Gem Diamonds, the London Stock Exchange listed junior miner, was in a jubilant mood this week as its Botswana subsidiary Gope Exploration Company was awarded a mining license for the Gope diamond deposit, located in the environmentally challenging Central Kgalagadi Game Reserve.
“I am pleased to be able to announce that Gem Diamonds has been awarded a mining licence from the Government of the Republic of Botswana for Gope diamond. This is the first step towards the development of the Gope deposit into a viable producing mine and it is in line with Gem Diamonds’ stated strategy of providing a platform for sustainable growth for the group through the development of existing assets,” Gem Diamond Chief Executive Officer, Clifford Elphick, said.
The company indicated that it is not in a position to divulge a lot of information about the project ÔÇô since it is in a close periodÔÇöuntil March 15, 2011 when its results will be released.
It is expected that the company will put details of its mining plan and the actual capital expenditure of the proposed mine to the market.
Gem Diamonds acquired the Gope deposits from De Beers in May 2007 and started operation on one of the most challenging environments in the country. The proposed mine is within a game reserveÔÇöthe size of Denmark — and does not have access to power, reliable water supply and access to roads.
However, its is expected that the company will use experience that it gained from its other operations in Australia, DRC, Indonesia and Lesotho to deal with the environmentally sensitive CKGR while at the same time adopting a phased approach.
Gem Diamonds has an eco-friendly mining programme at Letseng mine in Lesotho, which happens to be its most profitable mine in its nine portfolio mines in the world.
“I think we are walking on similar road with government,” Elphick has said. “We have received an overwhelming support during our consultation with the stakeholders.
He added: “We do have a background of operating in a sensitive area and we understand that we have to look after the environment.”
The Gope mine operation is expected to be unique in the sense that people will have to spend about two weeks in the mine camp and the rest with their families outside the reserve. The model is borrowed from two countries, Australia and Lesotho, where it has been in operation for some years.
“It is very appropriate to do that in (a sensitive area like) a game reserve,” he said.
“The Gem Diamonds Board will shortly be looking to approve construction of the initial phase at Gope, which aims to start production in 2013 in order to take advantage of the rising rough diamond market,” Elphick said.
Gope mine is scheduled to produce about 1 million carats per annum with a life-span of 30 years, which will bolster Botswana’s position as the premier diamond producer in the world.
However, the mine licence is for 25 years, which is an improvement from the last figure of 17 years before the mine was put on care and maintenance in June 2009.
The extension of the life-span is due to the new modeling that was initiated by the company to take full advantage of the deposit.
Gem Diamonds stated last June at the Capital Resources conference that the new prices for Gope are expected to go up as per the pricing model of WWW Diamonds.
As part of its expansion plan, Gem Diamonds has interest in three projects in the DRC, which are under exploration. The projects are in Mbelenge, Lubembe and Longatshimo and if they prove profitable they will boost its other plans of extending its operations beyond mining.
It is currently planning to start the jewellery manufacturing in DubaiÔÇö an international diamond centre — in a bid to get into the downstream activities.
Further, Gem Diamonds has put together 80 clients across the globe who are fighting for its gemstones at every auctionÔÇöa parallel system from that of De Beers.
