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Diamond mines pave way for company’s sustainable growth

IN DEMAND The long-term outlook for the diamond market remains strong

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DIAMOND MINING DEVELOPS The strategic focus for the year ahead will remain on creating value by focusing on mining and selling diamonds efficiently and responsibly

Photo by Bloemberg

5th June 2015

By: Kimberley Smuts

Creamer Media Reporter

  

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UK-based global diamond mining business Gem Diamonds continued throughout last year to focus on enhancing operational efficiencies and investing in innovative technologies at its Letšeng and Ghaghoo mines, in Lesotho and Botswana respectively.

This strategy, noted in the company’s 2014 full-year results statement, assisted the company in delivering improved earnings and positioned Gem Diamonds for long-term sustainable growth.

“[The year] 2014 was a solid year both financially and operationally for Gem Diamonds. We successfully delivered on a number of key growth objectives, including bringing Ghaghoo into production, significantly enhancing operational efficiencies at Letšeng and delivering a maiden dividend,” said Gem Diamonds CEO Clifford Elphick.

During 2014, the company continued to focus on cost control and ended the period in a strong financial position with a cash balance of $111-million, supported by the high average price of $2 540/ct achieved for the year.

“While there have been a number of challenges in the diamond market recently, the medium- to long-term fundamentals look positive. This, combined with the resilience of Letšeng diamonds to pricing constraints, leaves Gem Diamonds well placed to take advantage of the favourable supply-demand dynamics in the market in order to continue its growth in 2015 and beyond,” noted Elphick.

Gem Diamonds nonexecutive chairperson Roger Davis says the Letšeng mine is synony-mous with exceptional diamonds, and “it is therefore imperative that the group continually invests in innovative ways of identifying, recovering and preserving these high-value diamonds”.

Ghaghoo
Gem Diamonds’ technical skills have come to the fore in the development of the Ghaghoo mine, in Botswana, delivering the capital project on time and within budget.

“It is also pleasing to report that the first diamonds produced during commissioning have been of a better quality and average size than those recovered during the exploration phase. It has also been noteworthy that the presence of rare coloured diamonds in the resource has been confirmed,” says Davis.

The mine development showcases Gem Diamonds’ commitment to best practice in relation to its project-affected communities and the environment. The communities affected by the Ghaghoo mine have been involved and consulted from the outset with the aim of achieving broader stakeholder value.

In addition, numerous ecological and archaeological surveys, visual and socioeconomic impact assessments, as well as an extensive public participation process, have been conducted.

Information gathered during this process underpinned the group’s approach to minimising Ghaghoo’s ecological footprint and maximising the benefit for all stakeholders. A Ghaghoo Community Trust has been established and local community representatives sit in trust meetings. The trust has made a number of material interventions in the community.

The Ghaghoo mine, as Botswana’s first underground diamond mine, has showcased Gem Diamonds’ ability to add value to existing assets through technical innovation. By pursuing an underground mining option, the group achieved significant cost savings, reduced its potential environmental impact and has paved the way for a new era of mining in challenging mining conditions, including deposits covered with significant overburden.

The mine is currently in Phase 1, with the capital project complete and commissioning progressing well. As at December 31, 2014, 48 023 t of ore had been treated, with 10 167 ct recovered, including a 20 ct white diamond, a 17 ct white diamond, and a 3 ct orange diamond (the recovery of which confirms the presence of valuable coloured diamonds in the orebody).

The first tender of 10 167 ct was held in February of 2015, following viewings held in Gaborone and Antwerp, and achieved $210/ct.

As part of the mine’s Phase 1 plan, a production rate of about 60 000 t/m is expected to be achieved by mid-2015.

Letšeng
Positioned at the top end of the diamond market, Gem Diamonds’ Letšeng mine consistently produces some of the world’s most remarkable diamonds, making it the highest average dollar-per-carat kimberlite diamond producer in the world, achieving an average of $2 540/ct in 2014.

Letšeng’s tenders attract the world’s top diamantaires who continue to pay the highest prices for these exceptional diamonds, allowing Letšeng’s rough production to remain relatively resilient to market fluctuations.

Last year, Letšeng recovered its highest number of diamonds greater than 20 ct in a single year, since Gem Diamonds’ acquisition of the mine in 2006. This included seven diamonds of more than 100 ct each, five of which together achieved a total selling price of $37.4-million.

The largest diamond recovered during the year, a 299.3 ct yellow diamond, was sold into a partnership arrangement at the beginning of 2015.

Further, implementation of the Plant 2 Phase 1 upgrade project at the mine started in the third quarter of 2014.

The project is expected to result in an increased treatment capacity of 250 000 t/y and further reduce diamond damage and improve diamond liberation. Subsequent upgrades to the plant will be considered once the current projects are completed, and plant performance has been fully evaluated.

“The operational improvements undertaken this year, together with the projects that are currently under way and those considered for the future, position Letšeng as a long-life openpit operation. Optimisation of the life-of-mine plans, which take these improvements into account, will deliver on the longer-term plan for Letšeng going forward,” states Elphick.

Edited by Leandi Kolver
Creamer Media Deputy Editor

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