LETSENG
World’s lowest grade kimberlite mine with the highest value diamonds

The Letseng diamond mine is the world’s highest operating mine, located at 3.1 km above sea level and, unusually for a mine in southern Africa, operating specifications have to meet those of Canadian operations, since at Letseng temperatures in winter reach down to -20°C and the area can get up to 35 cm of snow.

Letseng, located 70 km from Mokhotlong, is also unusual in that it has the highest percentage of large diamonds, as defined by diamonds larger than 10 carats, of any known kimberlite mine, which gives it the highest dollar ratio per carat of any mine. For example the world average is US$70/carat, while Letseng during 2004 averaged over US$1,000/carat. At the same time the grade at Letseng is only just over two carats per hundred tonnes compared with about 200 carats per hundred tonnes (cpht) of an operation like Jwaneng. As Letseng is the world’s lowest grade operating kimberlite mine its large diamonds (those greater than 10 carats) account for two thirds of its revenue.

However, John Houghton, Letseng’s production manager, says that Letseng is not a big gamble as it has processed over one million tonnes of ore and the grade of 2.2 – 2.3 cpht and type of diamonds produced have been very consistent.

The Main pipe at Letseng, currently being used as the new mine’s water reservoir, was discovered in 1957. After its discovery and evaluation the pipes at Letseng were divided by the government into small claims that were mined by artisanal diggers between 1960 and 1970.

Brett Kebble, JCI chief executive at the
official opening of the Letseng diamond mine.

The mine was operated by De Beers from 1977 to 1982, after which De Beers withdrew with less than 20% of the open pit mineable ore having been treated. A dispute over tax and the pricing of diamonds led to De Beers’ pull out, as well as the fact that Lesteng was a small operation compared to a typical De Beers mine. In addition, conditions in the diamond sector were difficult in 1982, with the industry undergoing a slump.

View of the Letseng 350 t/h processing plant and
in front of it the shell of the original De Beers processing plant.

The mine has lain fallow since then until its revival as Letseng Diamonds under JCI and black economic empowerment (BEE) company Matodzi Resources, the latter being the largest shareholder in the Letseng project with a 38% stake. The Lesotho government has a 24% share in the project and will also earn a 7% royalty on the mine’s gross revenue, in addition to the 35% tax rate.

Mafika Mkwanazi, a director on the board of Matodzi Resources and Letseng Diamonds and former managing director of Transnet until December 2003, says, “Letseng is Matodzi’s anchor project. Over time it will generate the resources for the company to develop critical mass in the African diamond industry and pursue opportunities in other resource industries. We are in discussions with the Angolan and Namibian governments about acquiring further mining rights.”

Of the R210 million (US$35 million) required to undertake the Letseng project, JCI committed about R50 million (US$8.3 million), with the South African Industrial Development Corporation (IDC) granting the remainder in a commercial loan facility in 2003. The IDC lends based on sound commercial principles, but it also bases its loans on social benefits of projects. The IDC finances about one resource project the size of Letseng a year, so while it is not on the scale of a Mozal, the sort of project it finances once every number of years, Letseng represents a significant investment for the lending institution.

Mkwanazi says Matodzi decided to pursue the project after it rejected other diamond projects in Ghana and Kimberley. Mkwanazi intends for the project to pay back its IDC loan within five years.

The government of Lesotho granted Letseng Diamonds its mining lease in November 1999 and the lease is valid until 2009 with the option to renew every five years. One of the criteria for the lease is that Letseng must increase production from its current 350 tonnes an hour to 500 tonnes per hour, and it is intended this will be achieved by 2008/9.

The Satellite pit at Letseng, where mining is taking place.

The Letseng diamond mine comprises two pipes, these being the 4.7 hectare Satellite pipe which has a resource of 24 million tonnes at a grade of 2.26 cpht and the 16 hectare Main pipe which has a resource of 54.43 million tonnes at a grade of 2.00 cpht. Mining of the Satellite pipe is planned using three cuts and a stripping ratio of 1.07:1. There is also a Main pipe stockpile of five million tonnes at a similar grade to the Main pipe. Letseng’s two pipes represent an economically open-pit mineable 100 million tones of kimberlite containing 2.3 million carats, which should take 25 years to mine.

Ore being screened at Letseng.

By December 2004 most of Letseng’s ore production for the year had been sourced from the higher grade Satellite pipe. If the mine’s production capacity is to be doubled, as is planned, the Satellite pipe alone will be too small and mining from the Main pipe will have to take place.

The pre-project estimates for Letseng were for a grade of 2.8 cpht valued at US$635/ct, which comes to US$17.78/tonne. However, grades achieved were 2.26 carats per hundred tonnes and the value per carat achieved was US$1,007 per carat, amounting to US$22.76 per tonne processed. With Lesotho’s Loti tied to the South African Rand on a one to one basis, the project has suffered from currency strength.

A 60,000 ton sample was taken from the Main pipe and produced 1,460 carats, giving it a grade of 2.4 cpht. The value of the diamonds was US$1,137/ct, and resulted in revenue of US$27.30/ton.

“We used to think the Satellite pipe was the richer of the two, but the sample taken from the Main pipe has raised some uncertainty,” Houghton says.

Letseng has also hired on two alluvial contractors, Alluvial Ventures and Tlaeng Mining, which are treating ores in two valleys about a kilometre from the mine. This is ore that has eroded from kimberlite pipes, and the agreement between Letseng and the contractors is based on a split percentage of their diamond output. These ventures have been very successful with the discovery of three diamonds worth US$5 million: a 215 carat diamond, a 125 carat stone and a diamond of 95 carats. Taking into account the steep mountainous terrain of the Maluti Mountains, diamonds from eroded kimberlite could have been washed large distances away. These alluvial contractors process some 10,000 tonnes of ore a month, using their own plant and equipment.

Mining at Letseng is done by means of conventional drill and blast, load and haul methods. The operation has six haul trucks, two 365 tonne excavators, a DM30 drill as well as track dozers and graders. The mining machinery is owned by Matekane Mining, and the operation itself is managed by Letseng. The mine began waste stripping in November 2004. Construction of the plant began in May 2003 and was completed in March 2004 by DRA, the engineering, procurement, construction and management contractor for that project. The 350 tonne per hour plant, which is being operated and maintained by contract operator Minopex under a four year agreement, cost
R103 million (US$17 million) to construct. The plant runs 24 hours a day and has a crushing and screening facility and two dense media circuits, handling respectively coarse material of 21 mm to 45 mm and fines of 2 mm to 20 mm. The diamond mine’s sort house is operated by Letseng and includes five X-ray units and sorting is done by hand.

The operation currently aims at processing 210,000 tonnes a month, for an annual 2.4 million tonnes. The plans to double this capacity to 4.8 million tonnes a year would require R134 million (US$22 million) for the construction of a second treatment plant, and it is believed the expansion would pay for itself within a year.

Letseng employs 438 people, of whom 386 are local Basotho. The mine also creates up to 800 jobs in indirect employment and it increases the value of Lesotho’s exports by some 15%. The diamonds from Letseng are sold by international tender in Antwerp, Belgium, the world’s biggest diamond centre.

Letseng, located at the top of the Maluti Mountains is a remote mine, and is accessed by road and has a landing strip. One of the advantages, however, is that because of the previous De Beers operation at Letseng certain major infrastructure was already in place. Overhead power line refurbishment was completed in August 2002, and LEC supplies power at 88 kV to the mine. LEC owns an 88/33 kV substation at the mine and the mine owns the adjacent 33/11 kV substation. Electricity costs the mine some R600,000 (US$100,000) a month and the total earthmoving cost per tonne at Letseng is R65/tonne (US$11/tonne). The mine is fully self sufficient in all its water needs, both process and potable. Letseng is located near the sources of most if not all the major rivers in the region, so this is not a water scarce area.

www.jci.co.za

LETSENG: PREMIÈRE MINE AU MONDE POUR LA VALEUR DE SES DIAMANTS MAIS DEMIÈRE POWER LA QUALITÉ DE SES BLOCS DE KIMBERLITE La mine de diamants de Letseng, mine en activité la plus en altitude au monde, est située à 3.1 km au dessus du niveau de la mer. Exceptionnellement pour une mine en Afrique Australe, les conditions d’exploitation sont similaires à celles rencontrées au Canada, car les températures en hiver à Letseng atteignent parfois les -20°C et les chutes de neige peuvent atteindre jusqu’à 35 cm. Letseng se trouve à 70 km de Mokhotlong, au Lesotho. La particularité de cette mine de kimberlite est de posséder le pourcentage le plus élevé de gros diamants, c'est-à-dire plus gros que 10 carats. Cela lui confère le plus grand rapport dollars par carat au monde. Par exemple la moyenne mondiale est de 70 $ par carat, en 2004 Letseng avait une moyenne de plus de 1000 $ par carat. Cependant, le calibre de ses diamants est de seulement deux carats pour cent tonnes, comparé aux 200 carats par cent tonnes d’une exploitation telle que Jwaneng au Botswana. La mine a été exploitée par De Beers de 1977 à 1982, après cette période De Beers s’est retiré, laissant moins de 20% du minerai exploitable de la mine à ciel ouvert traités. Une dispute à propos de taxes et de politique de prix des diamants a conduit De Beers à se retirer et Letseng n’était qu’une petite exploitation pour De Beers. De plus, les conditions dans l’industrie diamantaire étaient particulièrement difficiles en 1982 à cause de la dépression. Le gouvernement du Lesotho a accordé un bail minier à Lentseng Diamonds en novembre 1999. Il est valable jusqu’en 2009 avec une option de renouvellement tous les cinq ans. Parmi les conditions de l’accord du bail par le gouvernement, on trouve l’augmentation de la production de Lentseng de 350 tonnes par heure à 500 tonnes par heure, ceci devrait être réalisé en 2008 / 2009. Lentseng emloie 438 personnes, dont 386 sont des locaux de Basotho. La mine crée également 800 emplois indirectement et contribue à l’augmentation de la valeur des exportations du Lesotho par 15%. Les diamants de Lentseng sont vendus par appel d’offre à Antwerp en Belgique, un des centres de diamants les plus importants au monde.