Lerala Mine to reopen next month
Brian Benza | Tuesday February 16, 2016 18:00
In an update to the Australian Stock Exchange, KDL through its Botswana subsidiary, announced that the mining contract has been awarded to Basil Read following a two-stage competitive tender process.
“Basil Read is scheduled to mobilise staff and equipment to Lerala Diamond Mine during the current month of February, with mining anticipated to commence during March. The contract covers the initial five years of mining and may be extended further,” said KDL.
JSE-listed Basil Read is one of the leading construction companies in Southern Africa and has more than six decades of construction and open cut mining expertise.
KDL, which bought the mine in the central district in 2013 from UK-based Mantle Diamonds, has in the past year undertaken various fund raising initiatives to finance the reopening of the mine.
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.
Once open cut mining operations commence during March 2016, KDL says production is scheduled to reach nominal output, in line with commissioning of the processing plant, around June 2016.
“Working together, the mine is expected to generate employment and income within the local Lerala community, contribute to the Botswana national economy and become an important source of income for KDL,” said the miner.
Earlier this month, KDL entered into a diamond sales agreement with a third party, Restwell Investments.
Under the terms of the sales agreement, Restwell agreed to acquire $6 million (P66 million) of diamonds produced at the Lerala after production commences, on a timetable and at a price agreed between the parties.
Restwell also agreed to pre-pay $1 million to Lerala, which will be applied to pre-production costs. The $1 million will be repayable by the supply of diamonds from Lerala to Restwell under the terms of the Sales Agreement.
KDL has now raised a total of $13 million under the debt facility with Zhejiang Huitong Auction Ltd.
In November 2015, KDL undertook a review and re-interpretation of all geological data and of the criteria for the estimation of indicated and inferred resources at Lerala.
The diamond mineral resources of the mine as at 31 December 2015 were estimated as 20.1 million tonnes (Mt) at 24.2 carats per hundred tonnes (cpht) containing 4.9 million carats.
The new estimate represents an increase of 9.8 million tonnes and 1.6 million carats over the mineral resource estimate at 30 June 2015 of 10.3 million tonnes at 31.5 cpht for 3.3 million carats.
The company had targeted yearly output of 400,000 carats from Lerala over the next six years.
Between February and July 2012, the mine produced 73,403 carats from 0.26 million tonnes of ore, before being decommissioned.