West Perth-based diamond exploration company Nare Diamonds Ltd expects a higher return from diamond sales at its Schmidtsdrift mine after the High Court of South Africa overturned an historical off-take agreement.
Prior to its acquisition, 100 per cent-owned Nare subsidiary New Diamond Corporation Pty Ltd had signed an agreement with Unitrade 1266, giving the diamond dealer exclusive rights to all diamonds produced from the mine.
While the two companies are currently involved in arbitration, the High Court refused to grant an interdict to restrain NDC from selling the diamonds to a third party beforehand.
Unitrade will be invited with other parties to tender for diamonds sold by NDC in what the company said would be a very competitive tender process.
The full text of a company announcement is pasted below
Australian based diamond exploration and development company Nare Diamonds (ASX: NDM) today announced that it expects to achieve higher returns from diamond sales from its Schmidtsdrift diamond mine in South Africa following the cancellation of an historical off-take agreement.
The agreement between New Diamond Corporation (Pty) Ltd ("NDC") and Unitrade 1266 ("Unitrade") was concluded prior to Nare Diamonds acquiring NDC and its diamond projects. Under this historical agreement, Unitrade had the exclusive rights to buy all diamonds produced from NDC's Schmidtsdrift Mine and other mining operations in South Africa.
Unitrade disputes the validity of the cancellation and applied to the High Court of South Africa seeking an interdict to restrain NDC from selling any diamonds to any third party pending the outcome of an arbitration. The High Court refused the interdict, which means that NDC will be able to sell its diamonds by public tender pending the outcome of the arbitration. Unitrade will be invited with other parties to tender for diamonds sold by NDC in what Nare expects to be a very competitive tender process.
Nare Diamonds Executive Director Will Burbury said that the cancellation of this historical off-take agreement provides the company with the opportunity to market its products on the open market.
"Our first public sale should attract significant attention as it will include a number of rare and good quality stones," he said.
