First Lerala Mine diamonds sold

Staff Writer | Tuesday July 5, 2016 15:20

In a statement released this week, ASX-listed KDL said the sale of a small parcel of gem and near-gem-quality diamonds, which were sourced predominantly from historic pre-2016 run-of-mine stockpiles, was conducted by an online auction platform operated by DDA Trading BVBA, in Antwerp, Belgium.

“After being sent to Antwerp, the parcel was available for viewing one week prior to the auction. The gem-quality diamonds were sold at the auction at an average price of $98/carat, while the near-gem-quality diamonds would be added to a September sale to take advantage of expected stronger market conditions, as well as the benefit of a larger parcel of diamonds, which would be available for sale in September,” said KDL.

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, previous owners of the mine, Mantle placed Lerala Mine under care-and-maintenance in July 2012, after only five months in operation, throwing about 100 people out of work.

Commencement of mining operations at Lerala follows the awarding of a $47 million (P380 million) open pit-mining contract to South Africa’s Basil Read in February.

The mineral resources of the diamond mine as at December 31, 2015 was estimated as 20.1 million tonnes (Mt) at 24.2 carats per 100 tonnes (cpht) containing 4.9 million carats.

The company has targeted yearly output of 360,000 carats from Lerala over the next seven years.

To market the output, the Australian stock exchange listed company has 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.

The reopening of the mine comes at a time when the mining sector has been hit hard by job losses largely due to the slump in commodity prices. Since last year, Boseto Mine, African Copper and Moolman Mining have all closed shop and laid off thousands of workers with the diamond miner, Ghaghoo also reported to be finalising a retrenchment exercise.