Diamond miner, Kimberley Diamonds Limited says it has secured $3-million (P23 million) in debt financing from China’s Zhejiang Huitong Auction to refurbish and recommission the Lerala mine and to fund ongoing operating costs.
In a statement released on Monday, the Australian Stock Exchange listed company said the funds would be provided under an existing loan agreement with Zhejiang, bringing the total funding to A$13 million (P98 million).
“Zhejiang Huitong Auction has agreed to provide KDL with a further A$3 million in debt finance. These additional funds will be provided under the terms of the loan agreement previously entered into with Zhejiang.
The funds will be applied to the refurbishment and re-commissioning of the plant at KDL’s Lerala Diamond Mine in Botswana, as well as to ongoing operating costs.
“KDL continues discussions with potential investors in relation to the further funding required to complete the re-commissioning work and re-open the Lerala Diamond Mine and intends to update the market in due course,” said the company.
The loan is repayable in May 2017 and would have an interest rate of five percent a year.
Diamond production from Lerala is expected to start in February next year and, once in production, the 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.
KDL noted that the refurbishment and recommissioning work continued to make good progress, with all orders for long-lead items already placed. A geotechnical review had also been conducted on the early production pits and preliminary recommendations on pit slope angles and bench-height configurations had been made. These will be used in an updated mine planning and optimisation exercise, which will start in mid-October.
In July, KDL awarded a lump sum turnkey contract for the plant modification work at Lerala, which includes the refurbishment of the existing camp facilities. Consulmet will be paid some A$9.83 million (P70.7 million) to undertake the plant modifications, which are scheduled for completion by February.
The Lerala project has a resource of 10.3 million tonnes, at an average grade of 31.5 carats per hundred tonnes, equating to some 3.3-million carats.
The ASX-listed firm, which bought the mine in the central district in 2013 from UK-based Mantle Diamonds, recently announced that it will be undertaking a non-renounceable pro-rata rights issue to raise nearly A$10 million (P77.2 million).
The company had targeted yearly output of 400,000 carats from Lerala over the next six years.
The mine has five diamondiferous kimberlite pipes totaling 6.66 hectares, a 15-year mining licence and a 230-tonne per hour processing and recovery facility.
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.
Between February and July 2012, the mine produced 73,403 carats from 0.26 million tonnes of ore, before being decommissioned.