PERTH (miningweekly.com) – ASX-listed Kimberley Diamonds has signed a deal to buy fellow gem miner Mantle Diamonds, in a bid to acquire its Lerala project, in Botswana.

Under the terms of the agreement, Kimberley would issue some 13.5-million new shares to Mantle shareholders in exchange for full ownership of the company.

The Lerala mine, which is currently on care and maintenance, comprises five diamondiferous kimberlite pipes totalling some 6.66 ha in size, along with a 230 t/h processing and recovery facility.

Between February and July 2012, the mine produced 73 403 ct from 0.26-million tonnes of ore before being decommissioned. The project is estimated to have a remaining mine life of seven years, and has an estimated remaining resource of 12.18-million tonnes, at 25.52 ct a tonne.

The project also has a 15-year fully permitted mining licence.

Kimberley Diamonds told shareholders on Tuesday that the project stood ready to be recommissioned following the execution of engineering improvements designed to further enhance recovery and to reduce operating costs.

The improvements, which included the purchase of a new diamond sorter and optical waste sorter, would cost $10-million, and Kimberley Diamonds said that it was in the process of reviewing its funding options.

The company planned to restart mining at Lerala in 2014, and was targeting a production of some 400 000 ct/y.

Apart from Lerala, Mantle also holds a 34% interest in the Lahtojoki kimberlite, in Finland, through a joint venture agreement with Firestone Diamonds, and an interest in a range of brownfield exploration projects in Canada, covering some 136 000 ha.

Kimberley Diamonds chairperson Alex Alexander said the acquisition provided the company with a strong foundation to grow its ambitions, including its objective to become a world-class diamond producer, with multiple operating mines, supported by long-term life extension opportunities.

“We aim to consistently acquire projects with promising prospects at attractive valuations, with significant upside potential that can be realised quickly and cost-effectively.

“Lerale has all of these qualities and represents an important incremental step in the company’s growth.”

The agreement is conditional upon a final due diligence, and the transaction is scheduled for completion by the end of October.