The Letšeng diamond mine, in Lesotho, recovered several diamonds larger than 100 ct during the first half of 2017, with LSE-listed diamond miner Gem Diamonds upbeat that this trend will continue for the remainder of the year.
These gems include the 114.38 ct Type II, the 126 ct D-colour Type IIa and the 104.73 ct white diamonds, as well as the 151.52 ct yellow diamond.
The openpit diamond mine, in the Maluti Mountains, comprises two kimberlite pipes within 200 m of each other.
Gem Diamonds CEO and founder Clifford Elphick tells Mining Weekly that Letšeng, which the company has been operating since 2006, is in “good shape”. The mine has also been consistently expanded. “We have built a second plant and invested heavily in diamond recovery, security and fleet management systems,” he highlights.
Elphick is of the view that the Letšeng mine is potentially the third-largest mover of rock in the global diamond industry, as it processes about seven-million tons of kimberlite and about 30-million tons of basalt rock a year. “This is a substantial amount of rock that needs to be moved, which indicates how substantial our operation has become.”
The mine employs about 1 600 people, including contractors, with the Letšeng workforce comprising about 97% Lesotho nationals. Gem Diamonds’ total staff complement worldwide is about 1 730.
Mining is performed by Lesotho-based mining contracting company Matekane Group of Companies Mining, primary crushing is undertaken by Gem Diamonds, while the mine’s two crushing plants are operated by Johannesburg-based engineering and project delivery company DRA. Gem Diamonds undertakes the final recovery of the diamonds at Letšeng’s sort house, as well as their sales and marketing.
The uncut diamonds are sent to the company’s sales, marketing and manufacturing division in Antwerp, Belgium, where the gems are graded for sale.
“We run an auction process, as we aim to achieve the highest possible price,” Elphick highlights.
The mine has a current life span to 2038. However, he says it is clear that the mine will have to eventually become an underground operation, with work expected to start on the transition in the mid-2020s. The company has engaged in high-level discussions on this development, which includes the timing of the transition and the new configuration of the mine.
Elphick tells Mining Weekly that, owing to the close proximity of the kimberlite pipes to each other, one of the options is for a shaft to be sunk between the pipes to ensure access to both simultaneously. Another “more imaginative option” is to potentially access the orebodies from the nearby valleys – this would entail constructing a horizontal shaft instead of a vertical shaft.
DIAMOND VALUE AND SALES
Elphick notes that, while the mine produces only about 100 000 ct/y of diamonds, owing to the low grade of the ore mined, they are exceptionally valuable diamonds, which are worth on average between $2 000/ct and $2 500/ct, thereby generating revenues of about $200-million a year for the company.
During the first half of 2017, the company held four tenders, where 49 930 ct were sold for $88.8-million, achieving an average price of $1 779/ct. The average price achieved is up 20% from the $1 480/ct achieved in the previous six-month period. Elphick comments that contributing to the US dollar per carat achieved was an 8.65 ct pink diamond that sold for $164 855/ct, the sixth-highest price per carat realised for a Letšeng rough diamond.
“One of the large, high-value white diamonds sold attained the highest price per carat for a Letšeng white diamond since February 2016,” he highlights.
Waste mined during the first half of 2017 was 15-million tons, in line with the requirements of the mine plan announced in March.
Letšeng treated 2.6-million tons of ore during the period, 69% of which was sourced from the Main pipe and 31% from the Satellite pipe. The balance of the ore (600 000 t), which was sourced from the Main pipe and low-grade stockpiles, was treated through the Alluvial Ventures contractor plant.
Elphick says that the lower-than-planned ore tons treated were the consequence of reduced plant availability and downtime associated with the installation and commissioning of the split front-ends for the plants (1 and 2). The availability issues have largely been addressed by the contractor and mine management.
During the first half of the year, 900 000 t of Satellite pipe material was processed, in line with the mine plan to process 1.8-million tons in the year. During this period, 50 478 ct was recovered at a grade of 1.59 ct per hundred tons (cpht) against an expected reserve grade of 1.63 cpht, mainly owing to the underperformance of and internal changes in the geology of the Main pipe.
Elphick remarks that a core drilling programme will be implemented during the second half of the year to improve confidence in the geology at depth, including volume, grade and revenue inputs of the resource.
As the mine is located at the top of the Maluti Mountain range – at about 3 000 m above sea level – it can become extremely cold and icy, sometimes reaching –25 ºC and, subsequently, making it a challenging mining environment. This is in addition to challenges associated with road infrastructure and the chronic shortage of skilled mining professionals living in Lesotho.
MINING IN LESOTHO
Elphick points out that one of the benefits of operating a mine in Lesotho is that it is located in the heart of Southern Africa, which has a plethora of mining skills and services stemming from neighbouring countries, such as South Africa.
In 2016, Mining Weekly spoke to then Lesotho Mining Minister Lebohang Thotanyana, who said, although the mining industry in Lesotho was still in its infancy, is was developing and had a lot of potential. He noted that, in 2015, Lesotho adopted the Minerals and Mining Policy – the first time that the country had developed a policy specifically focused on its mineral resources sector.
The mining industry contributes 7.7% to Lesotho’s gross domestic product; however, the country aims to increase this contribution to 10% over the next five years.
Thotanyana said government wanted to see an increase in Lesotho’s diamond production from its current 350 000 ct/y to about 1.5-million carats a year.
The Minister highlighted that the mining industry was a significant contributor of jobs in a country with a high unemployment level of 27%, with 37% of youth unemployed.
The mining sector directly employed about 3 000 people and it is envisaged that this figure would double as new mines came into production over the coming years.
“We hope that, by 2020, the mining industry will employ more than 10 000 people,” Thotanyana stated.
Meanwhile, Elphick notes, the government of Lesotho, which holds a 30% stake in Letšeng, has been “very supportive” of the mine, as it has built power lines to link it to the national grid. Letšeng also has standby power in the form of diesel generators that are used when heavy snows and high winds cause power supply interruptions.
Seeking Alternative Diamond Extraction Solutions
Letšeng has produced some of the highest-value diamonds in recent years; however, one of the challenges the mine faces is the traditional method of crushing that is used to extract diamonds from rocks.
“When one crushes something, by its very nature, it gets broken – not only does the rock get broken but also the diamonds in the rock . . . This naturally lowers the diamonds’ value,” Elphick notes.
Therefore, Gem Diamonds is working on developing alternative methods to more effectively extract diamonds, as it often produces large, high-quality diamonds.
The first is to disintegrate kimberlite rock nonmechanically; this method is being trialled at a pilot plant, in Johannesburg. The second method involves locating diamonds in the rock before it is sent for crushing and removing the diamond without having to crush it.
This trialling of alternative extraction methods is still in the early stages, but is ongoing. Elphick says, while the company does not yet have a working prototype, it has made some progress in certain areas of its research.
Gem Diamonds also owns the Ghaghoo diamond mine, in Botswana. However, owing to low rough-diamond prices, the mine was placed on care and maintenance ahead of plan on March 31.
During the second quarter of the year, there was an earthquake with its epicentre 25 km from the mine. There was superficial damage to the surface infrastructure, but the earthquake damaged the seal of the underground water fissure, leading to an influx of water. This resulted in an increase in the water-pumping costs of about $600 000 associated with care and maintenance.
The fissure will have to be resealed and plans are under way to complete this process during the third quarter of the year.
There were no sales of Ghaghoo goods during the six months ended June 30. The remaining carats on hand (13 000 ct) are expected to be sold during the current quarter.
“When diamond prices improve, Ghaghoo will definitely return to operation. It is a mine in which we have invested heavily and Gem Diamonds is very optimistic that it will return to production in the not-too-distant future,” Elphick concludes.
However, subsequent to the interview, Gem Diamonds announced on August 17 that its board was considering an offer for the 100% acquisition of the Ghaghoo asset.