Diamond Fields International (DFI) signed a joint venture option agreement in March 2013 with Afri-Can Marine to further develop its marine diamond leases in Namibia.
Under the agreement, Afri-Can and its local partner had the option to acquire a 90 percent interest in DFI's diamond mining leases numbered 111, 138, 139 and 32 located off the coast of Namibia in exchange for spending $3.3 million within two years on a programme designed to place the properties back into commercial production.
Mining Lease 111 hosts a resource of 950,000 carats of gem quality diamonds.
For the deal to go through, Afri-Can was required to spend $800,000 of exploration expenditures on the mining lease before the first year anniversary of the option agreement and an additional $2.5 million of exploration expenditures before the second year anniversary.
During the option period, Afri-Can was also said to be liable for all costs associated with maintaining the properties in good standing.
DFI was to retain a 10 percent interest in the properties as well as retain the right to 10 percent of all diamond production, without any liability for the capital and development costs for a period of two years from the date the option had been exercised by Afri-Can.
At the time, Ian Ransome, CEO of Diamond Fields said the Afri-Can agreement was a “positive step” forward in restructuring of the company.
“It further develops the Namibian concessions and allows DFI to focus its resources on advancing other components of its marine portfolio,” he said.
“The agreement provides the company with a realistic opportunity to generate a dependable revenue stream without significant further cash investment."
Afri-Can president and chief executive Pierre Léveillé also noted that the company was “very pleased” with the agreement.
“The DFI portfolio of Mining Leases complements EPL 3403 and offers very good development potential. It will enable us to get a resource base and then start production,” he said.
“We feel that we are sitting on a strong project in a very solid industry."
In December 2013, Afri-Can Marine signed a memorandum of understanding with International Mining and Dredging Holding (IMDH) for the development and mining of the mining leases under option with DFI and of the exclusive prospecting license (EPL) 3403 off the coast of Namibia.
Afri-Can and IMDH were planning to create a joint-venture company that would operate the mining programme on ML 111 and EPL 3403 if deemed economically viable.
IMDH was to fund the preparation of the mining vessel and Afri-Can would fund the vessel operating costs for the three first months of the mining programme.
Afri-Can's immediate goal was to focus on mining lease 111's existing resources to resume production in the shortest time frame possible.
“We are very pleased with this agreement as it gets us to a level that will allow mining and provide regular development and value for our shareholders,” said Léveillé at the time.
Things appeared to be going according to plan as Diamond Fields reported early this year the completion of a preliminary study of the feasibility of resuming mining in 2014 on the Mining Lease 111. The study was undertaken by Afri-Can Marine Minerals pursuant to the December 2013 agreement between DFI and Afri-Can.
"The completion of the prefeasibility study by Afri-Can is the next positive step in DFI's goal of restarting marine mining on its Namibian concessions. We look forward to continued progress toward that goal," said Ransome.
However, on September 10, 2014, Afri-Can reported that l'Autorite des marches financiers (AMF) had completed a review of its technical reports and noted issues of non-compliance with the requirements of NI 43-101.
“AMF's determination of the non-compliance of the technical report rests mainly on the qualified person not having conducted a personal inspection on the off shore marine diamond property allowing for proper validation of the underlying database in support of a mineral resource and mineral reserve estimate,” it said.
“AMF's determination of the non-compliance of the technical report also rests on the fact that the qualified person should have carried out a sampling program to confirm the data provided by Diamond Fields International.”
Afri-Can further said that the AMF's letter stated that it was their interpretation that in the absence of a proper verification programme to validate the inputs of the data base provided by DFI, the disclosure of quantities and grades should be limited to potential quantities and grades expressed as ranges of a target for further exploration rather than mineral resources or reserves.
The National Instrument 43-101 report completed in October 2013 showed that 413,000 carats were in the indicated category while 453,000 carats were an inferred resource.
Then a bombshell was dropped three weeks later.
DFI announced that it was terminating an agreement with Afri-Can regarding its Namibian marine diamond concessions.
It said that it would now develop the properties independently and was planning a resource development programme with an aim recommence mining before the end of 2015.
“We have identified a number of potential resource targets on the concessions, which we now intend to fully explore,” said Diamond Fields chief executive Ian Ransome.
“We are extremely excited about the future prospects for this project," he said.
The company said it expects the first marine survey work to commence next month.
Afri-Can didn’t issue a statement regarding this cancellation and it remains a matter of speculation as to what triggered this corporate divorce?
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
