Lerala Mine�s worth rises 24% to P890m
Staff Writer | Thursday February 25, 2016 16:37
According to Miningweekly, mineral resource consultancy, Venmyn Deloitte has valued the Lerala diamond mine at some A$105 million (P890 million), which was 24 percent higher than Kimberley’s in-house valuation of A$85-million. Kimberley said yesterday that the increase in valuation was driven largely by an upgrade to the mine’s mineral resource and ore reserve that was announced in January this year. This along with decreased costs negotiated within the mining contract, a weaker Australian dollar assumed over the life of the project, and Venmyn’s decision to place a value on inferred resources, which currently fell outside of the life-of-mine plan.
Once in production, the Lerala mine was forecast to have a life of some seven years, treating 1.4-million tonnes of ore a year and producing an average of 357,000 carats per year.
Kimberley shares closed at a high of 15c each, up from an opening price of 12c each.
KDL is set to re-open Lerala Mine in April following the awarding of a A$47 million (P380 million) open pit mining contract to a South African company.
In an update to the ASX, Kimberley Diamonds Limited, through its Botswana subsidiary, announced that the mining contract was 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 fundraising 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. 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 Sale 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.