Thursday, October 28, 2021

KDL shuts down its Lerala diamond mine

Australian miner Kimberly Diamonds (KDL) has closed its last remaining operation in Botswana, Lerala mine and placed the subsidiary responsible for the project into administration due to delays in sourcing the funding required to continue its work.

It had earlier stopped day to day operations at Lerala pending a renovation of the mine’s diamond processing plant.

Kimberly said in a statement on its website that, the mine had been in the process of implementing a performance improvement plan, which endeavoured to address the key issues affecting the plant. 

“The successful completion of this performance improvement plant required further funds to be provided by investors and despite considerable progress being made on implementing these improvements, all of the required funds have not been forthcoming,” Kimberley said.

However, the fall of Lerala won’t destroy the parent as the judiciary management does not apply to KDL, whose management remain in discussions with its investors for further funding and is exploring corporate restructuring options. 

“KDL has been in discussions with investors regarding further funds for some time, however, to date no agreement has been reached and KDL has been forced to cease providing financial support to Lerala,” the mine website states.

HYPERLINK “http://www.miningweekly.com/topic/lerala-mine”Lerala Mine, opened in 2008, has shut down twice owing to weak sales. Kimberley had targeted an annual output of 360 000 carats over seven years. The website further mentioned that in late 2013 Kimberley failed to pay royalties after they received a refund of $12 million from the Mining Rehabilitation Fund (MRF) and was expected to shift the $30 million cost of rehabilitating the Ellendale site back to the MRF.

In January 2015 the Department of Mines and Petroleum is said to have launched a forfeiture action over Kimberley’s failure to pay $200 000 in tenement rental for the Ellendale mining lease. Out of four instances of threats to forfeit their tenement over failure to pay royalties, Kimberley was forced to pay a fine only once, amounting to $3 087. And that was later when Kimberley announced it was shifting focus to the Lerala Mine in Botswana, and had already arranged a loan of $10 million to fund the operation.

Kimberley delisted from the ASX earlier this year after a chequered history. The stock enjoyed a charmed run early on, surging from 11c in 2012 to $1.30 in 2013, but fell spectacularly in 2014 when it revealed it had failed to secure a price increase from global jeweller Tiffany & Co that it had already factored into its profit forecasts. Its shares never recovered, and last traded at just 0.7c prior to its delisting.

RELATED STORIES

Read this week's paper