnan Mining, a private company in which it already owns a 16.7% interest. Under the deal, Carson must surrender the 2 million shares of Yunnan it already holds, which will be cancelled. Yunnan’s primary assets are four operating joint ventures pertaining to gold exploration in China’s Yunnan province and two memoranda of understanding on advanced-stage gold and copper exploration projects.
The Changma mine is China’s largest operating diamond mine, accounting for about 60% of national production. An open-pit operation, it produces 44,000 carats per year.
The measured and indicated reserve is estimated at 1.8 million tonnes grading 1.17 carats per tonne to a depth of 300 metres, plus an inferred reserve of 1.4 million tonnes averaging 0.77 carat to a depth of 600 metres. The value of the diamonds is estimated at US$115 per carat.
The 3,100 sq. km of exploration ground comprises two projects, known as 702 and 703. The former surrounds the Changma mine and hosts a cluster of seven pipes, which are believed to join at depth into a single pipe. The resource estimate stands at more than 7 million carats.
At the 703 project, 25 km to the west, diamonds and indicator minerals have been discovered throughout much of the 1,500-sq.-km concession.
China Diamond is completing a deal for the exclusive marketing rights to its diamond production in China.
In addition, the company is negotiating to acquire significant diamond assets in Southern Africa.
Carson has $11 million in working capital and 18 million shares outstanding.
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