Kimberley Diamonds Limited said on Monday its board has approved capital expenditure to fund decommissioning of Lerala mine, but warned delays in receiving environmental approvals could impact the planned commencement of operations. The mine was mothballed at the height of the global recession and there have been uncertainties from new owners on ways to raise cash to re-start operations. However, the new move will be good news for villagers who have been yelling for the project to be brought back to life.
“The Board has approved a total of A$14.7M which includes a 20 percent contingency to fund the restart of the Lerala operation which was placed on care and maintenance in July 2012 by the former owners Mantle Diamonds Limited,” said Chairman, Alex Alexander.
Kimberley said the capital expenditure and working capital will be funded by cash flow from on-going operations with any funding shortfall to be covered by either equity or debt raising. At 31 March, 2014, KDL had A$13.1M cash and no debt. Commissioning of Lerala is expected to commence in the first half of CY/2015. At full production, Lerala is expected to produce 400,000 carats of diamonds per year. So far, preliminary work has been carried out at Lerala by KDL’s technical team and the resource review is close to completion while review of the mine plan is in progress.
Lerala mine will be contract mined and consultants have been engaged to provide lump sum turnkey pricing for re-commissioning of the operation. Environmental consultants have also been engaged to analyse and advise on Health, Safety and Environmental aspects of the mine. Lerala is situated in north-east Botswana, 34km from the Martin’s Drift border post with South Africa, and comprises five diamondiferous kimberlite pipes. Lerala has a 15 year fully-permitted mining licence covering an area of 21.86km2.
The kimberlites were discovered by De Beers in the early 1990s and subjected to limited mining by DiamonEx Ltd from April 2008 to January 2009. Most recently, Mantle operated the mine between February and July 2012, producing 73,403 carats during that period.
KDL intends to recommence production at Lerala in the first half of CY/2015. Previous owners DiamonEx and Mantle together invested approximately US$31M on infrastructure at Lerala. A 230tph processing and recovery plant situated on site and will be modified to increase efficiencies and raise recovery rates.
“The Lerala mine is a desirable asset for KDL to acquire for a number of reasons. Botswana is a large and respected diamond jurisdiction and a stable operating environment with skilled workers,” Corporate Communications at Kimberley Diamonds, Candice Sgroi said recently.
“Also, the Lerala asset is attractive to KDL because it is already
established with a mine and processing plant in situ and KDL has the diamond industry expertise in-house to successfully bring the mine back into production and to run it sustainably over its remaining life.”
Kimberley Diamonds said it was also attracted to acquire Lerala because it aligns with the its mission to find, mine, recover and sell diamonds from operations in a safe, efficient and profitable manner by optimising the available resources for the benefit of its owners, employees and the local community. The company is bullish that the rough diamond market is strengthening.