Company History

Progress on the mine was halted when civil war broke out, leading to widespread damage of equipment.

The rights to the Koidu Kimberlite Project, the Upper Sewa, Middle Sewa and Matemu properties were originally secured in 1995 by Branch Energy Limited ('Branch Energy'). Branch Energy had obtained a 25-year mining lease for the Koidu Kimberlite Project and initiated development of the property in November 1996.

The democratically elected government (which was elected in 1996) found it appropriate to ratify and again enact the 1994 Mines and Minerals Decree under which the lease was issued. Moreover, the Koidu lease was specifically ratified by an Act of Parliament in December 1996.

In 1996, a Canadian listed company called DiamondWorks, acquired Branch Energy and all its mineral rights. In May 1997, the project was at the plant commissioning stage when a coup d'etat took place in Sierra Leone. Branch Energy was forced to halt its activities and invoke force majeure and, over the ensuing 5 years of conflict, the company's assets at Koidu were completely destroyed and no further work could be undertaken on the exploration properties. DiamondWorks revisited the mineral holdings in Sierra Leone after the war in 2002, targeting the Koidu Kimberlite Project, and began construction and re-development of facilities damaged during the period of civil unrest.

The support of the United Nations and the United Kingdom, along with the injection of substantial financial and humanitarian resources into Sierra Leone, facilitated efforts to bring the Koidu Kimberlite Project back into production.

In June 2002, DiamondWorks and Magma Diamond Resources Limited entered into a 50/50 joint venture agreement for the re-development of the Koidu Kimberlite Project. Magma is a wholly owned subsidiary of the privately owned BSG Resources Limited ('BSGR'). BSGR is the resources arm of the Beny Steinmetz Group ('BSG'), a private international investment group focusing on diamonds, natural resources, real estate, finance and asset management. BSGR has been involved in various major investments in the natural resources arena worldwide.

Koidu Holdings resumed operations in 2003, dewatering the open pits.

The initial joint venture was replaced by a new joint venture agreement, entered into between inter alia DiamondWorks, Branch Energy and Magma during September 2003 (the 'New JV Agreement'). In terms of the New JV Agreement, Magma and Branch Energy each held a 50% (fifty per cent) equity stake in the newly formed JV Company, Koidu Holdings S.A. and were obliged to fund the working capital and running cost requirements of the Company pro rata their shareholding in the Company. Koidu Holdings S.A. was incorporated in the British Virgin Islands and licensed to do business in Sierra Leone in terms of the Business Registration Act on 29 September 2003. A Certificate of Registration of Business and a Licence were issued to Koidu Holdings S.A. on 1 October 2003 in accordance with the Companies Act, Cap. 249 of the Laws of Sierra Leone 1960.

Magma and Branch Energy agreed to a dilution of Branch Energy's shareholding in Koidu Holdings S.A., such that the shareholding would be in proportion to the contributions made by the Shareholders to the Company. Further, Magma and Branch Energy agreed to the assignment by Magma of a portion of its Shareholders' loan to its holding company BSGR, and the introduction of BSGR as a Shareholder in Koidu Holdings S.A.

In terms of the Shareholders' Agreement, the new shareholding in Koidu Holdings S.A. became: 40% DiamondWorks, 35% Magma and 25% BSGR. In January 2004, BSGR assumed overall direction, supervision and management of Koidu Holdings S.A. In February 2007, BSGR acquired Energem's shareholding in Koidu Holdings S.A. and Magma's 25% holding was transferred to BSGR. Koidu Holdings is now wholly owned by BSGR Diamonds, Ltd, which is
wholly owned by BSG Resources Ltd.