Wednesday, August 10, 2022

DiamonEx mulling over P 50 million bond

DiamonEx, the mid tier mining company, is burning midnight oil pondering on whether to place a P 50 million bond that may propel the company to the production stage which is scheduled to start at the beginning of the New Year.

The Brisbane, Australia, based diamond exploration-cum-mining company announced the move which was short on details last week. However, sources said Friday that the picture will come clear this week as the company Managing Director, Dan O’Neill, is expected to fly into Gaborone on Sunday (today) for the annual Resource Sector Conference.

His visit will be the second within three weeks and it is hoped that either him or Fleming Asset Management ÔÇô bond arrangersÔÇöwill be able to come out with details once he has given the green-light.

Last week, Capital Securities said the bond is a funding arrangement aimed at taking the Leala mine into production.

“As part of the terms of the arrangement DiamonEx will issue P 50 million interest rate convertible bond. In order to minimize the dilution of the existing shareholders only 10 percent of the convertible bond can be converted into equity,” Capital Securities said in its weekly report.

During his last visit, he said they are aiming to produce their first diamonds at Lerala mine by the beginning of 2008.
“We are on schedule and we hope to produce our first diamonds around January/February next year,” he told The Sunday Standard in an exclusive interview.

“We are looking at our first production in the first quarter of next year and entering full production at the end of March,” he added.

His comments come within a period when Botswana is a focal point for mining companies as top management of various mining houses came into the country for the inspection of their projects ÔÇô especially in the diamond sector ÔÇô which is accompanied by the annual Resource Sector Conference.

“We are moving closer to production which is only six months away. We are looking at producing 300,000 carats per annum,” he said.

Lerala mine lies about 120 kilometers from Palapye ÔÇô a place earmarked for the development of the country’s second university ÔÇô and it is expected to create close to 260 new jobs directly.

At full production, the mine is to produce 300,000 carats per annum over its life span of 10 years. Its production is expected to be sold through the DTC Botswana which will become operational by 2008.

The mining will involve five open pits with the possibility of going underground over a concession area of 12,000 km2.

“The mine is going to be highly profitable because the production costs are low. And the most interesting thing about the project is K2 and K3 which is the richest resource,” an analyst at Capital Securities, Leutlwetse Tumelo, has said.

The mine is forecast to have a net operating cash flow of US $100 million on revenue of US $ 230 million over a period of 10 years. The mine was initially owned by De Beers as a pilot project but was abandoned because it was not meeting its target because of its size.

It is expected to yield 20 percent gem while the rest will be near gem and industrial diamonds.

The mine will be an open cut operation and there is a provision for underground Vertical pit mining after 10 years.

Further, the mine will be boasted by the envisaged diamond shortage in the market and the price spikes that are being driven by China and Indian markets.
In the next 10 years, diamond prices are expected to rise by 50 percent.

Earlier this year, the mine secured A$ 98 million in a bid to fast track its mine construction and an office at the Diamond Park. The company is dual listed on Australian and Botswana stock exchanges.


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