BOTSWANA

Geopolitical

Botswana is the world’s largest diamond producer by value and the second largest by volume. The country hosts three world class diamond mines, namely the Orapa, Jwaneng, and Karowe mines, which are all highly profitable. Three quarters of Botswana’s annual diamond production is of gem quality. The second largest diamond ever found, the 1,109ct Lesedi La Rona, was unearthed from the Karowe mine in 2015.

Figure 3: Kimberlite clusters of Botswana

Botswana’s long track record of conservative economic management has allowed it to build substantial financial reserves. The country has consistently been awarded the highest credit ratings in Africa and supported by its good governance and a strong democracy and is consequently considered to have low political risk. It has long been accepted as the best address for diamond investment.

The company is exploring in the Kalahari region of Botswana both under its own wholly owned subsidiary Sunland Minerals and in joint venture with BCL in Maibwe Diamonds. It will also commence work on its newly acquired Sekaka licenses next year which are also in the Kalahari.

Sekaka Diamonds

The company entered into a Sale of Shares Agreement with Petra Diamonds Limited (‘Petra’) and Kalahari Diamonds Limited (‘Kalahari Diamonds’) on 18 July 2020 to acquire the entire issued share capital of Sekaka held by Kalahari Diamonds, a wholly-owned subsidiary of Petra. The transaction was closed on 27 November 2020.

Sekaka, which was Petra’s exploration vehicle in Botswana, holds three Prospecting Licenses in the Central Kalahari Game Reserve (‘Kalahari’) (PL’s 169/2019, 058/2007 and 224/2007) which incorporate the high grade KX36 kimberlite pipe. Sekaka also holds a recently constructed, kimberlite bulk sampling plant on site which includes crushing, scrubbing, dense media separation and x-ray recovery modules all within a secure area. The acquisition also includes an extensive exploration database, built up over fifteen years of exploration activity.

Figure 4: KX36 Bulk sampling plant (photo courtesy of Petra Diamonds Ltd)

The transaction consideration comprises a deferred cash payment of US$300,000 of which US$150,000 is payable on or before 27 November 2021 with the balance on or before 27 November 2022. In addition, Petra is entitled to a 5% royalty on the sale of any diamonds that might be commercially produced from KX36 in the future. The royalty is also payable on diamonds recovered from any kimberlite discovered using information from Sekaka’s database. BOD has the option to buy-out the royalty for a cash payment of US$2 million.

KX36 is a 3.5 hectare kimberlite pipe, discovered by Sekaka, in the Kalahari. The kimberlite is situated approximately 70 km from Gem Diamonds’ Ghaghoo Mine, and 260 km north-west of Botswana’s capital Gaborone.

Figure 5: Geological model of KX36 (photo courtesy of Petra Diamonds Ltd)

Sekaka has undertaken considerable exploration work on KX36, including core and Large Diameter Drilling (‘LDD’). A historic SAMREC compliant Indicated Resource of 17.9 million tonnes at 35 cpht exists over the kimberlite, with an Inferred Resource of 6.7 million tonnes at 36 cpht, estimated for the pipe by Z-Star in 2016. The Company has not independently verified the historic resource estimate. Modelling of these grade estimates however suggests overall grades of between 57 cpht and 76 cpht. The estimated diamond value from the LDD is $65/ct, with an upside range of between $97/ct and $107/ct, all assuming a +1.15mm Bottom Cut-Off (‘BCOS’) or +3 DTC diamond sieve.

Figure 6: Sekaka historic ground holdings

Sekaka’s extensive diamond exploration database contains the results of work undertaken since 2004. The database comprises the results of airborne and ground-based electro magnetics work (inclusive of the Falcon survey), as well as heavy mineral sampling. The Company believes that the information contained in the database will provide substantial support to its future kimberlite exploration activities in Botswana. The area of initial specific focus will be the heavy mineral train flowing from KX36 as it is likely that there are undiscovered buried kimberlites in the vicinity of KX36 as kimberlites generally occur in clusters and not in isolation.

Sunland Minerals

BOD became operators of Sunland Minerals in 2018.

Several high-grade geophysical anomalies were discovered by Sunland in the Kalahari in areas adjacent to the Ghaghoo mine and KX36 discovery. The anomalies were found after collecting and collating all historical exploration data for all of Sunland Minerals’ Kalahari Prospecting Licences.

Data collection focussed on open file regional and semi-regional datasets (mainly airborne magnetic and deflation sampling). Some data re-processing and image enhancement of value-added (filtered) geophysical products was undertaken to assist with the identification of potential kimberlite targets.

All licences were covered by either the Falcon airborne gravity gradiometer (AGG) single sensor magnetic survey (typically acquired at 125 – 150m line spacing at a flying height of ca. 80m) or the 2004 – 2012 Xcalibur High-resolution horizontal gradient airborne magnetic survey acquired at 100 – 120m line spacing at a nominal flying height of 15 – 20m.

Potential kimberlite targets were selected and categorised as Priority One to Three for each of the prospecting licences. A total of twenty Priority One, sixty-eight Priority Two and one hundred and seventy- nine Priority Three targets were identified in these licences. Two of the twenty Priority One were already known and had been surveyed in detail so consequently the remaining eighteen targets were followed up with detailed ground walk magnetic survey and soil sampling.

Figure 7: Location of high priority aeromagnetic targets (Red = 8 high interest targets; Yellow: low priority targets; Black empty circles: targets discarded on the basis of poor walk magnetic response)

Three types of responses were noted during modelling of the survey data:

Magnetic low anomalies similar to known kimberlites Go194 and KX36 that exist in the same geological setting
Dipole type magnetic high anomalies similar to known kimberlites TB4 and Go25 (Ghaghoo mine) that are also hosted in basalt
Magnetic high anomalies at the end of linear structures or dykes as the known Quoqo kimberlite K7 is also hosted in basalt.

Only eight of the high interest targets were selected for Heavy Mineral sampling and four low interest anomalies were identified for follow-up in future.

Anomalies selected for detailed soil sampling are shown below. From each anomaly, five 100 litre samples were taken in a cross pattern across each anomaly and were analysed for heavy minerals using Tetrabromoethane (‘TBE’) at specific gravity of 2.9.

Figure 8: Geophysical targets in Sunland Minerals Kalahari project

A total of 267 kimberlitic indicator minerals (’KIMs’) were discovered. All eight anomalies had KIMs. The KIMs included 41 garnets, 13 chromites, 139 ilmenites, 4 chrome diopsides and 70 olivines. An analysis of the grains by Remote Exploration Services of Cape Town concluded that the sources were likely to be local due to the abundance, size and fresh surface textures of the KIMs.

The next steps are to determine the mineral chemistry of the grains and thus determine their diamond bearing potential and to follow up the Priority Two anomalies with walk- magnetics and soil sampling as some may be reassessed with a higher priority following ground truthing.

The same process of target picking using high resolution aeromagnetic survey data and previous regional soil sampling will be applied to new licences that the company has been issued.

Figure 9: Kimberlitic indicators from Sunland’s Kalahari project.

Assuming positive mineral chemistry results, a decision will be made on a drilling programme.

Maibwe

Maibwe Diamonds holds PLs in the Kalahari. Maibwe is a three-way JV between Botswana state-owned copper-nickel producer BCL, Future Minerals and Siseko Minerals (51% owned by BOD).

Under the original JV agreement, BCL was the operator and had to complete and fund an agreed work programme, whereas JV partners Future and Siseko have a free carry up to the Bankable Feasibility Study stage. The project came to an abrupt halt due to BCL’s inability to finance the agreed work programme as result of its being placed into liquidation. The complex nature of BCL has resulted in an impasse over the liquidation process. The original liquidator has been replaced and there is now greater impetus to find a commercial solution to moving forward with Maibwe following a corporate impasse going back four years.

Figure 10: Drilling on the Maibwe JV.

To date the Maibwe JV has identified a cluster of four diamond bearing kimberlite pipes on PL186, with surface sizes of 5ha, 6ha, 2ha and 1ha respectively. Significant quantities of microdiamonds have been found in one of these pipes.