UK’s Vast Resources signs diamond JV with Chiadzwa community, sets Oct for ZCDC deal

Zimbabwe diamonds

Vast Resources plc, the UK-listed mining company, has signed a joint venture with a community-owned company ahead of the signing, in October, of an agreement with the Zimbabwe Consolidated Diamond Company to start mining at Chiadzwa.

A joint venture agreement had been reached with Chiadzwa Mineral Resources, a company designated to represent the Chiadzwa community interests in the diamond concession, Vast said in a statement to shareholders on Thursday. The new venture will be called Katanga Mining.

In June, Vast announced that it was in talks with ZCDC on a joint venture to mine the Heritage concession at Chiadzwa. Agreement on the joint venture has now been reached with ZCDC and it will be officially signed in October.

“Details of the Chiadzwa JV will be announced at the same time as the announcement of the ZCDC JV to which it is linked,” Vast says.

Andrew Prelea, Chief Executive Officer of Vast, said: “This is the beginning of an exciting era in Zimbabwe, and working together with government and community has been a great pleasure.  Being a part of this landmark project is of great significance to all the stakeholders, being a first of its kind where the community will have a direct benefit from the natural resources in their community. 

Given the complexities of the matters that have had to be taken into consideration, we are very happy with the results to date.  I would like to thank the Company’s team on the ground in Zimbabwe as well as the Government of Zimbabwe for all the guidance and support that they have given in the whole project.  We look forward to arrangements being concluded.”

An update on the financing details of the Chiadzwa details are to be released shortly, Prelea said.

The company recently sold its gold interests in Pickstone and Eureka mines to Padenga Holdings to focus on the diamond project.

Vast had previously independently negotiated with the local community for access to the Chiadzwa concession. However, a change in the diamond policy in December last year made it necessary for the UK firm to partner ZCDC.

The policy allowed only four companies to mine for diamonds in Zimbabwe; Russia’s Alrosa, ZCDC, Chinese joint venture Anjin and RioZim.

Zimbabwe is desperate to attract new investment into mining, including diamonds.

In July, Alrosa announced a new joint venture with ZCDC to mine diamonds in the Chimanimani area. The Chimanimani claims were previously held by DTZ-Ozgeo, another Russian joint venture, but ceded to ZCDC in 2018.

Under the diamond policy, local investors are entitled to 5% of any new operations while Government controls 46%. However, concessions are provided for; in the case of Alrosa, the Russian firm is to control 70% of the JV, while ZCDC will control the remaining 30%.

ZCDC is targeting 4.1 million carats of diamonds in 2019, up from 2.8 million carats in 2018. However, this target is looking ambitious after production fell sharply midyear, down 49% in June alone. At peak in 2012, Zimbabwe produced 12 million carats.