The Board of Directors of Central Kimberley Diamonds limited ("CKD") has entered into an agreement with Gemstar Diamonds Limited ("CDL") for the acquisition of a majority interest in the Palmietfontein Diamond
Project ("Project") located approximately 180 km northwest of Johannesburg in South Africa. The project hosts one of the largest diamond-bearing kimberlites in South Africa.
The main terms and conditions of the agreement to acquire the Project interest include a two part due diligence programme, a bulk sampling programme to be undertaken by CKD within the Project Area and the issuance of shares in CKD to GDL as consideration for the option to acquire the Project interest and the acquisition itself.
More specifically, under the agreement CKD is granted the option to purchase from GDL all of the shares in Urafiki Gems (Ply) Ltd ("Urafiki") held by GDL, which shareholding comprises 74% of the issued shares capital of Urafiki. Fidulex Diamond Holdings (Ply) Ltd, a wholly owned subsidiary of Urafiki, is the 100% owner of the Project.
• In stage 1 of the due diligence, GDL permits CKD to undertake an initial investigation of all aspects of the Project. This stage has been completed to this satisfaction of CKD;
• In stage 2 of the due diligence CKD will at its own cost perform grid and mapping work on the Project area;
• In tHe bulk sampling stage CKD may undertake at its own cost a bulk sampling programme on the Project area after issuing GDL with 10 million fully paid ordinary shares in CKD ("Option Shares") and will process not materially less than 25,000 and not materially more than 100,000 tonnes of ore;
• CKD holds an option to acquire from GDL all of issued shares in Urafiki by issuing GDL such number of fully paid ordinary shares in CKD as together with any option shares will comprise 50% of the fully paid ordinary shares of CKD as at completion on a fully diluted basis ("Acquisition Shares").
Terms of Acquisition
At the completion of Stage 1, when all funding is finalised and subject to shareholder approval, GDL or its nominees will be issued 10 million shares as an option fee from CKD. This option may be exercised if after the bulk sampling, CKD may wish to then purchase the 74% of the Palmietfontein project. The purchase price will be sufficient fully paid CKD shares to enable GDL to hold 50% of the Capital of CKD.
CKD considers the acquisition of the Palmietfontein Diamond Project, via the agreement with GDL, as an enormous and privileged opportunity that will add significant value to the company in a very short space of time. The project is located in a region that is famous for hosting many of the world's most profitable and long-lived diamond mines, including the Cullinan Mine (formerly the Premier Mine) that produced the 3,106 carat Cullinan Diamond -the largest gem-qualily diamond ever found, the Kimberley Mines (that led to the creation of De Beers), Venetia, Orapa, Letseng, Koffiefontein and ]agersfontein, to name a few.
The Palmietfontein Project hosts the fourth largest diamond-bearing kimberlite in South Africa. It also hosts a large untested target that has soil and geophysical characteristics the same as the Palmietfontein kimberlite. In an independent review of the Palmietfontein kimberlite, it was concluded that diamond-bearing kimberlites this large are so rare that their discovery is considered a "once in a life time" event The pportunity this acquisition therefore represents is virtually unprecedented in the annals of recent global diamond exploration.