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Covid-19 stalls Gov’t – De Beers’ negotiations

De-Beers

Travel restrictions, prohibited meetings and unprecedented disruptions on the diamond industry and entire global economy occasioned by the COVID-19 pandemic has not only affected Botswana’s revenue streams, the country’s highly anticipated negotiations with De Beers Group have also been stalled.

De Beers Group is Botswana’s partner in the diamond business for over 50 years. The two parties were supposed to finalize their new sales agreement negotiations this year April. Information gathered by this publication however reveal the nation would have to wait a little longer for the outcome of the much talked about new deal talks. The Botswana-De Beers diamond sales deal was last renewed into a 10 year union in 2010 and it lapses this year September 2020.

De Beers-Botswana marriage has birthed Debswana Diamond Mining Company, the partnership’s flagship entity. Debswana is Botswana’s largest private sector employer, only government employs more people than Debswana. The company is directly owned by Botswana Government and De Beers on 50-50 shareholding.

Another offspring of the partnership is Diamond Trading Company Botswana (DTCB), also a 50 -50 joint venture between the two parties. DTCB sorts and values diamond from Debswana mines and then avails 85 % of then sorted and valued diamonds to De Beers Global Sight holder Sales (DBGSS) and 15 % to Okavango Diamond Company (ODC).

The latter, established in 2012 is wholly owned by Botswana Government while the former is a De Beers wholly owned operation. DBGSS relocated from London to Gaborone in 2011, transferring De Beers’ operations consolidated rough diamond aggregation and sales to Botswana, bringing alongside professionals, skills, and the world’s biggest rough diamond transactions to Africa.

The new sales agreement negotiations which began last year are said to be have been significantly stalled by the current COVID-19 pandemic, weekendpost has learnt. According to Reuters there is no guarantee that the 10 year old sales deal lapsing this year would be renewed by end of this year, corona virus pandemic has delayed negotiations.

Mmetla Masire, Permanent Secretary in the Ministry of Mineral Resources, Green Technology & Energy Security said, “The ideal situation would be to end the talks by December but there are no guarantees that will happen.” Masire said the government had resumed talks for a new deal, but travel restrictions have kept the progress slow.

One of the highly earmarked outcomes to possible emerge from the negotiations is increase in percentage volume of ODC’s uptake from DTCB. The argument has always been that Botswana as one of the largest diamond producers in the world has the capacity and ability to develop its own price book through its own independent window outside De Beers’ channels.

Before ODC was establishment in 2012 all diamond recovered from Debswana mines were made available to De Beers for dispatch into the sight holder market. Currently ODC rakes in sales in the region of $500 Million annually (approximately P5 billion).

After assuming power in April 2018 President Masisi noted that he would be eyeing more participation of Botswana in the diamond business, “We have had a wonderful relationship with De Beers and we expect that relationship to be even more cemented, there is a way of actually achieving a win-win for both, we want to participate more on cutting, polishing and retail,” Masisi said when talking to Bloomberg in May 2018.

Business

Matsheka seeks raise bond program ceiling to P30 billion

14th September 2020
Dr Matsheka

This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.

“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.

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Business

Lucara sits clutching onto its gigantic stones with bear claws in a dark pit

14th September 2020
Lesedi La Rona

Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.

A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.

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Botswana Diamonds issues 50 000 000 shares to raise capital

14th September 2020
Diamonds

Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.

A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.

Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.

In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.

The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.

In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.

Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.

The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”

In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.

Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.

The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.

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