Mantle Diamonds takes aim at re-opening Lerala mine, BSE board

27 Jun 2011

Mantle Diamonds, the UK-based diamond exploration outfit, is said to be itching to list on the Botswana Stock Exchange (BSE) following its successful bid to acquire and ramp up the development of the Lerala mine, sources pointed out this week.

The privately-held company pulled the financially troubled DiamonEx Botswana — a company that owned and operated Lerala mine – from the rubbles of the global economic crisis with a US $10 million (about P 67 million) offer that will see the re-opening of the Lerala mine in Botswana.
“Mantle Diamonds spent some time looking at the mine and they bought it. The plan now is to bring back Lerala mine, back to production and then list on the Botswana Stock Exchange and London AIM,” Wayne Osterberg, of Fleming Asset Management Botswana said Friday.

Mantle Diamonds has offered Batswana investors a 20 percent stake in the mine and the balance was paid out in cash.

The move has hoisted both Mantle Diamonds and Botswana pension funds grip on Botswana’s natural resources. Fleming Asset Management team is in the board of DiamonEx — the international division.
The Lerala mine stands out as the sole active asset in its portfolio of assets that are scattered around the world.

Under the sale arrangement Botswana Public Officers Pension Fund (BPOPF), the largest creditor in DiamonEx Botswana Limited’s balance-sheet through the bond note that was issued by the company for its mine construction.

The defunct company had issued a bond note of P 50 million as it was positioning itself for production before the worst global economic crisis since the Second World War.

Other creditors were European Investment Bank and Stanbic Investment Management Services.
The cash-rich Mantle Diamonds is to inject working capital geared toward the re-starting of production at Lerala mine that was halted at the beginning of the global economic crisis that led to it being suspended on the Australian Stock Exchange while it was de-listed in Botswana.
Further, the sale of DiamonEx Botswana Limited will involve the transfer of exploration ground in Botswana to Mantle Diamonds.

Lerala mine lies about 120 kilometres from Palapye – and at full production the mine is to produce 330,000 carats per annum over its life span of 10 years.

The mine is an opencast operation and there is a provision for underground mining after 10 years.
The company has several exploration licences in Tuli-block and some for areas around Jwaneng—which they have not yet acted upon.

“The pipes that have been earmarked for mining are K2, K3 – which is the biggest – K4, K5 and K6.
The Lerala was formerly mined by De Beers but it left because the deposits there were of a smaller scale. Further, De Beers by then used old and second hand equipment which made it unviable.
The Lerala deposit has about 25-to- 30 percent gem- stone diamonds while the rest is industrial diamond.

The mine will be boosted by the envisaged diamond shortage in the market and the price spikes that are being driven by China and Indian markets. China’s is currently the second consumer of diamond jewellery after surpassing Japan.

In the next 10 years, diamond prices are expected to rise by 50 percent.

It is believed that Mantle Diamonds’ involvement will also enable the company to consider a number of options that are aimed at recapitalizing the company and help it to get re-quoted on the Australian Stock Exchange.