BoD bullish of opening new mine in Orapa

475,Correspondent,, | Saturday May 9, 2015 00:00

The company expects to find new areas of kimberlite, potentially containing diamonds, by the end of this year, and then to identify specific diamondiferous kimberlite-containing sections by the end of 2016.

“There is a need for new mines, and outside Russia, Botswana is the best place to find them. Diamond demand will continue to grow and the challenge is to supply it,” says Teeling.

He notes that Botswana Diamonds hopes to repeat the success it had with African Diamonds (AFD), which found and established the Karowe diamond mine that produces exceptional stones at an average price of $644/ct, yielding a gross margin higher than 80%.

AFD, in collaboration with diamond major De Beers, discovered Karowe in 2004. De Beers in 2009 sold its share in Karowe to diamond producer Lucara Diamond Corp, which subsequently also bought AFD’s share in the project for the equivalent of $90-million in 2010.

Upon the sale of Karowe to Lucara, Botswana Diamonds was formed and subsequently took over AFD’s exploration assets.

Botswana Diamonds’ May presentation notes that diamond supply and demand are expected to be balanced in the medium term, but that increased inconsistency is expected over the long term, with demand outweighing supply.

In addition, established diamond mines are getting deeper and, therefore, more costly to operate, which is likely to result in stronger prices in the future.

“There is a clear supply-demand gap opening. Demand for gemstones in Asia, the Middle East and parts of Africa is increasing, owing to an emerging middle class,” he says. The demand for diamonds in Asia is high, with 40% in diamond jewellery retail sales. Teeling explains that “girls want diamonds as an expression of love and commitment, and there are more women in China than in all of the US and Europe combined”.

Botswana Diamonds/Alrosa Joint Venture
Botswana Diamonds and Russian diamond miner Alrosa have a 50:50 joint venture currently focused on the Orapa area of Botswana.

Some of the world’s greatest diamond mines are in Orapa, and Alrosa believes that its technology, experience and people can identify diamondiferous kimberlites through up to 100 m of overburden – as is commonly found in Botswana.

Alrosa, together with Botswana Diamonds, has successfully obtained exploration licences from the government of Botswana. A preliminary exploration programme in 2014 included four drill holes on prospecting licence (PL) 117. This was as much a test of the Alrosa techniques as a targeted programme, Teeling notes, stating that the drill programme’s results supported the techniques, with kimberlitic stringers in two of the four holes.

“As a result of our work and expenditure on PL 117, we have earned a 51% position on the PL 117 licence,” he says.

Meanwhile, the current programme, which is the second field programme begun in September 2014 and continuing in 2015, focuses on PL 206 to PL 210, selected by Alrosa.

Detailed geophysics and soil sampling of these licence areas was carried out in 2014. The results were analysed in St Petersburg, Russia, and a new 2015 work programme agreed on three licences. This work programme involves highly focused soil sampling and geophysics. Since the end of March this year, several thousand kimberlite indicator minerals concentrate samples from the current programme have been shipped to St Petersburg for analysis.

“We expect results to follow in June. The joint programme is fully funded until the third quarter,” says Teeling.

Other activities
Botswana Diamonds also holds an option to acquire up to a 95% interest in 13 licences in the Brightstone block, in the Gope region of the Kalahari, in Botswana. A new diamond mine, Ghaghoo, has recently opened in this area.

“A large base metals producer has decided to enter the diamond sector. It has become the operator of the block and it has an exploration team on the ground. We have made our Gope area data bank available to the new company,” Teeling explains.

“In return for conceding our rights and contributing our data, Botswana Diamonds will have a 15% free carry through all phases of exploration up to the completion of a bankable feasibility study,” he adds. Teeling says Botswana Diamonds’ interest in the licences will be held through a share- holding in a private Botswana company.

“This is a good deal for all parties concerned. It brings fresh eyes and ideas to the block,” he concludes.

(MiningNews)