Kimberley seeks P83m to reopen Lerala Mine
Brian Benza | Tuesday August 26, 2014 13:35
The ASX-listed firm, which bought the mine in the central district last year from UK-based Mantle Diamonds, last Friday announced that it would be undertaking a non-renounceable pro-rata rights issue to raise nearly A$10-million (P83 million).
“Eligible shareholders in Australia and New Zealand would be able to purchase one new share for every two existing shares held, at a price of 19 cents each.
“The capital would be used to fund the recommissioning of Kimberley’s Lerala mine, in Botswana, as well as for general working capital purposes,” said the company.
In June this year, Kimberley approved A$14.7-million to recommission the Lerala diamond project, which the previous owner Mantle Diamonds placed on care and maintenance in 2012. The project is expected to start production in 2015, and will produce some 400 000 carat per year of diamonds at full production. The government of Botswana owns a stake in the mining project after investing P15 million in Lerala Mine in 2007 through irredeemable bonds, which was later converted into equity when the former owners of the mine, Diamonex Limited, folded during the 2008 global financial crisis.
Diamonex sold the mine to UK firm Mantle Diamonds in 2011 before the latter also offloaded the project to Kimberley in 2013.
In February, Kimberley Diamonds had said the project is ready to be re-commissioned 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.
Kimberley Diamonds reported a loss of $6.9 million for the half-year ended December 31, 2013. The company had targeted yearly output of 400,000 carats annually from Lerala over the next six years. The mine has five diamondiferous kimberlite pipes totaling 6.66 hectares, a 15-year mining licence and a 230-tonne per hour processing and recovery facility.
Citing a weak diamond market, Mantle placed Lerala Mine under care-and-maintenance in July 2012 after only five months in operation, throwing about 100 people out of work.
Between February and July 2012, the mine produced 73,403 carats from 0.26 million tonnes of ore before being decommissioned. Lerala is estimated to have a remaining mine life of seven years and an estimated remaining resource of 12.18 million tonnes, at 25.52 carats a tonne.
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 100 tonnes and a life of mine of six years at full production levels of 400,000 carats per annum.