Dan O’Neill, the managing director of the mid tier diamond miner, DiamondEx, was upbeat Friday that production at the proposed Lerala mine will be on schedule to boost the economy of the country.
“We are on schedule and we hope to produce our first diamonds around January / February next year,” he told Sunday Standard in an exclusive interview.
“We are looking at our first production in the first quarter of next year and entering full production at the end of March,” he added.
Last week, Botswana became a focal point for mining companies as top management of various mining houses came into the country for the inspection of their projects ÔÇô especially in the diamond sector.
“We are moving closer to production which is only six months away. We are looking at producing 300,000 carats per annum,” he said.
Lerala mine lies about 120 kilometres from Palapye ÔÇô a place earmarked for the development of the country’s second university ÔÇô and it is expected to create close to 260 new jobs directly.
At full production, the mine is to produce 300,000 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 mining will involve five open pits with the possibility of going underground over a concession of 12,000 km2.
“The mine is going to be highly profitable because the production cost is low. And the most interesting thing about the project is K2 and K3 which are the richest resource,” an analyst at Capital Securities, Leutlwetse Tumelo has said.
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 was initially owned by De Beers as a pilot project but was abandoned because it was not meeting its target because of its size.
It is expected to yield 20 percent gem while the rest will be near gem and industrial diamonds.
The mine will be an open cut operation and there is a provision for underground mining after 10 years.
Further, the mine will be boasted by the envisaged diamond shortage in the market and the price spikes that are being driven by China and Indian markets.
In the next 10 years diamond prices are expected to rise by 50 percent.
Earlier this year, the mine secured A$ 98 million in a bid to fast track its mine construction and an office at the Diamond Park.