On the 26th of February in Moscow OJSC ALROSA and the Angolan national diamond company ENDIAMA signed an agreement establishing an exploration joint venture in Angola.
In June 2013 ALROSA and ENDIAMA signed an Memorandum of Understanding on joint work. Today’s meeting saw the adoption of the agreement establishing a 50-50 joint venture between the two companies. Its registration procedure is expected to take several months, with the launch of exploration phase to follow in the second half of this year.
The parties also signed a mining investment contract regulating the JV’s activities. According to its provisions, the first stage will comprise the acquisition of the prospective Cassango area for 3-year exploration works with the total financing estimated at $15.5 mln.
The agreement envisages granting the joint venture with diamond mining rights in case of discovery of a cost effective kimberlite deposit. Under this scenario ALROSA could invest not less than $150 mln. into building of mining facilities. Production would be equally divided between the parties. The agreement also provides for the return of investment when the joint venture reaches its target capacity: 75% of its profit will cover the return of investment and 25% to be paid as dividends to the stakeholders.
Further on in 2014, the joint venture will receive exploration rights for another prospective area.
At the signing ceremony ALROSA CEO Fedor Andreev said, “Angola has been ALROSA’s strategic partner in Africa for many years. For more than twenty years ALROSA and ENDIAMA have been successful partners in the Catoca joint mining project that accounts for 6% of the global rough diamond output. We are very optimistic about the prospects of our exploration efforts in Angola, and perceive the probability of finding new primary sources of diamonds there as high. Diamond prospecting and exploration in Angola is an important part of ALROSA’s development strategy”.