Key points
- TMH Acquisition Co., a vehicle of Denham Mining Fund LP, will pay Diamond Fields $250,000 (U.S.) immediately.
- The 2019 work program, expected to cost about $500,000 (U.S.), is to be completed within seven months.
- TMH can acquire 100 per cent of Beravina for $2-million (U.S.) plus a 9-per-cent sales royalty.
- Beravina’s inferred resource is 1.5 million tonnes at 22.7 per cent zircon equivalent, per a Dec. 14, 2018 NI 43-101 report.
Diamond Fields Resources Inc. has entered into a cooperation agreement with TMH Acquisition Co., a special purpose vehicle established by Denham Mining Fund LP, to advance the company’s Beravina project in Madagascar.
Pursuant to the agreement, TMH will make an immediate payment of $250,000 (U.S.) to the company and will finance the next stage of exploration and development work on Beravina. The 2019 work program, which will be under TMH’s control, is expected to cost approximately $500,000 (U.S.) and should be completed within seven months. TMH will have the right to extend the evaluation period by a further three months if it has incurred expenditures of $500,000 (U.S.) and made a further payment of $250,000 (U.S.) (which, if exercised, will be deducted from the option exercise payment of $2-million (U.S.) referred to below).
Upon completion of the 2019 work program, TMH will have the option to acquire 100 per cent of the project in consideration of:
A net payment of $2-million (U.S.);A 9-per-cent sales royalty.
- A net payment of $2-million (U.S.);
- A 9-per-cent sales royalty.
If the option is exercised, TMH will incur all future capital and operating expenditures in relation to the project and the company will benefit, in perpetuity, from its right to 9 per cent of all future mineral sales, subject only to limited deductions (such as value-added tax, third-party sales commissions, third-party freight and any third-party toll treatment charges). If the option is not exercised by TMH during the evaluation period, the project must be returned to the company without TMH retaining any interest, along with all of the results from the 2019 work program.
Upon exercise of the option, TMH is required to place the project into production by no later than June 30, 2023, subject to certain extensions for events of force majeure such as permitting delays, but not longer than June 30, 2025. If the project is not placed into production by the project long-stop date, then TMH will be required to make advance royalty payments to the company, as follows:
$500,000 (U.S.) on the project long-stop date;
$500,000 (U.S.) six months after the project long-stop date;$500,000 (U.S.) on every anniversary of the project long-stop date thereafter.
- $500,000 (U.S.) on the project long-stop date;
- $500,000 (U.S.) six months after the project long-stop date;
- $500,000 (U.S.) on every anniversary of the project long-stop date thereafter.
If TMH should fail to make any advance royalty payment, when due, then the company shall have the right to reacquire the property in consideration of $1 (U.S.) and 50 per cent of all advance royalty payments actually made by TMH, if any.
Sybrand van der Spuy, chief executive officer, said: “We are pleased to have secured the cooperation of such a strong financial and technical partner for Beravina. We have confidence that the 2019 work program will meet expectations and confirm the technical merits of the project. If the option is exercised, DFR will be in the enviable position of being carried through to production at no cost whilst retaining a very substantial economic stake in future sales revenue from Beravina.”
Diamond Fields was advised by Tamesis Partners LLP, as financial adviser, and Fasken Martineau LLP, as legal adviser.
Diamond Fields has agreed to pay the following fees to Tamesis in connection with its services: $25,000 on signing of the agreement, $75,000 (U.S.) on exercise of the option and $100,000 (U.S.) following the commencement of commercial production at Beravina.
The agreement is subject to approval of the TSX Venture Exchange, which approval Diamond Fields expects to obtain.
About Beravina
The Beravina project is a hard-rock zircon deposit with a NI 43-101 inferred mineral resource estimate of 1.5 million tonnes at 22.7 per cent zircon (ZrSiO4) equivalent to 15.3 per cent ZrO2; see the NI 43-101 technical report, with an effective date of Dec. 14, 2018, and filed on the company’s SEDAR profile on Jan. 29, 2019, written by MSA Group (Pty) Ltd. (Michael S. Cronwright, PrSciNat, FGSSA, John Derbyshire, PrEng, FSAIMM, Jeremy Witley, PrSciNat, FGSSA, and Andre van der Merwe, PrSciNat, MAUSIMM, FGSSA), each of whom is a qualified person, for purposes of NI 43-101, and independent of the company as defined in NI 43-101. The project, which covers 625 hectares, is located in western Madagascar. Results so far show that, utilizing industry standard beneficiation technologies, zircon can be concentrated to levels of between 50 per cent ZrO2 and 58 per cent ZrO2 with varying levels of thorium ingrained.
About Diamond Fields Resources Inc.
Diamond Fields is an exploration and mine development company with assets in Madagascar and Namibia. In Madagascar, the company is developing the Beravina project, an advanced high-grade hard-rock zircon exploration prospect located in the west of the country, approximately 220 kilometres east of the port of Maintirano and near a state road. The company acquired Beravina from Pala Investments and Austral Resources in 2016. In Namibia, International Mining and Dredging Holdings (Pty) Ltd. is undertaking an initial six-month (non-continuous) offshore diamond mining program on the company’s ML 111 licence area.
