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Mwana Africa Plc Considers Halting DRC Diamond Exploration after BHP pulls out

By Amarendra Bhushan for CEOWORLD Magazine Updated:December 2, 2008 Become a writer!

Mwana Africa Plc has been hit by news that BHP Billiton, its joint venture partner working on diamond exploration in the Democratic Republic of Congo, is set to pull out of agreements between the two companies.

Mwana said that BHP had given notice of its intention to withdraw from deals with SouthernEra Diamonds Inc and Gravity Diamonds Ltd, which were acquired by Mwana in 2007 for £68 million.

Prior to the acquisitions, BHP Billiton owned shares in both Gravity and SouthernEra, which it tendered in exchange for Mwana shares as part of each transaction.

Mwana has subsequently been in negotiation with BHP Billiton to take forward discussions including combining the Gravity and SouthernEra agreements into a single exploration agreement, and the potential for BHP Billiton to wholly fund the exploration programme. These discussions, including agreement of exploration budgets, were not concluded.

Following BHP Billiton’s withdrawal from the SouthernEra agreement and proposed termination of the Gravity agreement, Mwana said all options including the closure of all kimberlite diamond exploration in the DRC, were being considered.

1) Received from BHP Billiton World Exploration Inc notice of its withdrawal from the kimberlite diamond exploration agreement

2) BHP Billiton has also proposed to terminate the exploration agreement entered into between BHP Billiton and Gravity Diamonds.

3) Gravity and SouthernEra were acquired by Mwana in 2007 for a total consideration of GBP68 million.

4) BHP to withdraw from SouthernEra deal on Dec. 31