Vast Resources has concluded an agreement that will give it access to the Marange diamond fields in Chiadzwa, the London-listed company has said.
Vast will partner with Red Mercury a company owned by the Marange-Zimunya Community Share Ownership Trust Community Trust.
Under the terms of the agreement, Vast will have the right to carry out initial due diligence on the area with a view to concluding a joint venture agreement, the principal terms of which have been for exploration, mining and marketing of any diamonds recovered.
The 15 km² Heritage concession is close to an area of Vast’s historic Marange diamond fields claim and is understood to be an extension of the same geological system. Vast has effective control of exploration and mining on the Heritage concession and also of marketing of the diamonds in consultation with Red Mercury.
“The concession area has not been mined before and by virtue of its geographical positioning within the Marange diamond fields it is anticipated to contain economically viable diamondiferous alluvials, as well as conglomerate ore resources,” Vast director Mark Mabhudhu said.
This new diamond venture broadens Vast’s investments in Zimbabwe. The company already runs Pickstone, a gold mine near Chegutu, and holds a 23.75 percent indirect interest in Eureka, the Guruve gold mine that recently reopened.
Andrew Prelea, chief executive of Vast, said: “Shareholders will be aware that we have long held an historic diamond interest in Zimbabwe. With an evolving political backdrop, the country’s mining landscape is beginning to change and new opportunities are emerging.
“Whilst we await further developments on our historic claims, we are delighted to be strengthening our operating presence in the area and building on our relations in-country through this agreement with Red Mercury, which we believe paves the way for future growth.
The deal with Red Mercury helps vast comply with the 51/49 local ownership requirement for diamond investors, although this may change as Government is currently developing a fresh diamond policy.
Should the law change, the deal will provide for a profit split that will result in the local partners getting no less than 25% of the profits, plus a grant payment equal to 10% of all expenditure on capital equipment procured for mining.
The agreement also requires annual dividends of at least 50% of profits.
Vast has also pledged to promote local jewellery manufacture with a proportion of the production. The company did not specify on the size of that proposed value-addition component.