Gemstone producer targeting Zambia in-pit ore-reserve extension

11th September 2015 By: Mia Breytenbach - Creamer Media Deputy Editor: Features

Gemstone producer  targeting Zambia in-pit ore-reserve extension

EXTENSION PLAN The current and planned high-wall pushback programmes will extend the Chama pit to increase in-pit mineable ore reserves

Once the fourth phase of the high-wall pushback programme at coloured gemstone producer Gemfields’ flagship Kagem emerald mine, in Zambia, is completed, the company is considering embarking on a fifth-phase pushback programme to further extend the mine’s in-pit ore reserves to 2024.

Gemfields CEO Ian Harebottle tells Mining Weekly that the fifth phase will entail a 100 m horizontal waste pushback to expose ore to be moved over a three-year period.

“While the fourth phase of waste removal is nearing completion, it is beneficial to begin considering the project now to maintain production momentum and maximise economies, particularly from a long-term cost-saving perspective,” he says.

Completion of the fourth phase is expected in October and will result in in-pit ore reserves being available for nearly two years, depending on the rate of ore mining, Harebottle says, reiterating that more than 30-million carats of emerald and beryl was produced in the most recently completed financial year to June 30.

Overburden and waste material are mined in phases at the 105-m-deep, over-1-km-long Kagem openpit to expose the orebodies for processing. The high-wall pushback programme seeks to increase the overall rate and life of available ore mining.

The fourth phase has extended the pit by another 75 m on the south and east sides of the main Chama pit to increase in-pit mineable ore reserves. In-house capability and a third-party contractor are used for this work, Harebottle says.

Moreover, Gemfields has appointed SRK Consulting UK, a firm of multidisciplinary consulting engineers and scientists, to provide an updated resource statement for the Chama pit in the Kagem mine before the end of this month.

“Gemfields believes that the updated resource enables the company to provide the market with a high level of confidence about the company’s long-term, sustainable opencast operations,” Harebottle says.

He adds that, on the basis of the resource statement, the company will make some changes to the mining plan, with the inten-tion to extend to a 25-year opencast mine plan.

Exploration Targets
Gemfields is also focusing on exploration activities on the Fibolele and Libwente emerald belts within the Kagem mining licence. Harebottle adds that SRK will provide an additional resources statement for the Fibolele pit.

Extensive diamond core drilling has been undertaken at Fibolele and Libwente, after which considerable bulk sampling and production of quality-grade ore at Fibolele was done, Harebottle notes.

“Following the outcomes of the resource statement at Fibolele, Gemfields aims to start full-scale mining production at the pit at some point within the next year,” Harebottle says.

Meanwhile, the Libwente pit is in early-stage bulk sampling that will continue for another 12 to 18 months.

There are currently six known emerald-bearing deposits across the Kagem mining licence.

“Although Gemfields has been focusing on the Chama, Fibolele and Libwente pits, the company is also engaged in exploring the other deposits,” he emphasises.

Production Outlook
Despite the global economy’s current volatility, Harebottle notes, Gemfields has not been severely affected by current economic changes, owing to its low level of market saturation and it does not depend on the success of a single commodity or that of any single economy.

“Coloured stones are significantly rarer than luxury items or diamonds, for example, and, therefore, are not a saturated market yet. Since Kagem production and gemstone prices remain steady, operations remain significantly viable, provided that production continues, production costs are maintained and market awareness of the gemstones is increased,” he says.

Consequently, emerald and beryl production at Kagem remains targeted at between 25-million and 30-million carats this year. However, the company might consider production ramp-up at Kagem in the future, Harebottle notes. This depends partly on the outcomes of the SRK resource statement that will be published early next month, and the associated changes to the company’s long-term mine planning.

Meanwhile, Kagem’s production unit costs have been reduced, with the cost of emerald production at about $1.58/ct for the past quarter, compared with $1.79/ct in the same quarter the previous year, Harebottle highlights. He attributes this partly to marginal carat production increases.

He further points out that the company has maintained its production cost increases at about 8% year-on-year – “an achievement, considering the significant inflationary pressures, including fuel prices, labour issues and power supply constraints”.

Trading Prospects
Since being awarded gemstone trading approval in Zambia, in May, Harebottle believes that precious-stones trading in the country could potentially contribute an additional 20% to Kagem’s revenue in the next couple of years.

“This will provide additional benefits for the small, local miners and the country’s economy, as Gemfields can buy and export the gemstones at true market prices, as well as paying all the proprietary taxes in an open and transparent manner,” he says.

The trading business involves buying coloured stones at true market prices from local miners, which are then marketed as traded (that is, as not having come from the company’s own Kagem mine) and sold at auction.

“Gemfields further remains positive about the Zambian mining industry, as the company invests millions of dollars every year in exploration, new phases of high-wall pushback programmes and new fleets of equipment and other expansion projects,” Harebottle says.

He emphasises that Zambian emeralds are the foundation of Gemfields’ business.

Nevertheless, Harebottle believes that Zambia, largely dependent on one significant commodity, should aim to diversify its potential sources of revenue and look to maximise the opportunities presented by manufacturing, agriculture, tourism, and other industries.

“If it is true that ‘discontent is the mother of invention’, then there is potential for massive goodness in Zambia to result from the current global economic outlook and resulting diversification,” he concludes.