EVER EXPANDING The shaft sinking expansion projects at the Lucara Diamiamond Karowe mine in Botswana is progressing as planned
Diamond exploration and mining company Lucara Diamond in February released its results for the year and quarter ended December 31, 2022, in which it updated stakeholders on the progress of the shaft sinking expansion project for its Karowe mine near Letlhakane, in Botswana.
During 2022, $106-million was invested in the Karowe underground expansion project (UGP), with total project to-date investment of $226.1-million.
The Karowe UGP is expected to extend the mine life to at least 2040, with initial underground carat production predominantly from the highest value eastern magmatic/ pyroclastic kimberlites (EM/PK) unit.
EM/PK is forecast to contribute about $4-billion in additional revenues, using conservative diamond prices, says the report.
The updated estimated capital cost for the Karowe UGP is $547-million, which includes contingencies, and reflects expected pricing changes following execution of the main sink contract in the second quarter of last year.
Mine ramp-up is expected in 2026, with full production from the Karowe UGP expected in the second half of 2026.
The company is using a combination of cash flow from operations and project debt for the investment in the Karowe UGP, which is fully financed.
During the three months ended December 31, 2022, a total of $22.3-million was spent on the Karowe UGP development, primarily in relation to ongoing construction activities and procurement of long-lead items.
These developments include the main sinking in the production and ventilation shafts.
The company explains the cover grouting began in the production and ventilation shafts in December 2022 in response to expected water inflows from the sandstone.
The grouting was undertaken as part of a planned methodology, which includes the use of chemical grouting, which has thus far been effective.
Experiences gained from this first grouting event – which was completed in February in the production shaft and remains ongoing in the ventilation shaft – will inform future anticipated cover grouting events as the shafts progress to depth.
The main sinking activities continued to ramp up in the fourth quarter, however, equipment and operational challenges continued to negatively impact on planned cycle times.
Active interventions and mitigations implemented in the fourth quarter include equipment and personnel changes as well as shift and rotation schedule optimisation, along with the roll-out of a behavioural-based safety training programme which is helping to resolve these issues.
The company says it intends on assessing the impact of the incurred delays against the effectiveness of the operational changes implemented in the fourth quarter, combined with recent grouting experiences to refresh estimates around planned sinking rates and the overall project schedule and budget.
This process is expected to occur before the end of the second quarter.
“The Karowe diamond mine completed its tenth year of continuous operations and successfully delivered on all of its financial and operating metrics,” says Lucara Diamond president and CEO Eira Thomas.
She adds that this includes safety, production, processing, sales and revenues, with costs trending below guidance and continued access to sufficient liquidity in support of the company’s growth plans.
“For the underground expansion project, we achieved a number of important milestones, including the completion of all pre- sinking activities on schedule and budget,” she says.
Additionally, the execution of a main shaft sinking contract, the start of main shaft sinking, and the completion of a new power line were also on schedule and budget.
“Importantly, we started our first grouting phase in the production shaft in December which was successfully completed last month, confirming that our planned approach and methodology is effective,” she points out.
The impact of delays and a slower-than- anticipated ramp-up in shaft sinking cycle times, together with experience gained from the first grouting programme, will be incorporated into a refreshed schedule and budget which is expected to be completed in the second quarter of 2023.
Thomas says the diamond market remained healthy and stable in 2022, though price softening was observed in the latter half of the year which impacted on revenues year over year, achieving the mid-range of guidance.
“Despite rising global economic uncertainties, our outlook for 2023 and beyond remains optimistic as global supply shortages continue to play out in the market,” she concludes.