BRC DiamondCore (which features in International Mining’s July issue) has signed a Letter of Intent with Rio Tinto Mining and Exploration, whereby Rio Tinto can earn a 60% interest in the company’s five diamond exploration projects (the Northern Projects) in the northern Democratic Republic of the Congo (DRC) under a staged earn-in arrangement. These five Northern Projects relate to a total of 106 exploration permits covering approximately 27,000 km2 in the Equateur and Oriental Provinces. It is believed that the region’s geology, which represents an extension of the Mboumou Craton from the Central African Republic, is prospective for the hosting of kimberlite pipes. Alluvial diamonds are currently being recovered in this region.
Under the proposed arrangement, Rio Tinto would fund an exploration program with the objective of finding and defining kimberlite deposits capable of economic development. The Letter of Intent contemplates the following three phases:
Reconnaissance Phase. Rio Tinto contributes $550,000 towards the initial reconnaissance sampling phase to be completed by BRC by year-end 2009.
Phase 1 Exploration. Upon completion of the reconnaissance phase and receipt and interpretation by Rio Tinto of all reconnaissance sample results, Rio Tinto has the exclusive option to earn an initial 35% interest in whichever Northern Project Rio Tinto selects by spending $3 million in exploration expenditure on each of the projects it selects by no later than December 31, 2012. Rio Tinto may elect to earn this 35% interest in multiple Northern Projects by spending the said $3 million on each Northern Project selected by Rio Tinto by no later than December 31, 2012. This Phase 1 exploration program will be as agreed upon by the parties and will be operated by BRC.
Phase 2 Exploration. Upon completion of Phase 1 exploration on a Northern Project, Rio Tinto would then have the right to earn an additional 25% interest in the applicable Northern Project by spending an additional $10 million in exploration expenditure on each project by no later than December 31, 2014. At the point during Phase 2 exploration where a kimberlite requires the first bulk sample, BRC would hand over operation of the bulk sampling program to Rio Tinto.
Following Phase 2 exploration, a joint venture company would be formed with Rio Tinto holding a 60% interest and BRC holding a 40% interest.
The above proposed earn-in arrangement is subject to various conditions, including completion of due diligence and negotiation and execution of a definitive agreement between the parties.
This proposed earn-in arrangement applies solely to BRC’s northern DRC projects and does not impact the company’s major DRC projects of Tshikapa, Kwango River and Lubao. Company President, Dr. Mike de Wit, said: “We are very pleased to be joint-venturing with such a highly respected mining company as Rio Tinto on the exploration of these promising diamond projects. Both companies are of the view that these properties are highly prospective for the hosting of diamondiferous kimberlites.”
