Wednesday, June 7, 2023

Kimberley Diamonds AGM told Lerala mine faces delays

Kimberley Diamonds Ltd has admitted to delays in recommisioning the Lerala mine blaming the snail pace in getting environmental approvals and difficulties in raising funding for the Botswana based asset.

The ASX listed junior miner had hoped to restart the mine early in 2015, but now the project that is forecast to produce an average of AUD$44.4 million (about P355 million) of revenue per annum to the companyÔÇöhas been brought forward.

The company Managing Director, Noel Halgreen told an annual general meeting that the mine remains its long term asset and admitted to funding delaysÔÇöwhich means the mine can go into operation in the last quarter of 2015.

“Assuming we complete the funding process in December, we are aiming to have Lerala
operational by August/September 2015,” he told shareholders.

Kimberley is having difficulty in raising money coupled by the slow pace in getting Environmental Impact Assesment from officials in Gaborone, but Halgreen told shareholders the latter has been achieved.

However, Halgreen said they have since received notification from the Botswana Department of Environmental Affairs that the EIA was transferred to Kimberley Diamonds.

“This is a major step forward for us, as this now allows us to commence all the planned recommissioning activities on site within the current approved footprint. We still need to complete the agreed process, but with the approval received overnight, we cleared a major stumbling block.”

He added that the tender requests for the mining contract will be sent out next week, and we are using the ‘down time’ to improve our operational readiness.

“The delay we experienced, whilst we worked on funding the project, was used to complete the design of the processing plant, and getting ahead of the critical path with regards to the required environmental approvals,” he said.

The Aussie company was recently forced to deny rumours it was planning to sell Lerala mine. “Such rumours are not true. KDL has no intention of selling Lerala. Such transaction has not been considered by the Board or the management of KDL at any point and has never been discussed with any external parties.”

The Lerala Diamond Project will produce an average of 357,000 carats per annum and result in AUD$7.6 million cash generated in the first year of production and AUD$16.5 million in the second year of production.

The project will have a mine life of 7 years and KDL said it will be undertaking an exploration program and believes it is possible that the life of the Lerala Diamond Mine may be extended beyond the estimated 7 year mine life.

The mine will be contract mined and consultants have been engaged to provide Lump Sum Turn Key pricing for the recommissioning of the operation and environmental consultants to analyse and advice on Health, Safety and Environmental aspects of Lerala.
Halgreen told a Botswana Resources Conference in June that they will be successful with Lerala because the second group that ran the mine ‘has done a good review’, which allows operational readiness. He said the two groups had clean starts without operational readiness.

“We have the reasons of the previous failures and we can solve the problems easily. We have done alternative reviews and done extensive changes on what needs to be done,” Halgreen told the conference.

The company recently published the 2014 Ore Resource and Mineral Reserve Statement which showed that Lerala mine contains 3.253 million carats valued at an average price of $74 per carat.


Read this week's paper