JOHANNESBURG (miningweekly.com) – After investing just over R20-million on diamond exploration projects in South Africa, diamond exploration and development company Botswana Diamonds is within striking distance of being able to declare its maiden diamond resource.
“We’re not too far off declaring a major resource at Thorny River,” Botswana Diamonds MD James Campbell has told Mining Weekly in a Zoom interview. (Also watch attached Creamer Media video.)
Thorny River is about 50 km east of Mokopane, in Limpopo province, on the Klipspringer/Marsfontein kimberlite field.
Marsfontein, which had the fastest payback at any mine in history – three-and-a-half days, yes, days – is a 0.4 ha blow on a kimberlite dyke, which is very small but which was extremely profitable for the then shareholders De Beers and Southern Era.
“Our exploration work in that area has focused very much on finding another Marsfontein,” said Campbell.
Exploration over the last three to four years has enabled the company to discover two blows on the Thorny River area, where very detailed geophysics and drilling has been carried out and where further drilling and bulk sampling is imminent.
Botswana Diamonds has secured Section 20 authorisation, which allows it to do the bulk sampling to enable it to sell diamonds to arrive at a diamond price.
The source of all funding has been the UK and Ireland as the company has found that there is no money available on the Johannesburg Stock Exchange for exploration and development work on potential projects.
Mining Weekly: So, you have already found diamonds while exploring Thorny River, and you’re selling those diamonds?
Campbell: That’s correct. One of the great things about South African legislation, and I know there are many detractors out there at the moment, is you have a provision, within a prospecting licence, called a Section 20, where you can sell your diamonds. Many think that is mainly for income purposes but in fact it isn’t, although that’s obviously very nice. It’s actually to get a proper diamond value, because anybody can give you a diamond value if they don't have to buy the diamonds. There is nothing more accurate than actually selling your diamonds and getting that value. Then, of course, you have the option of either going towards a full-scale mining licence with your feasibility study and all the permitting around that, or going towards a mining permit, which is for a 5 ha piece of ground and lasts for a period of two years. Again, that’s a fairly innovative part of the mining legislation in South Africa.
How are you finding the legislative framework in South Africa?
Where there is plenty of room for improvement is in the cadastre system. It is very difficult to find out who owns what and where you can apply for something, and that could be enormously simplified. For example, where we work in Botswana, it’s a simple application and it either gets accepted or it gets rejected. You don't have the long process of acceptance, granting, execution and notarisation there, which you have in South Africa. Equally, from a funding perspective, there is literally no money available on the Johannesburg Stock Exchange for exploration and development work on potential projects. That is why we have to raise our money in the UK and in Ireland, where there is an appetite for exploration. Those are the two main things that I think need a huge amount of work: simplifying the application system for exploration licences and then creating meaningful incentives for investors to invest in what is a high-risk business, being exploration.
Are you encouraged by the return on your South African investment to date?
The stage we are at at the moment is that we’ve discovered diamonds, we understand what the grade range is, we understand what the value range is, and we are not too far off declaring our maiden resource at our Thorny River. Investors are naturally impatient and, yes, they would like us to find something quicker, at a lower price and to go into production quicker. That is the mandate that I have; to try and do things as quickly and as cheaply as possible, but also to do them properly as well. At the end of the day, we do want things which are sustainable and which does provide quality returns to our shareholders.
What is your understanding of the grade and value range?
The kimberlite in situ grade is around about 60 carats per hundred tonnes (cpht), which is high grade for a kimberlite in itself. Other kimberlites are typically being mined at in the 20 cpht, or perhaps a little bit higher.
PORTFOLIO OF DIAMOND EXPLORATION PROJECTS
Botswana Diamonds has a portfolio of diamond exploration projects spanning South Africa, Botswana and emerging interests in Zimbabwe. Its focus in South Africa is very much on the Thorny River project whereas in Botswana, it is on grassroots diamond exploration discovery, chiefly in the Kalahari desert.
“Why an exploration company should have a portfolio is that it’s often like finding a needle in the haystack. As you do more work on different projects, projects tend to fail,” said Campbell, who reiterated the oft quoted statistics of there being 6 000 kimberlites in the world, of which 600 have diamonds and of which 60 have been mined or are mines.
“But for a junior like us, listed on the London Aim market and the Botswana Stock Exchange, it’s about being able to raise sufficient funds at a fair price without too much value shift of your founding shareholders to progress your work.
“On the one hand you’ve got the work requirements, and if I was a large corporate, yes, you could get this done possibly much quicker. On the other hand, you have your funding requirements, where you have to try and raise money at successively higher share prices so you can fund your exploration work.
“What that means in practice is that we do campaign development. The next phase of work which we said we would do is to complete the sample treatment of those samples that we drilled earlier in the year. We expect those results by the end of July and then following that, we’ll do the next phase of drilling in August, before the wet season. If those results are positive, we’d like to move towards bulk sampling,” he said.
At any one point in time, the company is active on one or two projects as it cannot afford to be active on all the projects, all of the time.
In South Africa, it has a joint venture (JV) with Vutomi Mining, in Botswana, it has a JV with Dimetstraat Botswana and the Australian-listed Burgundy Diamond Mines, and in Zimbabwe, it has a JV with Vast Resources and is also looking at doing work on its own.