Zimbabwe’s long legacy of diamond exploration and mining had all but vanished during the many years of economic isolation under President Robert Mugabe’s political regime. Following Mugabe’s downfall in November 2017, and on the back of the new government’s favourable stance on foreign investment, investors’ interest has been rising steadily. Recent amendments to the country’s mining bill have reaffirmed the new government’s intention to open up to foreign investors. The controversial indigenisation policy which had caused concern among foreign mining firms has been amended. The requirement for 51% local ownership of foreign mining companies continues to be applicable to diamonds and platinum mining entities, where the government or one of its entities must own a majority stake. Notwithstanding this, the indications are clear that Zimbabwe is indeed open for business and that the local ownership requirements for diamonds and platinum may soon be amended.
In May 2018 BOD signed a MoU with Vast, an AIM listed exploration company. In terms of the MoU, the two companies would be exchanging past exploration information and forming a special purpose vehicle (‘SPV’) to jointly develop the diamond potential of Zimbabwe. The initial focus of this agreement is on the Marange Diamond Fields (‘MDF’) of eastern Zimbabwe. Vast holds exclusive access to key diamond concessions within the MDF (“Heritage Concession”) through an agreement with a community organisation.
The 6,913 hectares Heritage Concession (also named Block T1A) contains several targets for modern alluvial diamond placer deposits. The grades of the known modern alluvial placers which drain the MDF range from 50-500 carats per hundred tons (“cpht”), most typically 100-200 cpht. Moreover, there is potential for remnants of the basal Umkondo (conglomerate) unit, which has grades of 100-3,000 cpht elsewhere in the MDF. It is generally estimated that over 60 million carats have been recovered from the entire MDF to date.
The initial MoU has since matured into a formal agreement over the MDF, which includes the following terms:
- An SPV between BOD and Vast to develop diamond resources in the MDF.
- Initial shareholdings will be BOD – 13.33% and Vast – 86.67%.
- Vast will contribute up to US$1 million as initial funding.
- If any additional funds are required, this will be via an equity raise.
- BOD and Vast may contribute to any future equity raise on a pro rata basis. If either party does not take up its allocation, the other may contribute further and increase their relative shareholding.
A separate agreement between BOD and Vast will cover the joint development of diamond properties outside of the MDF in a 50/50 joint venture model.
Preliminary results from a due diligence review of Block T1A have highlighted potential for modern alluvial placers and the possibility for older conglomerates. Next steps will be to investigate the potential of the modern alluvial diamond deposits and older conglomerates on the property. Assuming positive results, field work will be closely followed by drilling, pitting and bulk sampling which will form part of a pre-feasibility study. This may entail further funding beyond the initial US$1 million committed to the programme by Vast.