Hello All
I don't believe those posts last week duplicated very well and SUF's plays and relevant information were not easily viewed so I will try again. Hope I get it right this time:
An Overview Of 1998 Diamond Mining And Exploration
By
Dr. Luc Rombouts
Terraconsult bvba
Oosterveldlaan 273
B-2640 Mortsel-Antwerp
BELGIUM
E-mail : rombouts@terraconsult.be
Fax : + 32 3 448 08 71
Tel : + 32 3 448 08 63
Introduction
The natural rough diamond mine supply was 120 million carats in 1998, worth US$ 6.7 billion. The amount of carats produced was the same as in 1997, but their value was down by 5% (US$ 7 billion in 1997). The drop in value was mainly due to an overall weakening of diamond prices in 1998. In volume terms, new production from Canada and Southern Africa, was offset by lower production in Congo and Angola. Sales of rough diamonds by the Central Selling Organisation (CSO) were in 1998 US$ 3.35 billion, 28% below the previous year and the lowest level since 10 years. The CSO stockpiled during the year diamonds valued at US$ 400 million from its contractual suppliers. The CSO stockpile at the end of 1998 was valued at US$ 4.8 billion. The strict supply policy of the CSO managed to clear up US$ 1 billion worth of diamonds out of the long pipeline from mine to retailer. The diamond stocks in the trading and cutting centres are estimated at US$ 4 billion.
Retail sales of diamond jewellery worldwide were down 3% in 1998. The drop was most marked in South-East Asia, where sales dropped by 35%, and in Japan, down by 19%. On the other hand sales were up in the USA (+9%) and in Europe (+4%).
Mine production
The most important event in 1998 was the opening of the Ekati mine in the North-West-Territories of Canada. The opening of the mine is the fruition of a decade of successful diamond exploration in Canada. Ekati is a joint venture between BHP (51%), Dia Met Minerals (29%), Charles Fipke (10%) and Stuart Blussom (10%). The mine is expected to produce about 3 million carats of diamonds per year, worth close to US$ 400 million. The mine started producing diamonds in the last quarter of the year. Production in 1998 was only 250,000 carats, but by now Ekati has reached its full production rate of 250,000 carats per month. Initially diamonds were sold independently through the BHP sales office in Antwerp. In March 1999, the joint venture partners announced that 35% of the Ekati diamonds are going to be sold through the CSO.
With the expansion in the past few years at Jwaneng and Orapa, Botswana is now firmly the world's leading diamond producer. In 1998 Botswana produced 20 million carats, estimated to be worth US$ 1.6 billion. Jwaneng is the world's richest diamond mine, producing annually diamonds worth US$ 1.1 billion. A new fully automatic sorting and picking facility was installed. The expansion at Orapa is still ongoing and production should reach 12 million carats the next year. In Russia, decreasing production at the largest mine, Udachny, is being compensated by increased production from Jubilee and the newly opened underground operation at International, near Mir. International should procuce only 200,000 carats per year, but diamonds are of excellent quality. The Russian diamond producer, Alrosa, signed in November 1998 a 3 year marketing agreement with the CSO. The amount of Russian diamonds sold through the CSO should be between a minimum of US$ 550 million per year and a maximum of 26% of total CSO sales.
In South Africa, production at Marsfontein started with exceptionally high diamond grades. Marsfontein is a small rich kimberlite pipe with a grade of 2.6 carats/tonne, owned 60% by De Beers and 40% by Southern Era, the discoverers of the deposit. Southern Era lost the majority share to De Beers after a legal battle about the mining title. Controversy continues at Marsfontein now that the Government Valuator has challenged the De Beers pricing structure of the diamonds. The Government Valuator claims that the CSO offers too low prices for the Marsfontein goods. De Beers has invited the participation of a black empowerment business group (49% share of De Beers' 60% share) in the project. Reserves at Marfontein down to a depth of 150 metres would last till July 2000. Treatment of lower grade stockpile could extend the operation to October 2001. Southern Era fully owns the Klipspringer property adjoining Marsfontein. The Klipspringer project is expected to run at a production rate of 70,000 carats per year.
De Beers is restructuring its older mining operations in South Africa. The new treatment plant in Kimberley should extend the life of the dump retreatment and mining operations by 15 to 25 years. Underground mining operations at Premier are going to be extended to the 1000 to 1200 m depth range, sufficient for a mine life till 2030. Transhex, who mines the alluvial deposits of the Orange River on the South Atlantic coast, merged with Ocean Diamond Mining (ODM), a small but successful offshore diamond producer. Transhex produces 180,000 carats per year, worth US$ 40 million, at the Baken mine, while ODM produces 57,000 carats per year, worth US$ 9 million, from their offshore concessions near Lüderitz in Namibia. Alexkor is mining the coastal deposits south of the Orange River at a rate of about 125,000 carats per year from onshore operations and close to 9,000 carats from offshore operations, worth close to US$ 40 million in total. The operation is state-owned and struggling. As a first step to privatisation, a management contract was awarded to Nabera Mining, a consortium led by Petra Diamonds, listed in London. In Namibia, Namdeb, a joint venture between De Beers and the Namibian state, produced 779,000 carats onshore and 497,000 carats offshore. Namco has emerged as the country's second largest producer. In 1998, Namco produced 128,000 carats and plans to add another vessel, aiming at producing 300,000 carats per year. In the last quarter of 1998, Namco obtained US$ 132/carat for its diamonds, while in March 1999 the average selling price increased to US$ 153/carat.
In Angola, the Catoca mine managed to produce more than 1 million carats despite increased hostilities in the country. The Catoca operation near Saurimo in the east of Angola is a joint venture between Alrosa of Russia, Odebrecht of Brazil, Endiama, the state-owned diamond company of Angola, and Daumonty Financing of Holland, a company controlled by Israeli traders. Alrosa markets 90% of the Catoca diamonds at selling prices varying between US$ 75 and 100/carat. Other operators in Angola had great difficulty keeping operations going. The Yetwene mine, producing 250 carats per day and operated by DiamondWorks was the victim of an armed attack and was closed at the end of the year. Conditions in neighbouring Congo are hardly better, but MIBA (80% state-owend, 20% owned by Sibeka of Belgium) still manages to produce US$ 65 million worth of diamonds. Most diamond production continues to come from the artisans.
Congo's artisanal production was down in 1998 but still worth close to US$ 600 million. Also in Angola, production by artisans and small mining operations dwarfes the mechanized production of Catoca. Angola's total production in 1998 was down and estimated at just below US$ 700 million, with the rebel Unita movement contributing an estimated US$ 255 million. The Unita diamonds leave Angola through illicit channels via Central and West African countries.
In Australia, the Argyle mine produced 40.9 million carats. Prices for Argyle diamonds, mainly small stones of poor near-gem quality, went up by 20%. Despite the weakening in prices for most other types of diamonds, Argyle profited from the drying up of unregulated stockpile sales out of Russia and of the sharp reduction in CSO sales. The mine produced in 1998 US$ 398 million worth of diamonds. A pit expansion should extend the open pit mine life to the year 2005.
New mine developments
In the next five years, the two most important new mine developments could be the Diavik property in Canada, a joint venture between Rio Tinto (60%) and Aber Resources (40%), and Alrosa's Botyubinskaya and Nyurbinskaya kimberlites in the Marka valley, Sakha Republic, in eastern Russia. After an intensive drilling programme, which yielded high diamond grades, Alrosa is shortly starting a bulk sampling programme on the Markha valley pipes. The feasibility study on Diavik envisages mining a cluster of small, but high grade, kimberlite pipes at Lac de Gras. The kimberlite pipes to be mined initially are A-154S, A-418, A-154N and A-21. Mining is planned at a rate of 1.5 to 1.9 million tonnes per year, yielding 6 to 8 million carats, worth about US$ 400 million. If everything proceeds as planned, production should start in 2002.
In the Arkhangelsk region of northern Russia, the Lomonosova kimberlite pipes and the Grib pipe are still awaiting development. Five pipes with overall grades above 0.3 carats/tonne form the Lomonosova deposit: Lomonosov, Pionerskaya, Karpinskaya 1 and 2, and Arkhangelskaya. The five pipes are aligned over a distance of 35 Km. Five other pipes exist in the same area, but have lower grades. Overburden varies from 30 to 50 metres. The kimberlite pipes consist of an upper lower grade crater and a lower higher-grade diatreme. De Beers has joined, amidst some political controversy, the state-owned company Soglisaye to develop the Lomonosova deposit. The Grib pipe was discovered by the Verkhotina joint venture in January 1996 by drill testing a large composite magnetic anomaly. The Verkhotina joint venture was operated by the state geological survey Arkgeo and Archangel Diamond Corporation, listed in Canada. Task Holdings of the Oppenheimer family has taken up a controlling stake in Archangel Diamond Corporation. The Grib pipe occurs under 70 metres of overburden and consists of an upper crater facies, about 115 metres thick at a grade of 0.4 carats/tonne, and a richer underlying diatreme at a grade of 1.4 carats/tonne. Diamonds are valued at US$ 72/carat. A litigation between Arkgeo on the one hand and Archanchel Diamond Corporation on the other hand about transforming the exploration lease into a mining permit remains unresolved.
In Botswana, the development of the Gope kimberlite into a mine is controversial. Falconbridge and De Beers hold the property in joint venture. The Gope kimberlite is low-grade and located in the Kalahari National Park. While environmentalists and De Beers do not seem very keen, Falconbridge and the Botswana government wants the project to go ahead.
Ashton is developing three new mines: Merlin in Australia, Cempaka in Indonesia and Luzamba in Angola. Merlin, located in the Northern Territory, should produce 200,000 carats in 1999 from a cluster of small kimberlite pipes. Cempaka is an alluvial dredging operation in Kalimantan and should start in July 1999. Annual production rate at Cempaka is estimated at 35,000 carats. The Luzamba mine is a joint venture between Ashton (33.3%), Odebrecht (33.3%) and Endiama (33.3%). The mine is located along the Cuango River and trial mining produced about 100,000 carats in 1998, worth US$ 19 million. The Luzamba diamonds are sold through the CSO. Four staff members were killed by a rebel attack.
Exploration
A decade of intense exploration has led to the discovery of 200 kimberlite in the North-West-Territories of Canada. Several diamond-bearing kimberlites are at an advanced exploration stage. At Snap Lake, 220-km northeast of Yellowknife, Winspear and Aber have delineated three kimberlite dykes with good grades and excellent quality stones. The dykes are dipping at 11° to 23° and are about 2.5 metres thick. So far, resources are estimated at 1,348,000 tonnes at a grade of 1.14 carats/tonne. The average carat price of a small exploration parcel was estimated at US$ 301/carat, but the average is not robust and heavily influenced by the presence of three large stones. Winspear is now taking a larger 6000 tonnes bulk sample to firm up the grade and value estimates. Litigation is ongoing between Winspear and Aber. Winspear's share in the Snap Lake property was 67.76%, while Aber's share was 32.24%. For the year 1999, Aber and Winspear had to agree on co-funding a C$ 12 million exploration programme, proportional to their share. Aber forgot to give written notice of their agreement to participate and Winspear on strict legal terms has decided to fund the 1999 exploration programme in full and by doing so, to dilute Aber's interest to 16%. Lytton and New Indigo merged recently into the new company Tahera and are now planning to develop the Jericho property. Jericho consists of three small kimberlite pipes. The best pipe measures 1.2 hectare and has a grade of 0.93 carats/tonne, with diamonds valued at US$ 60/carat. Resources down to 300 metres depth are estimated at 5 million tonnes. The three pipes together may contain 1 million tonnes at grades varying between 0.3 and 1.0 carats/tonne. In the vicinity of Jericho, Tahera found the Contwoyto pipe, measuring 60 by 80 metres in surface area, which yielded good microdiamond results. At Kennedy Lake, the joint venture partners Monopros (60%, the Canadian subsidiary of De Beers), Mountain Province (36%) and Camphor Ventures (4%) continue to evaluate the four small kimberlite pipes Hearne, Tuzo, Tesla and pipe 5034. Total resources in these four pipes down o a depth of 300 metres are estimated at 40 million tonnes at an overall grade of 1.78 carats/tonne, valued at US$ 55/carat.
Dia Met Minerals and BHP have now identified 107 kimberlite pipes on their 30 by 30-km property. More sampling at the Pigeon pipe confirmed the earlier grade and value estimates. Pigeon has a grade of 0.45 carats/tonne, valued at US$ 54/carat. Drilling of the Koala North pipe yielded 202 tonnes of kimberlite at a grade of 0.63 carats/tonne and a value of US$ 200/carat, while drilling at Beartooth yielded 189 tonnes at a grade of 1.2 carats/tonne and US$ 79/carat. Further south, in Alberta, the Buffalo Hills kimberlites explored by Ashton have yielded poor grades. In western Greenland, the joint venture partners Monopros (51%) and Dia Met Minerals (49%) found several poor grade kimberlite dykes. A 140-kg sample of kimberlite float, aligned in a dyke-like fashion, yielded however good microdiamond results.
In Brazil, Southern Era joined Canabrava in testing several kimberlite pipes and alluvial gravels in the area about 400-km southeast of Brasilia. In November 1998, Teck pulled out of a joint venture with Canabrava.
Diagem, listed in Canada, is testing the Juina gravel deposits in Mato Grosso and explores the Chapada area for possible kimberlite pipes. The Brazilian subsidiary of De Beers is now exploring for kimberlites in Venezuela and Bolivia. Overall, diamond exploration in South America is at a low level, with most activity centred on small-scale alluvial operations.
With the controversy surrounding the Arkhangelsk kimberlites, exploration for diamonds in Russia by non-Russian companies seems hardly worthwhile. In neighbouring Finland, Dia Met Minerals in joint venture with Ashton, continues to explore for better grade kimberlites.
With Congo and Angola in turmoil, the diamond exploration attention is now mainly focused on southern and western Africa. In Botswana, AfriOre and TNK are exploring the region surrounding the Gope kimberlite, while Botswana Diamondfields explores the area around the newly opened Tswapong mine. Tswapong is a small pilot-scale operation run by a joint venture between De Beers and the Botswana government. Rio Tinto remains active in kimberlite exploration in Zimbabwe. In Namibia, Diamond Fields International (DFI) continues to sample the rich offshore deposit at Marshall Fork. DFI will be using the Coral Bay of De Beers Marine as sampling vessel. The Marshall Fork feature adjoins Namco's rich Koichab channel. In West Africa, most attention is going to Mauritania, where Rex has taken up 100,000 km² of exploration ground covering the core of the Archean Reguibat craton. Rex found for the first time in the country commercial-sized diamonds (larger than 1 mm) and is exploring for the kimberlite source rocks. Ashton and Dia Met Minerals surround Rex. Ashton has exploration permits covering 190,000 km² and has found barren kimberlites, while Dia Met Minerals started recently exploring on their 60,000-km² permits. Ashton and Dia Met Minerals have decided to pool their efforts in Mauritania into a joint venture.
***
I find the following interesting:
1. This is the first time I had read that the RSA Government Valuator's challenge of the De Beers pricing structure was specifically referenced to Marsfontein production.
2. That the Marsfontein project is characterized or prefaced as the controversy continues
3. That none of SUF's Angolan operations or mine development are/were referenced in any way. Since this is probably not an oversight, I have to assume that it is a reflection of what Dr. Rumbouts' thinks of the potential of Camafuca as a significant or even marginal producer.
4. That at best, Brazil and its potential were given a passing reference.
5. That a reasonably significant amount of text and effort was spent on discussing what had occured recently in the NWT, what was about to occur and what was anticipated in the near term.
In short, the NWT's obvious potential in the eyes of an expert.
Regards |
