Dwyka Diamonds to buy four South African mines

AIM-listed Dwyka Diamonds (DWY-L) has picked up an R15-million purchase option on four advanced diamond properties in Northern Cape province, South Africa.

Dwyka will pay R4 million ($800,000) in cash and issue 2.75 million shares, valued at R11 million, for the Blaauwbosch, Newlands, New Elands, and West End properties. There are also provisions for additional payments depending on the projects’ financial performance.

The purchase is subject to some final due-diligence investigations. Dwyka first optioned three of the properties in July 2004, adding West End a few months later.

The company has budgeted R10.7 million ($2.1 million) for development at Blaauwbosch and Newlands and another R8.3 million ($1.7 million) for New Elands. It expects to produce about 96,000 carats annually from the mines once they are in full production.

Blaauwbosch, about 100 km east of Kimberley, was reopened in 2004 after being shut down in the 1960s; it produced about 1 million tonnes at 0.35 ct per tonne. Newlands, 60 km northwest of Kimberley, is producing from one kimberlite blow. New Elands, near Blaauwbosch, and West End, 200 km west of Kimberley, are not in production, though both have some historical production.