Lerala to reopen in the fourth quarter

Brian Benza
Staff Writer | Friday April 16, 2010 00:00

 

According to Mark Gray, a Diamonex consultant with Fleming asset management, contractors will be shortly on site to carry out some maintenance and engineering work that will see the mine operating more efficiently and profitably when it reopens.

'For the next three to four months, contractors will be at the mine to do some modifications in preparations for the resumption of production.

 'After the engineering work, we will start the ramping up which involves all the processes necessary to start production in the fourth quarter,' he said. Fleming Asset Management Botswana ('Fleming Botswana') is acting on behalf of DiamonEx convertible bondholders.

 Choked by the sharp fall in commodity prices in late 2008, DiamonEx Ltd Botswana was placed under voluntary judicial management in January 2009 by the High Court of Botswana leading to the suspension of the trading of its shares on the Botswana Stock Exchange (BSE), AIM and AUX.

Asked to give an update on the ownership and creditors issue, Gray said all the creditors are going to be fully repaid although he could not elaborate on how much Diamonex still owes and how much has been paid.

'We are still working on the restructuring and I cannot therefore give you a comment on the ownership of the mine but I am sure all the creditors will be paid back before the mine reopens,' he added.

After suffering the financial crisis, Diamonex that is also listed on Australian Stock Exchange, in October last year agreed to sell 80 percent of its Botswana subsidiary to its bondholders in return for acquiring all of its liabilities.

DiamonEx will also transfer its diamond exploration interests in the United States.

The agreement will see Fleming Botswana assume all of the obligation and liabilities under the terms of the A$10 million in convertible bonds. Liability for a European Investment Bank loan of approximately A$10 million will also be transferred to DiamonEx's Botswana subsidiary as part of the restructuring, and Fleming will also repay a P10 million loan due to Stanbic Bank of Botswana, and will lend A$0.5 million to DiamonEx, due to be repaid in 2 years. The loan will carry a 15 percent interest rate.

In addition to assuming control of DiamonEx's debt and taking an 80 percent stake in the diamond mine, Fleming Botswana and/or other bondholders will invest a further A$6.5 million into DiamonEx Botswana to provide working capital for the Lerala Diamond Mine.

On successful completion of the transaction, DiamonEx will manage its 20 percent investment in DBL, continue exploration and evaluation of remaining tenements and will restructure the company to pursue other exploration and development opportunities.

The Lerala diamond resource which lies within the company's Martin's Drift project area comprises five diamondiferous kimberlite pipes.

The estimated Indicated Diamond Resource is 13.5 million tonnes at a grade of 27.41 carats per hundred tonnes representing approximately 3.7 million carats of diamonds.