Ventersdorp – South Africans tend to associate this far-flung rural town with agriculture rather than mining.
Tall green mealies come to mind long before alluvial gems.

But there are millions of tons of good diamond-bearing alluvial resource in Ventersdorp, TSX- and JSE-listed Rockwell Diamond CEO Dr John Bristow, a former De Beers geologist, tells Mining Weekly.

As the owner of some of the mineral rights, the near-mine community is keen to see the diamond operation working again, says Mogopa community leader Pule Mohutsiwa.

“We’re hoping to produce our first carats this month and then progressively ramp up production,” says Rockwell COO Graham Chamberlain.

Rockwell’s Leon Meyer and his team are at an advanced stage of completing a first-class plant rebuild.

Between 1926 and 1984, the Ventersdorp diamond district, located some 150 km west of Johannesburg and covering 5 000 km2, produced more than 660 000 ct, but without ever being exploited on a large scale.

Already mining alluvial diamonds in the Northern Cape, Rockwell is now intent on changing all that.

The grade at Ventersdorp’s Tirisano resource, at 2,37 ct/100 m3, is 200% higher than the grade in the Northern Cape.

Life-of-mine within 5 km of the reviving plant infrastructure is 40 years at 90 000 m3 a month.

Envisaged are 1 500 ct/m of ‘bridal’ range diamonds, which are ideal for the growing Chinese market.

Rockwell’s operations north of Kimberley, in the Vaal river and Barkly West area, are at Holpan, Klipdam and Klipdam Extension, and also in the Middle Orange river, between Douglas and Prieska, where Saxendrift is its flagship mine.

The company currently produces 2 500 ct/m to 3 000 ct/m at an average run-of-mine price of $1 500/ct, and Ventersdorp will help the company to build up consistent production that will smooth out revenue flows.

“We would like, very quickly, to get to 4 000 ct/m and 5 000 ct/m and our long-term plan is to get to 10 000 ct/m.

“We’ve certainly got the resources to do that. We just need to be creative about funding our growth over the next couple of years. But, given the situation in South Africa’s Department of Mineral Resources (DMR) today, it is very difficult to replicate what we have done so far in the Northern Cape,” Bristow adds.

In March, Rockwell signed an agreement to buy 74% of the Tirisano, or Blue Gum, diamond operation near Ventersdorp, in South Africa’s North West province, from Etruscan Diamonds for R33, 5-million in shares.

It plans to begin mining in the shallow ore regions and then to develop a pit surrounding the old workings.

The current water-filled openpit is 400 m long and 64 m deep.

Impressive planning and rebuilding of the new R17,7-million first phase is taking place meticulously.

“The new processing plant will provide a new benchmark for the alluvial diamond mining sector,” says Bristow.

The attributes of the new processing plant include a flexible front end to cope with ore variability in both wet and dry conditions.

The plant has three barrel screens, four scrubbers, eight pans, nine X-ray diamond sorting machines and an optical sorting machine in new office, recovery building and motor control centre surroundings.

It makes use of existing equipment formerly used by Etruscan as well as redundant equipment from Rockwell’s Northern Cape operations.

The company is impressively resuscitating this important South African alluvial diamond project, which will have an expected internal rate of return of 46%.

Legal Limbo
A current snag, which the Rockwell team and the local community are working flat out to overcome, is that Rockwell is having to operate in a legal limbo owing to the tardiness of the DMR to transfer ownership.

Its relatively straightforward Section 11 change-of-ownership application in terms of the Mineral and  Petroleum Resources Development Act has been in the hands of the DMR since the first half of this year, but both Rockwell and the Mogopa community are none the wiser about its current status within the DMR’s corridors of regional and head office power.

The bureaucratic delay is holding up a $30-million capital-raising aspiration that has the potential to economically boost the local economy as well as the Mogopa community, which has still to pay for its 26% black economic- empowerment (BEE) ownership of the Tirisano asset.

“That’s the most frustrating part of this whole process,” says Bristow.

Together with the Mogopa, Rockwell submitted the required documentation to the DMR’s regional office in Klerksdorp on May 28.

As far as both parties can ascertain, the regional office has accepted the documentation.

“But, right now, we are uncertain as to how near to completion the process is and whether the relevant documentation is still at the regional office or whether it has gone to the Pretoria head office.

“Our knowledge and experience are that, once the documentation is approved by the regional office, then the Pretoria process is quite quick. I think that, unfortunately, the considerable amount of work involved in the DMR’s process of auditing of prospecting permits following the moratorium on prospecting permits, is causing overall delays in the department.

“We’re committed to working with all stakeholders to ensure the development of our business and are endeavouring to build a strong partnership with the DMR office in the North West as we have done in the Northern Cape. Improving communication with the DMR is high on our priority list.”

Currently, Rockwell is operating as a sub contractor and not as an owner, because of the bureaucratic hold-up.

The delay also means that South Africa’s State-owned Industrial Develop-ment Corporation (IDC) is having a long wait for the R20-million that it is owed.

“We don’t like debt on our balance sheet and, going forward, would look to, repaying the debt to the IDC,” says Bristow, who commends the IDC’s patience: “A commercial bank would probably have pulled the plug here, to everyone’s detriment, but, fortunately, the IDC has a more pragmatic view and shares Rockwell’s commitment to developing South Africa’s mineral resources and creating employment.”

The IDC also funded the Mogopa community’s R26-million preferential-share-based BEE investment in the diamond project, which the community will have an opportunity to repay if the mining project goes ahead as planned.

IDC executive Kevin Hodges tells Mining Weekly that the IDC has obtained the opinion of senior counsel on the issue of acquirers of mining assets acting as subcontractors while awaiting Section 11 cessions, and is lending into such structures, but with guarantees of debt repayment.

“Most important for us right now is to get Section 11, because that triggers several things. The first is a capital raising but, obviously, investors would like to see that we do have ownership. We see ourselves creating 150 jobs once the first phase is going,” Bristow says.

Rockwell also has a venture with the Steinmetz group to beneficiate diamonds in South Africa, which means that the sooner the mine can get production going, the more it will be able to beneficiate, which creates value-added economic benefit for South Africa.

Mineral Resources Minister Susan Shabangu said in a media briefing last month that the DMR was intent on speeding up its administration processes significantly.

“We take note of what the Minister says and I think she is trying very hard to issue prospecting permits in three months and mining permits in six months. If that happens, it will be fantastic.

“We had a very bad experience with Saxendrift, where we waited 12 months for a Section 11. Then, next door at Nuwejaarskraal, we waited for two years, which is unacceptable.

“We all know about the boom that South Africa missed. The lost opportunity cost to both the country and to little companies like ours is massive.”

Greater Community Potential
Chamberlain tells Mining Weekly that Rockwell has plans to involve the Mogopa far more significantly in owner mining.

“We have additional properties that come with the purchase that don’t suit the Rockwell way of working, and part of the plan is to hand 100% ownership of those to the Mogopa to put them in charge of their own destiny,” Chamberlain discloses.

“There is an opportunity here to develop at least two or three other similar operations. If we can achieve that, then you start looking at significant employment numbers,” says Bristow.

Rockwell employs 500 people in a depressed area of the Northern Cape and has been holding some highly profitable recent diamonds sales.

Rockwell this month sold diamonds at an average price of $1 244/ct, with 5 294,55 ct fetching $6,6-million, including 58 diamonds larger than 10 ct, and four larger than 50 ct.

All four of the 50 ct-plus stones were sold into Rockwell’s gain-share agreement with the Steinmetz group.

These sales are seen as reinforcing the resilience of the diamond market, which has continued to recover steadily since the damaging downturn of early 2009.