Not really Yanni just a personal note :
For Those interested:
Current Diamond Mining and Exploration
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Mine production
The rough diamond supply during 1997 was slightly higher in value than in 1996. Currently, about US$ 7 billion worth of rough diamonds are sold annually. In volume terms, diamond production was slightly down from 123 million carats in 1996 to an estimated 119 million carats in 1997. The increase in value was mainly due to increased production from Botswana and Angola, while the reduction in carat supply was mainly due to the decreasing trend in Argyle's production. The latter remains in volume terms the world's largest diamond mine, with 36 million carats produced in 1997, but is largely surpassed in value by Jwaneng (Botswana), the world's largest mine in value, Udachny (Russia) and Venetia (South Africa). Botswana remains the top current producer in value, with an estimated value of close to US$ 1.5 billion in 1997. Russia is second (US$ 1.2 billion current mine production), but surpasses Botswana if the stockpile sales are added (close to US$ 300 million). Next follow Angola and South Africa, with each about US$ 1 billion worth of diamonds produced in 1997. Despite the remaining unrest with the UNITA resistance movement, diamond production is carried out on a wide scale in mainly the Lunda Norte province, with several medium-scale alluvial mines coming on-stream, operated as joint ventures between local parties and foreign companies, such as DiamondWorks, ITM and others. The artisanal production in neighbouring Congo (Kinshasa) was unaffected by the change of power from Mobutu to Kabila, and still forms the bulk of the country's production, with the mechanized MIBA operation contributing only 10% to Congo's diamond export value. In Namibia, the trend to increased offshore production was confirmed in 1997. With present markets remaining strong for good quality stones larger than 0.75 carats, Namibia produces a nearly ideal assortment of easily saleable goods. The polarization in market performance between the good quality gem stones and the smaller poor quality near-gems, is positively affecting the mainly alluvial or marine production of Namibia, Angola, West Africa, Central African Republic and Namaqualand. Continuing sorting in the alluvial environment over million of years has preferentially preserved the well-formed diamonds with little or no inclusions or cleavages, and therefore less likely to shatter under impact between boulders in the rivers or along the coast. The resulting assortment of diamonds correlates better with the profile of market demand. On the other hand, kimberlites tend to yield a large amount of small brown stones, often with many inclusions. These stones are now hard to sell and those mines having the largest proportion of small near-gems, such as Argyle, but also to a lesser extent Finsch (South Africa), Orapa (Botswana) and Jubilee (Russia), are getting less revenue. This situation is unlikely to change as the world's two leading producers, Alrosa (Almazy Rossii Sakha of Russia) and Debswana (the Botswana and De Beers joint venture), have chosen resp. Jubilee and Orapa for increased production capacity. Orapa is to double capacity by the year 2000, while Jubilee is going to replace Udachny as Russia's largest diamond mine. Three mills with an annual capacity of about 3 million tonnes each should bring by the year 1999 Jubilee's capacity to 9 million tonnes, producing more than 5 million carats. The second mill has come on-stream in July 1997, and a gas-pipeline is being constructed to deliver the energy needed for the third mill. Jubilee's diamonds are on average of lower quality than Udachny's, but Alrosa is going to compensate this by re-opening the Mir pit. The Mir kimberlite pipe used to yield a large number of perfectly crystallized clear octahedral diamonds. The Mir pit was closed a few years ago because of an in-rush of large amounts of underground brine water. The groundwater problem has been solved by shielding the pit from the surrounding aquifers by an intensive grouting (injection of cement) programme. The pit is being enlarged to make the mining of deeper levels possible. Udachny's production was down this year because of wall stability problems during the widening of the pit, needed to mine deeper levels. The Aykhal open pit has reached its economic limits and Alrosa is considering continuing underground.
De Beers has management control over Southern Africa's largest mines. The production of the mines under De Beers control amounts to 24% in carats and 39% in value of the world's total rough diamond supply. If one takes into account the De Beers shareholding in Botswana, Namibia and Venetia, the attributable diamond production of De Beers is only 14% in carats and 23% in value of the world's supply. Alrosa's current mine production represents 11% in carats and 17% in value of total world supply. The depletion of the central Russian stockpile in Moscow continued during 1997, but at a reduced rate and is expected to dry up, now that a new sales agreement has been reached between Alrosa and the CSO. The CSO sells currently about 65% in value of the world's supply.
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Table 1: The world's estimated 1997 diamond production by countryCountry
Carats
US$/ct
Value
('000)
(US$ million)
Botswana
17,850
82
1,461
Russia
13,400
90
1,210
Angola
5,340
194
1,035
South Africa
9,898
98
971
D.R. Congo
23,300
31
715
Namibia
1,440
284
410
Australia
36,000
8
288
Brazil
2,100
60
126
Sierra Leone
500
240
120
Central African Republic
600
175
105
Guinea
750
140
105
Venezuela
550
75
41
Liberia
200
150
30
Ghana
737
34
25
Ivory Coast
250
80
20
Tanzania
127
150
19
China
179
96
17
Zimbabwe
440
25
11
Guyana
60
80
5
India
26
154
4
Indonesia
10
175
2
USA
15
65
1
Other African countries
50
100
5
Russian stockpile depletion
4,820
56
270
TOTAL
118,642
59
6,995
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Table 2: Current annual production at the world's major diamond minesMineProducerCountry
Carats
Tonnes
ct/tonne
US$/ct
US$/t
Value
('000)
('000)
(US$ million)
JwanengDebswanaBotswana
11,350
9,200
1.23
90
111
1,022
UdachnyAlrosaRussia
10,200
8,000
1.28
95
121
969
VenetiaDe BeersSouth Africa
4,300
3,300
1.30
90
117
387
OrapaDebswanaBotswana
5,600
7,900
0.71
60
43
336
Namdeb onshoreNamdebNamibia
880
22,000
0.04
325
13
286
ArgyleRio Tinto / AshtonAustralia
36,000
12,800
2.81
8
23
288
JubileeAlrosaRussia
2,700
4,500
0.60
65
39
176
NamaqualandDe BeersSouth Africa
700
3,500
0.20
185
37
130
PremierDe BeersSouth Africa
1,600
3,800
0.42
80
34
128
FinschDe BeersSouth Africa
2,100
3,580
0.59
60
35
126
Namdeb offshoreNamdebNamibia
500
2,000
0.25
225
56
113
LethlakaneDebswanaBotswana
900
3,100
0.29
115
33
104
MIBAMIBACongo
6,800
5,200
1.31
11
14
75
SytykanAlrosaRussia
500
500
1.00
130
130
65
KimberleyDe BeersSouth Africa
560
3,500
0.16
110
18
62
Orange RiverTrans HexSouth Africa
190
4,750
0.04
230
9
44
KoffiefonteinDe BeersSouth Africa
140
1,700
0.08
150
12
21
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New mine development and exploration
Two major kimberlite projects are expected to start production during 1998: the Ekati (the new name for the Koala project of BHP and Dia Met) mine in Canada, and Catoca in Angola. The Ekati project has been well publicized and is a joint venture between BHP (51%), Dia Met (29%), Charles Fipke (10%) and Stuart Blusson (10%). The Ekati mine is going to produce 3 million carats per year, worth about US$ 400 million. The daily mining and treatment rate is planned to start at 9,000 tonnes of kimberlite ore, but should rise to 18,000 tonnes per day after ten years. The capital cost for the project is US$ 640 million. Under the original joint venture agreement, BHP guaranteed the financing of the first US$ 500 million. A new agreement was signed on 17 April 1997, where BHP agreed to guarantee the balance of the funds, but subject to reaching a satisfactory resolution of marketing arrangements for the project. The funds and interest will be repaid by Dia Met through 90% of the cash flow generated by the project. The repayment is expected to take three years.
The Ekati treatment plant is located close to the kimberlite pipes Panda, Koala, Fox and Sable (which recently replaced the lower grade Leslie pipe in the mining schedule). The Misery pipe is 35 km to the east, while Sable is 18 km to the north of the Koala plant. BHP and Dia Met continue to find new rich pipes, such as Pigeon and Jay, that may be mined as well and the priority schedule of mining the pipes may still change. The present feasibility study based on the Koala, Panda, Fox, Sable and Misery pipes is sufficient for 17 years of operation, treating in total 120 million tonnes of kimberlite ore.
BHP has presented its feasibility study, with the following reserves announced:
Table 3: Reserves for the EKATI projectmillion tonnesStatusPanda MiseryKoalaFoxSablePandaKoalaTOTALopen pitopen pitopen pitopen pitopen pitundergroundundergroundProven
8.6
4.8
10.0
8.1
11.0
0.0
1.0
43.5
Probable
4.0
0.7
4.6
8.6
1.9
0.8
1.8
22.4
Proven+Probable
12.6
5.5
14.6
16.7
12.9
0.8
2.8
65.9
Grade (ct/tonne)
1.09
4.26
0.76
0.40
0.93
0.97
1.63
1.09
Value (US$/ct)
130.0
26.0
122.0
125.0
64.0
130.0
122.0
84.0
US$/tonne
141.7
110.8
92.7
50.0
59.5
126.1
198.9
91.6
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A total of approximately 78 million tonnes of kimberlite should be mined over the initial 17-year life of the project, and more than the 65.9 million tonnes are currently in the reserves schedule. Reserves can be further developed at depth on Panda, Koala and Fox. The waste removal is expected to amount to a total of 508 million tonnes. The Panda kimberlite will be mined in the first five years, with Misery scheduled in from years 2 to 15. The Koala pit should come into production from year 5 to 11, while Panda's underground production should come in from year 6 to 11. Fox, Sable and Koala's underground development are expected to come into production after year 10.
The Catoca diamond-bearing kimberlite pipe is located in north-east Angola, in the Lunda Sul Province, 26 km NE of Saurimo, the provincial capital. A joint venture was formed to develop the Catoca pipe into a mine. The partners are Alrosa of Russia (40%), Endiama (40%), the Angolan state diamond enterprise, and Odebrecht (20%), the Brazilian civil construction company. Based on sampling data and drilling done by Diamang, the Portuguese colonial company, during 1969-1971, and based on a re-evaluation study done by MATS, a De Beers subsidiary, during 1985-1987, a feasibility study was prepared by the joint venture partners and completed in December 1991. Initially the investment capital required to develop a mine and a plant with an annual treatment capacity of 1.6 million tonnes was estimated at US$ 86.6 million. Cost escalation over the years has resulted in a revised estimate at US$ 94 million. The treatment plant is supplied and erected by Alrosa, while the civil construction of the township and offices is done by Odebrecht. The pipe has a surface area of 65.7 hectares and is composed of a central low grade core, surrounded by a peripheral higher grade rim. Down to 100 m depth, the high grade rim contains 72 million tonnes with a grade of 0.54 carats/tonne, or 39 million carats, while the central core is probably uneconomic at 0.06 carats/tonne only. The average value of the diamonds may range between US$ 50 to 75/carat. The mining of the peripheral high grade rim at an annual rate of 1.6 million tonnes should take 9 years to reach a depth of 40 metres (20 m of overburden and 20 m of kimberlite). Annual production at designed capacity should amount to 860,000 carats, possibly worth US$ 52 million, a fairly modest figure in comparison with the Ekati project.
Apart from the Ekati project, Canada has another major diamond project developing. The Diavik project, owned by Aber and Kennecott (Rio Tinto), has the potential to become Canada's second diamond producer after the year 2000. To date, the Diavik Joint Venture has discovered 19 diamondiferous kimberlite pipes and has devoted most of its attention to four: A-154 South, A-154 North, A-418 and A-21. Pipes A-154 South and A-418 were evaluated first and bulk sampling is now largely completed. These two pipes, only about 100-200 m apart, have grades of about 4 carats/tonne with diamonds worth about US$ 60/carat, yielding a very high US$ 240/tonne average value content. Pipes A-154 North and A-21 haave been less sampled and are lower grade (2-3 carats/tonne) and seemingly of lower value (US$ 35/carat for A-154 North based on preliminary results). The results can be summarized as follows:
Table 4: The Diavik evaluation sampling resultsPipeSample sizecaratsct/tUS$/ctUS$/tMillion tonnes down to 400mA-154 North2,900 tonnes12,8004.20 63 265 12A-154 South71.7 tonnes1572.19 35 77 10A-2130.5 tonnes85.22.82 n.a. n.a. 5A-4181,490 tonnes4,2004.02 60 241 9
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Bulk sampling at A-418 is still underway and should total 3,000 tonnes. A-154 N and S and A-418 are within a 1 km radius of each other, while A-21 is about 7 km to the south-west. Grades in A-154 South are fairly homogeneous throughout the pipe, while grades in A-418 are more variable, with the best grades close to the surface.
The main technical problem presented by the two main pipes is that they lie under the water of Lac de Gras, a very large lake. Present plans are to build a berm around the areas to be mined and then to open-pit mine the deposit. Pipe A-418 would be enclosed by the dike and mined first, followed by A-154 South. Since the material in the top third of A-154 North will be removed during the mining of A-154 South, further testing was not believed to be necessary. The mining rate may amount under this hypothetical scenario to 6,000 tonnes/day, or more than 2 million tonnes per year. If open-pit mining proves after a more detailed feasibility study unpractical, underground mining may turn out to be a hard alternative. With a lake overhead, the crown pillar should possibly be as much as 150 m, significantly reducing the recoverable reserves and in the case of A-418 leaving in place the richest ore.
The feasibility study is expected to last 2 years. This study will involve more bulk sampling and delineation drilling and environmental impact studies. If everything goes well, construction could begin in the year 2000 and be completed in 2001 or 2002. From the year 2002 Canada could be producing an additional 8 million carats per year, worth US$ 480 million, on top of BHP-Dia Met's Ekati (the Panda kimberlite) production of about 3 million carats per year, worth US$ 390 million. The total Canadian production by the year 2003 could be 11 million carats worth US$ 870 million. After the year 2003, the Canadian production may further increase in volume terms, but the average value of their production is expected to decrease.
Elsewhere in Canada, Ashton has found diamond-bearing kimberlites in the Buffalo Hills region of central north Alberta and is continuing evaluation drilling. Diamond exploration has been extended to Greenland, with Dia Met and Monopros (De Beers) having regional exploration programmes in the west of the world's largest island.
Diamond exploration is routinely continuing in the world's two leading diamond producing regions: Russia and Southern Africa. In Russia, Alrosa discovered new kimberlites in the Nyurba district of the Sakha republic underneath 60 m of overburden, and is carrying out evaluation drilling. North of Arkhangelsk, in European Russia, the Russian state company Severalmaz continues evaluating the feasibility of mining the Lomonosova kimberlites. A major technical difficulty is the cover of 30 to 70 m of water-logged loose sediments on top of the pipes. Open pit mining would require pit slopes of less than 35ø, creating an unfavourable waste to ore ratio. Arkhangelskgeoldobycha, the regional Geological Survey, discovered a high-grade pipe in the Verkhotina area just to the north-east of the Lomonosova kimberlites in a project funded by Vancouver-listed Archangel Diamond Corporation. In Botswana, Tswapong Mining, a Debswana subsidiary, is starting trial mining of 5 small kimberlites at Martins Drift, while other parties (AfriOre, Falconbridge, BHP, De Beers) continue the evaluation of different kimberlites in the Gope region.
In South Africa, Southern Era is getting excellent results from its Klipspringer property. Even though grades are high, the kimberlite bodies are fairly small. In Lesotho, Messina Diamond Corporation obtained mixed results on the Liqhobong kimberlites. The initial samples from the main pipe show disppointing grades, while the smaller satellite pipe has a better grade. In Australia, Ashton is soon to start pilot-scale mining of the Merlin kimberlites in the Northern Territory. Plans are to develop an open pit mine, at a rate of 500,000 tonnes per year, at a cost of A$ 20 million. As the pipes are small, deeper mining would be by underground methods. In Angola, DiamondWorks currently produces already about 10,000 carats per month, worth US$ 3 million from its alluvial operation at Luo, and plans to evaluate the nearby Camatchia and Camagico kimberlite pipes, which are of low grade but large in size.
Offshore along the Atlantic coast in Namibian and South African waters, exploration and trial mining is carried out by De Beers Marine, Ocean Diamond Mining, Namco, Benguela Concessions, Diamond Field Resources and BHP. De Beers Marine produces now about half a million carats from its deep sea concessions in Namibia, while Ocean Diamond Mining is in the process of increasing its production (52,000 carat per year). The Moonstar vessel, operated by the joint venture partners Benguela Concessions and Moonstone Diamonds, has started trial mining offshore in South African waters. Plans are to recover 65,000 carats per year. In Namibian waters, Namco plans to start production shortly in their high-grade Koichab lease at a rate of 160,000 carats per year.
In West-Africa, much attention went to Sierra Leone, with both DiamondWorks and Rex planning to develop the rich, but small, kimberlite pipes and dykes of resp. Koidu and Tongo. Their plans had to be suddenly suspended though because of a coup d'‚tƒt by junior officers. The democratically elected president went in exile and the country remains isolated from the outside world. In Guinea, De Beers has been flying a large scale airborne geophysical survey in the south-east, searching for new kimberlites. In Mali, Ashton and Mink have found new pipes in the K‚ni‚ba region, close to the Senegalese border, but no high grade pipes have yet been found. The West African craton, on which the Guinean, Malian and Sierra Leonean kimberlites are located, continues under cover toward the north and crops out in northern Mauritania. The government of Mauritania has awarded large diamond exploration leases to Ashton and Rex. Rex has flown a 100,000 line km aeromagnetic survey and is following up a number of anomalies, while Ashton carries out a regional indicator mineral sampling survey.
Diamond exploration by junior exploration companies is mainly funded through the Vancouver and Toronto stock exchanges. One should never loose sight of the fact that unscrupulous companies might be tempted to salt drill samples and bulk samples with microdiamonds and commercial-sized diamonds to favourably influence exploration results in pursuit of stock market gains. This was tragically shown to be the case in the Bre-X fraud. Gold exploration samples from Bre-X's Busang project in Indonesia were massively and systematically salted in what must have been history's biggest stock market swindle. Bre-X was listed in Canada and the fall-out of this fraud on the other exploration companies listed in Canada is presently depressing the ability to raise fresh exploration funds. Only reputable companies with a technical sound exploration management are likely to survive the present squeeze. Major diamond producing companies, with a steady cash flow from operating mines, are little affected however. Several attractive exploration projects, initiated by junior explorers, could become easy targets for joint venture agreements with major mining companies. In this context, future diamond production is likely to remain concentrated in a few large companies, such as De Beers, Alrosa, Rio Tinto and BHP.
Courtesy of Luc Rhombouts
Sincerely
George J. Tromp
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