October 20, 2004
De Beers Forms Joint Ventures in Madagascar and India
De Beers reached an agreement with Majescor Resources to form a joint venture to explore for diamonds in northern and central Madagascar. Also, De Beers Centenary Mauritius, an arm of the diamond conglomerate, will hold a 74% interest in a prospecting and mining joint venture in India with Hindustan Diamond Co.
As part of the Madagascar joint venture agreement, De Beers will contribute its extensive database to the joint venture and Majescor will contribute some of its land holdings it has in Madagascar. According to the terms of the agreement, Majescor will secure and keep the identified area of high interest in 2004 and 2005. During this period, both companies will jointly explore the area of interest defined by the agreement on a 50/50 basis.
In 2003 and 2004, De Beers collected and processed a total of 102 samples from areas of Madagascar selected for their diamond potential. The companyıs analysis led to the recovery of 4,378 visually positive kimberlitic indicators, some of which have been confirmed, through micro probing, as having a kimberlitic origin. Kimberlite is a host rock which in scarce occurrences contains diamonds, and in rare occurrences enough diamonds to mine economically.
Starting in April 2004, Majescor acquired a large land package over areas either cratonic (the most ancient part of the earth's crust) or identified as being prospective for diamond exploration based on the discovery of kimberlitic indicator minerals in the past. Majescor's sampling of ground has yielded encouraging results.
"We are very excited about this opportunity to do a joint venture with De Beers in Madagascar," says Jacques Letendre, Majescor vice president of exploration. "Although Majescor has acquired a large land package, most of the sample results are still pending and the amount of work we have performed and money spent to date on the project is less than that invested by De Beers in developing the database which Majescor, as the joint venture operator, will profit from. This joint venture will assist us in fast-tracking our project, and we can therefore be more selective regarding the permits we apply for to renew thereby saving considerable amounts of exploration time and money."
De Beers intends to spend $200-$300 million over the next few years to search for diamonds in India, reports India's online Business Standard. De Beers Centenary Mauritius, an arm of the diamond conglomerate, will hold a 74% interest in the prospecting and mining joint venture with Hindustan Diamond Company, itself a 50-50 joint venture between De Beers and the Indian government that specializes in diamond polishing, says the Antwerp Facets News Service.
India has been known as a source of rough diamonds since ancient times, but most of its mines were exhausted centuries ago. There is only one active diamond mine in the country, the National Mineral Development Corp., which owns one mine at Panna in the central Indian state of Madhya Pradesh. De Beers reportedly is prospecting in that region and in several other Indian states, including Chattisgarh, just to the east of Madhya Pradesh, and Karnataka, Andhra Pradesh, and Tamil Nadu, all in the country's south.
The mining joint venture with Hindustan Diamond will be based in Mumbai and will have equity of 1 billion rupees ($22 million), the Business Standard said. It quoted Hindustan Diamond Chairman and Managing Director Madhavan Nair as saying that the company will sign a memorandum of understanding with De Beers by the end of October and will start operations in two to three months. Hindustan Diamondıs revenues in 2003-04 were 10.3 billion rupees ($225 million).