South Africa’s Department of Mineral Resources and Energy has dismissed a third party's appeal against the granting of a mining permit for Aim-listed investment company Kazera Global’s 60%-owned subsidiary Whale Head Minerals (WHM). 

WHM now expects to shortly receive final documentation allowing it to start heavy mineral sands (HMS) production at the Walviskop mine, in the Northern Cape.

"This has been an incredible week for Kazera. We have been anticipating being granted the right to mine Walviskop since January . . . The rejection of the appeal reflects our previously expressed confidence that the correct procedures had been followed by the department in initially approving the mining permit," Kazera CEO Dennis Edmonds said on July 28.

Ore production from the Joint Ore Reserve Committee- (Jorc-) compliant resource at the Walviskop mine is expected to generate positive cash flow from operations within six months of receipt of the mining permit being granted over a 5 ha beach sand deposit.

Walviskop sits within the diamond mining operations of Kazera’s other South African subsidiary Deep Blue Minerals.

The company expects to produce about 6 000 t/m of HMS, achieving an estimated gross profit of more than $300 000 a month within six months of the mining permit being granted.

The mining permit gives WHM the right to mine a 5 ha beach sand deposit at Walviskop with a Jorc-compliant indicated mineral resource of 3.11-million tons of valuable heavy minerals at a grade of 61.2%.

The predominant valuable heavy minerals are garnet, at 30.29% run-of-mine (RoM), and ilmenite at 27.54% RoM. Also present are zircon at 1.2% RoM and rutile at 0.92% RoM, which have not been included in the modelling.

The independently determined net present value of the mine amounts to about £150-million.

Potential partners have already been identified to build the Walviskop processing plant. Kazera said discussions had already started with independent third parties to build and operate a plant at their own cost to separate out the various component minerals, which will considerably increase profitability to WHM without increasing overheads.

Prior to that, unseparated material will be sold in bulk.

WHM has also applied for a prospecting right over an adjacent beach, which appears to share similar characteristics to Walviskop and which is about 34 times larger.

The start-up costs of the Walviskop mine are expected to be covered by cash flows from Kazera's Alexander Bay diamond mine in South Africa and Tantalum Valley mine in Namibia.

The opportunities represented by the HMS deposits in the vicinity of Alexander Bay/Port Nolloth were recognised as early as 2016. Previous access to these deposits had been made difficult by their location within the highly protected diamond mining areas on the West Coast.

These HMS deposits contain substantial diamond deposits which means that HMS miners cannot obtain permission to mine them. However, conversely, the density of the HMS makes it prohibitively expensive for diamond miners to extract diamonds.

With Deep Blue, a Kazera subsidiary, having the right to mine diamonds and WHM holding the rights to mine HMS, the company has overcome these issues.

As a by-product of the HMS operation, Deep Blue now expects to generate about 300 ct a month of additional diamond production from the HMS operation – this being incremental production to complement the current existing diamond operations.

Kazera explained that beach diamonds tend to be larger and higher-quality than those found inland and so it is expected that these diamonds will attract a premium at auction.

Inland diamonds typically attract prices of about $250/ct, whereas the company expected these diamonds to exceed a price of $750/ct.

Further efficiencies will also be gained in the mining process during the first stage in the separation process as the diamond-bearing gravel is separated from the sand, which contains valuable heavy minerals.

The company also expects that the five-year life-of-mine of the 5 ha deposit will be considerably enhanced owing to the effect of wave action redepositing HMS on the mined areas. This wave action should also ensure that rehabilitation is constantly carried out.