Botswana Diamonds (LON:BOD) is expanding its operations from its base country to neighbouring Zimbabwe by teaming up with Vast Resources (LON:VAST) to jointly explore for diamonds in that country.
The memorandum of understanding signed Tuesday sees the two companies exchanging past exploration information on areas prospective for diamonds in Zimbabwe. It also says the parties will set up a jointly-owned special purpose vehicle to develop and exploit diamond resources.
Vast acquired a database related to diamonds in Zimbabwe back in 2008. It has also, until 2010, carried out its own exploration in the field using information from the database.
Botswana Diamonds, in turn, has independently acquired a Zimbabwe diamond database and has expertise in exploration, development and mining of precious stones. In particular, it has access to technology relating to extracting diamonds from hard rock.
The Southern African nation has “excellent” diamond potential, Botswana Diamonds chairman John Teeling said in a statement.
Vast CEO Andrew Prelea said in a separate release that the new Zimbabwe government’s desire to open the country up for business triggered the deal with Botswana Diamonds. He added his company believed it was the right time to use its industry knowledge to bring value for stakeholders by developing new resources.
Prelea was referring to Zimbabwe’s decision, announced in March, to relax its ownership laws requiring companies to sell or transfer 51% equity to black citizens, particularly in the platinum and diamond sectors.
Botswana, which was overtaken by Russia as the world’s top diamond producing country in 2014, is grappling with aging mines, as well as power and water shortages.
Still, the nation is home to some of the world’s most prolific diamond mines, including Lucara Diamond’s (TSX:LUC) Karowe operation, where the now-famous Lesedi la Rona, the second-largest gem-quality diamond to ever be found, was unearthed in 2016.
Besides diamonds, the country also produces nickel, copper, coal and iron ore.
Zimbabwe is home to the world’s second largest platinum reserves. It also known for its diamonds, though alluvial deposits are almost depleted, and it’s said to have eight out of nine “rare earth” minerals and a processing capacity for gold, diamond and chrome.