OGI Group (ASX:OGI), formerly Golden Gate Petroleum, is acquiring a 50.7% interest in a diamond licence in Mozambique that is downstream from the world-class Murowa and Marange diamond fields in Zimbabwe.
The Save River Diamonds Project includes a 40 kilometre by 10 kilometre deposition of gravels.
Bulk sampling is planned to commence in August to test the extensive alluvial gravels. This will be completed before end December 2014.
OGI is planning a capital raising of between $3.5 million and $6 million as part of the transaction.
The minimum raising of $3.5 million will be arranged on a best endeavours basis by Novus Capital, which has confirmed their full support for the acquisition and financing of the project.
This includes a priority top up facility for existing shareholders.
OGI has proposed to change its name to reflect the proposed principal focus on diamond exploration and mining.
Transaction Details
The company is entering into a Share Purchase Agreement with the current shareholders of Save River Diamonds Pty Ltd to acquire 78% of its issued capital.
This will give OGI an effective 50.7% interest in Licence 4969L as well as a right of first refusal to acquire an effective interest of 51.1% in Licence 4525L.
OGI will provide SRD with a loan facility for the drawdown of up to US$1.7 million.
The maximum anticipated drawdown is US$1.3 million under the budget for the bulk sampling program.
This will be on arm’s length commercial terms and will be repayable by SRD if the transaction does not proceed within 3 months.
To ensure the company has adequate funds to meet this facility it has arranged a US$500,000 convertible loan facility.
The facility is available for a 6 month period and is subject to an interest rate of 10%. The loan may be converted to equity, subject to shareholder approval, under the prospectus.
Save River Diamonds Project
The Save River Diamonds Project is located in southern Mozambique, next to the border with Zimbabwe, where gravels, conglomerates and grits have been mapped on surface.
The tertiary to quaternary aged sediments are potentially associated with alluvial diamonds.
Its geological model is based on the Save and Runde Rivers having drained areas some 200 kilometres upstream with rich diamondiferous conglomerates and kimberlites (Murowa and Marange diamond fields in Zimbabwe) over millions of years.
Save River shows a very steep gradient resulting in a high energy environment which the Save River maintains until it reaches the confluence with the Runde River.
The topography then changes to a gentle and almost flat surface at the confluence of the rivers. This has resulted in a massive deposition of gravels on the concession area which is a substantial 40 kilometres by 10 kilometres in size.
Previous exploration work included radiometric images of the areas which showed channel features cutting across the concession.
An exploration program has been designed to validate the traverses and test for diamonds in all gravel settings.
The program will involve the collection of a minimum 50,000 tonnes and a maximum of 100,000 tonnes of material to test for diamonds.
A preliminary budget of US$1.7 million is proposed for this work with the programme to commence immediately and be completed during 2014.
