Kimberley Diamonds Ltd. is buying all of Mantle Diamonds Ltd. for almost 13.6 million new ordinary shares.
The deal will take place after it has carried out due diligence and a capital restructuring of Mantle Diamonds, the firms said.
Mantle Diamonds owns the Lerala diamond mine in eastern Botswana, which has five diamondiferous kimberlite pipes disovered by De Beers around 20 years ago with indicated resource estimates of around 3.1 million carats and probable reserves of almost 2.5 million carats.
Despite a considerable overhaul of the plant and equipment and the Lerala is ready to be recommissioned, Kimberley Diamonds said the operation requires engineering enhancements to increase recovery and cut operating costs. It hopes to recommence mining next year and has set an annual production target of 400,000 carats. Upgrades are estimated to have a cost of $10 million.
Kimberley Diamonds also aims to acquire Mantle's 34-percent stake in a joint venture with Firestone Diamonds at the Lahtojoki kimberlite project in Finland along with the Slave and Superior projects near the Ekati diamond mine in Canada's NorthWest Territories.