Tuesday, March 2, 2021

Kimberley Diamonds strategic review to impact Lerala mine re-commissioning

Kimberley Diamonds Limited, the owners of the Lerala mine will be
forced to review its development plans–including the re-commissioning
of the Botswana project as it has failed to get a positive outcome for
price increase with one of its clients.

The Australian company failed to get a price adjustment with Laurelton
Diamonds Inc., the cutting and polishing arm of Tiffany, a company it
has an exclusive off-take agreement with for the supply of premium
grade fancy yellow diamonds from the Ellendale Mine.

The lack of agreement therefore means the company will be reviewing
the strategy which includes amongst others the re-commissioning of the
Lerala Diamond Mine in Botswana and the restart of the Ellendale E4
mine.

It said a price increase above current levels was required to sustain
the continued economic development of the Ellendale E9 pit, as well as
support the reopening of the Ellendale E4 pit later this year.

“KDL had anticipated securing a price increase in the June quarter of
2014 (Q4/2014) and this expectation was reflected in the earnings
guidance provided to the market,” the company said.

“The absence of a price increase will therefore impact KDL’s forecast
revenue for Q4 and the full-year 2014 results”.

It is estimated that revenue for Q4/2014 will now be circa. $20
million and Operating EBITDA for Q4/2014 will now be circa.
$1.5million.
Head of Corporate Communications at Kimberley Diamonds, Candice Sgroi
told Sunday Standard recently that it has postponed the
re-commissioning of Lerala mine is it looks at ways of funding the
project.

“The Board of KDL this week announced that the re-commissioning of the
Lerala Diamond Mine will be postponed until the appropriate funding is
available,” Sgroi said from Sydney, adding that they are in the
‘process of putting together costings for the re-commissioning of
Lerala is ongoing”.

“KDL is looking at several options to fund the re-commissioning of
Lerala and when that is concluded we will notify the market,” Sgroi
added.

The Lerala is situated in north-east Botswana, 34km north of the
Martin’s Drift Border Post with South Africa and comprises five
diamondiferous kimberlite pipes totalling 6.66ha in size.

The kimberlites were discovered by De Beers in the early 1990s and
subjected to limited mining by DiamonEx Ltd in 2008. Most recently,
Mantle operated the mine between February and July 2012, producing
73,403 carats from 0.26 Mt at 28.2 cpht. The mine and processing plant
was placed on care and maintenance in July 2012.

“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. Also, the
Lerala asset is attractive to KDL because it is already established
with a mine and processing plant insitu 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,” added
Sgroi.

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