DiamondWorks (DMW-T) has agreed to form a 50-50 joint venture with Magma Diamond Resources to operate DMW’s 60% interest in the Koidu Kimberlite project in Sierra Leone.
Magma can earn its stake by spending US$1.2 million on the project and securing US$5 million in project financing by the end of the year.
The deal is subject to regulatory approval and due diligence by Magma by July 15.
DiamondWorks will act as the project operator.
The Vancouver-based company plans to immediately resume operations, and figures that, subject to further detailed project planning, the project will need about US$6.2 million in capital and working costs to reach initial commercial production.
The company is exploring the two kimberlite pipes that make up the Koidu project and host proven and probable reserves estimated at 7.6 million tonnes grading 0.352 carat per tonne (or 2.67 million carats).
Two of the exploration licences are on the Sewa River, in the eastern province. At last report, reserves were estimated to contain 1.7 million carats of alluvial diamonds. Another concession is in southeastern Sierra Leone.
Magma’s shareholders are BSG Investments, Bateman, a provider of process and recovery expertise and equipment to the diamond mining industry, the Steinmetz Diamond Group, and Brian Menell, chief executive of Magna International.
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