KDL rebuffs Lerala sale speculation
Brian Benza | Thursday October 2, 2014 09:00
“It has come to the board’s attention that there have been rumours in the market that KDL is attempting or intending to sell Lerala. Such rumours are not true. KDL has no intention of selling Lerala,” the board said in a statement to the ASX.
The Lerala mine, which was acquired in February, contains 3.253 million carats valued at an average price of $74 per carat, while Smoke Creek contains an estimated 6 million carats at an average price of $30 per carat.
KDL reiterated that Lerala was its flagship project and that it continued to work towards reopening the mine in late 2015. Once in production, Lerala will produce about 1.4-million tonnes of ore a year, producing an average of 375 000 carat a year over a seven-year mine-life.
Kimberley Diamonds has already put plans in place to raise cash from shareholders to fund the reopening of Lerala Diamond mine.
The ASX-listed firm, which bought mine in the central district last year from UK-based Mantle Diamonds, last month announced that it would be undertaking a non-renounceable pro-rata rights issue to raise nearly A$10-million (P83 million).
In June this year, Kimberley approved a A$14.7-million kitty to recommission the Lerala diamond project, which the previous owner Mantle Diamonds placed on care and maintenance in 2012.
The government of Botswana owns a stake in the mining project after investing P15 million in Lerala Mine in 2007 through irredeemable bonds, which was later converted into equity when the former owners of the mine, Diamonex Limited, folded during the 2008 global financial crisis.
Diamonex sold the mine to UK firm Mantle Diamonds in 2011 before the later also offloaded the project to Kimberley in 2013. In February, Kimberley Diamonds had said the project is ready to be re-commissioned following the execution of engineering improvements designed to further enhance recovery and to reduce operating costs.
The improvements, which include the purchase of a new diamond sorter and optical waste sorter, would cost $10 million. The mine has five diamondiferous kimberlite pipes totaling 6.66 hectares, a 15-year mining licence and a 230-tonne per hour processing and recovery facility.
Citing a weak diamond market, Mantle placed Lerala Mine under care-and-maintenance in July 2012 after only five months in operation, throwing about 100 people out of work.
The mine first closed in 2009 against the backdrop of poor sales, leaving 160 employees jobless. Lerala contains probable reserves of 8.38 million tonnes, with an average grade of 29.68 carats per 100 tonnes.
Earlier in September, KDL appointed Consulmet to undertake detailing and design work to modify the plant treat about 200 tonnes per year of ore. Consulmet will undertake the detailing and design work for this modification.