De Beers Managing Director Gary Ralfe and Mvelaphanda Resources Chairman Tokyo Sexwale signed the joint venture agreement between the two companies, for primary kimberlite exploration in certain parts of the Limpopo and Mpumalanga provinces, De Beers said in a statement. This document formalizes an earlier agreement signed by the two parties in February.
A new company, Ndowana Exploration (Proprietary) Limited, has been formed. De Beers will have a 67% stake and Mvelaphanda a 33% stake. The agreement marks the first time that De Beers will work in partnership with another company in South Africa seeking primary diamond deposits, and it is also significant for Mvelaphanda Resources as they expand into exploration for kimberlites.
“The finalization of this deal means that for De Beers it is business as usual,” Ralfe said at the signing ceremony. “Even though much of the minerals bill still has to be finalized we are of the view that whatever happens hereafter we will deal with those business issues as they arise.”
The parameters of the agreement balance project and financial risks appropriately for both parties, the statement says.
Should exploration prove successful on the prospective target areas, De Beers will operate and manage large-scale mines for which its capabilities are most appropriate (defined as mines with potential annual diamond production valued at $70 million or greater), and Mvelaphanda Resources will manage other operations, the statement says. If deposits are discovered that are best suited for exploitation on a smaller scale than normally undertaken by either De Beers or Mvelaphanda Resources, then these may be contracted or sold to small-scale operators from previously disadvantaged communities.
“The conclusion of this agreement is an important milestone for Mvelaphanda Resources going forward and will, if successful, create value for its broadly based previously disadvantaged shareholders,” Sexwale said.