Lerala Mine strikes lucrative offtake deal

Brian Benza | Thursday October 13, 2016 16:31

The company said yesterday that its subsidiary Lerala Diamond Mine had conducted a tender for its diamonds in late September, with the winning bidder entering into an offtake agreement for all diamonds produced at the mine for a six-month period.

Kimberley Diamonds said prices achieved under the offtake were consistent with the company’s expectations and recent forecasts.

The company noted that the entry into this short-term offtake agreement reflected demand and interest in the market for the Lerala diamonds, and supports the company’s view of the quality of the product, as well as the longer-term viability of the project.

Kimberley Diamonds started production at Lerala in April. The mine will produce an average of 357,000 ct/y at full production and operate for seven years.

KDL, which bought the mine in the central district in 2013 from UK-based Mantle Diamonds, has in the past year undertaken various fund raising initiatives to finance the reopening of the mine.

Citing a weak diamond market, previous owners of the mine, Mantle placed Lerala Mine under care-and-maintenance in July 2012, after only five months in operation, throwing about 100 people out of work.

Commencement of mining operations at Lerala follows the awarding of a $47 million (P380 million) open pit-mining contract to South Africa’s Basil Read in February.

The mineral resources of the diamond mine as at December 31, 2015 was estimated at 20.1 million tonnes (Mt) at 24.2 carats per 100 tonnes (cpht) containing 4.9 million carats.

The company has targeted yearly output of 360,000 carats from Lerala over the next seven years.

The reopening of the mine comes at a time when the mining sector has been hit hard by job losses largely due to the slump in commodity prices. Since last year, Boseto Mine, African Copper and Moolman Mining all closed shop and laid off thousands of workers with the diamond miner, Ghaghoo also reported to have finalised a retrenchment exercise.