Sunday, March 26, 2023

Lerala Mine’s P 50 million bond details to be announced Monday

DiamonEx, the mid tier diamond miner, is on Monday expected to outline the details of its P 50 million that is to take it to production by early next year.

The four year convertable bond with undisclosed interest rate is expected to be listed on the Botswana Stock Exchange by next month.

“All what will be left for Monday will be the signing of the legal documents and the exchange of cash and certificates,” a close source to the deal said, adding that one of the things which will be done will be the appointment of the sponsoring broker.
The move is hoped to take the mine to production scheduled to start in early 2008 near Lerala village.
Lerala mine lies about 120 kilometers from Palapye ÔÇô a place earmarked for the development of the country’s second university ÔÇô and it is expected to create close to 300 new jobs directly.

At full production the mine is to produce 330,000 carats per annum over its life span of 10 years. Its production is expected to be sold through the DTC Botswana which will become operational by 2008.
The mine is forecast to have a net operating cash flow of US $100 million on revenue of US $ 230 million over a period of 10 years.

The mine will be an open cut operation and there is a provision for underground mining after 10 years.
“We are busy working on plans to extend the life-span of the mine to beyond 10 years. As part of the plan, we are doing magnetic flights to determine the kimberlite resource and we are taking soil samples to South Africa and Australia for testing,” Mark Cotzee said.

The company has several exploration licences in Tuli-block and some for areas around JwanengÔÇöwhich they have not yet acted upon.

“We are looking at mining five pipes around Lerala in order to extend the life-span of the mine,” he added.

The pipe that has been earmarked for mining are K2, K3 ÔÇô which is the biggest ÔÇô K4, K5 and K6.
The Lerala area was formerly mined by De Beers but it left because the deposits there were of a smaller scale. Further, De Beers by then used old and second hand equipment which made it unviable.
The Lerala deposit has about 25-to- 30 percent gem- stone diamonds while the rest is industrial diamond.

The biggest stone ever discovered there was 17 carats but DiamondEx exploration has only gone as far as three carats. According to DiamonEx valuation each stone will average US $ 55 per carat.
DiamondEx is also planning to go back to the tails which were left by De Beers with the use of modern technology to salvage whatever diamonds could have been left behind.

“We have gone 110 meters below the surface with our drilling and what we believe is that we will be able to do an open pit mining up to that level. Thereafter, we will have to do a shaft,” Cotzee said.
The mine will be boosted by the envisaged diamond shortage in the market and the price spikes that are being driven by China and Indian markets. The supply shortage has impacted on De Beers’ results for last year as they tumbled six percent against the prior year.

In the next 10 years diamond prices are expected to rise by 50 percent.


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