Lerala Mine to reopen this year
Staff Writer | Wednesday February 26, 2014 15:00
In a statement released on Monday, Kimberley Diamonds said that it would target yearly output of 400,000 carats per year from Lerala over the next six years.
The mine, situated in the Central District, which was placed on care and maintenance in July 2012, comprises five diamondiferous kimberlite pipes totaling 6.66 hectares.
“Rough diamond prices are on the rise and Kimberley is well positioned to capitalise on this. This acquisition is in line with our growth strategy of becoming a diversified diamond producer and we will continue to look for further acquisition opportunities,” said Kimberley executive chairperson Alex Alexander.
Citing a weak diamond market, Mantle placed Lerala Mine under care-and-maintenance in July 2012 after only five months of operating, throwing about 100 people out of work.
The UK based Mantle Diamonds had bought Lerala from another Australian miner, DiamonEx in 2011.
The mine, which has a 15-year mining licence, comprises five diamondiferous kimberlite pipes totalling some 6.66 ha in size, along with a 230 tonnes per hour processing and recovery facility.
In the statement, Kimberley Diamonds said the project is ready to be recommissioned following the execution of engineering improvements designed to further enhance recovery and to reduce operating costs.
The improvements, which include the purchase of a new diamond sorter and optical waste sorter, would cost $10-million, and Kimberley Diamonds said that it was in the process of reviewing its funding options.
Apart from Lerala, Mantle also holds a 34% interest in the Lahtojoki kimberlite in Finland through a joint venture agreement with Firestone Diamonds, and an interest in a range of brownfield exploration projects in Canada, covering some 136,000 ha.
Alexander says the acquisition provided the company with a strong foundation to grow its ambitions, including its objective to become a world-class diamond producer, with multiple operating mines, supported by long-term life extension opportunities.
“We aim to consistently acquire projects with promising prospects at attractive valuations, with significant upside potential that can be realised quickly and cost-effectively.
“Lerala has all of these qualities and represents an important incremental step in the company’s growth.”
Between February and July 2012, the mine produced 73,403 carats from 0.26-million tonnes of ore before being decommissioned. The project is estimated to have a remaining mine life of seven years, and has an estimated remaining resource of 12.18-million tonnes, at 25.52 carats a tonne.
The Lerala mine was originally expected to produce 330,000 carats annually during its 10-year lifespan. DiamonEx sold more than 10,000 carats diamonds from the mine in 2008, but failed to make a profit due to the crash in prices. The mine first closed in 2009 against the backdrop of poor sales, leaving 160 employees jobless.
Lerala contains Probable Reserves of 8.38 million tonnes, with an average grade of 29.68 carats per hundred tonnes and a life mine of six years at full production levels of 400,000 carats per annum.
Together with the reopening of the Ellendale E4 mine, which should contribute 200,000 carats in 2015, Kimberley’s marketable production of gem and near-gem quality diamonds is expected to be around 700,000 carats per annum.
Kimberley also maintains interests in two joint venture projects in Canada managed by Diavik Diamond Mines, in which it is free carried during the ongoing exploration phase.