Vast Resources PLC (LON:VAST) has agreed principal terms of a joint venture with Red Mercury Ltd for the Heritage diamond concession area in the Marange Diamond Fields in Zimbabwe.
The company said it has agreed a deal with Red Mercury for exclusive access to the Heritage concession to carry out due diligence, with a view to concluding the joint venture.
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Under the principal terms of the joint venture, Vast Resources will take effective control of exploration and mining of the concession as well as marketing of the diamonds in consultation with Red Mercury.
“The concession area has not been mined before and by virtue of its geographical positioning within the Marange Diamond Fields it is anticipated to contain economically viable diamondiferous alluvials as well as conglomerate ore resources,” said Mark Mabhudhu, director of Vast Resources Zimbabwe Ltd and former chief executive of state-owned Zimbabwe Consolidated Diamond Company Ltd.
Red Mercury will be responsible for providing a full mining licence and Vast will be responsible for procuring funding to develop an operating diamond mine on the Heritage Concession. Vast said the deal is subject to Zimbabwe’s future indigenisation laws not being an effective bar to investment.
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The new Zimbabwe government abolished indigenisation laws for most types of mining but it was retained for diamonds. The law was introduced during the rule of former president Robert Mugabe to increase black Zimbabweans’ stake in the sector but it resulted in a drop in foreign investor confidence, prompting the new government to change the rules.
“With an evolving political backdrop, the country’s mining landscape is beginning to change and new opportunities are emerging,” said Vast Resources chief executive Andrew Prelea.
“Whilst we await further developments on our historic claims, we are delighted to be strengthening our operating presence in the area and building on our relations in-country through this agreement with Red Mercury, which we believe paves the way for future growth.”