Triple-listed diamond miner Lucara Diamond Corp. is embarking on a new and exciting journey that will see it continue to recover (in possibly higher quantities) high quality, Type IIA diamonds in excess of 10.8 carats from its 100% owned Karowe mine in Botswana. How?
By transitioning from an open pit operation to an underground mine, thereby gaining access to deeper resources within the kimberlite ore body that hosts the true ‘gems’ of this operation, CEO EIRA THOMAS tells LAURA CORNISH.
Karowe mine is well-recognised within the diamond fraternity – it has recovered a variety of spectacular large diamonds larger than 300, 500 and even 1 000 carats. This is over and above its consistent delivery of +10.8 carat diamonds, making it a true performer within this market sector.
And now this performance is set to continue – to at least 2040 – as the mine transitions into an underground mine that will override the production drop off from open pit resources around 2026.
“This is an exciting time for us as we are finally in a position to move forward with underground expansion at Karowe, a plan which has been in the works for a while but was largely interrupted by the COVID-19 pandemic,” Thomas notes. She is referring in particular to the cash raising portion of the project, no easy feat considering investors have remained largely ‘in hiding’ during this pandemic uncertainty.
But the economics of the underground project, forecast to contribute approximately US$4 billion (based on conservative diamond prices) in additional revenues using conservative diamond prices, made it hard to ignore, enabling Thomas and her team to secure the necessary cash. It includes two financing pieces, a $220 million senior secured debt facility package, supplemented with an additional C$41 million in equity. “This puts us in a strong position in terms of available liquidity to get this project fully built.”
Coupled with this is the overall cost of the project – US$534 million – only up a minor 4% from the feasibility study, an impressive feat considering some engineering adjustments as well as a year lost to COVID-19. “A year lost perhaps but not wasted,” Thomas highlights. “We have already spent $51.4 million of our budget which, as mentioned, included detailed engineering work and equipment procurement.”
And now, with cash in hand and the necessary contractors appointed, the development of a new Karowe is officially in progress.
What’s important to understand about the project is the ore body – as an open pit operation, mining was undertaken across the north, central and south lobes. The underground mine however, will focus on the high value south lobe – the highest-grade area of the resource, attributable to all the ultra-large diamonds recovered. “Within the south lobe, we will also have greater access to the EM/PK(S) portion of the ore body, which has delivered some of our largest, exceptional diamonds including the 1 758 carat Sewelo, the largest diamond ever recovered from Botswana,” Thomas confirms.
With a tight schedule, the transition will commence in 2026 with first ore generated from underground. To ensure steady production – 2.5 – 2.8 Mtpa ROM material to the plant – Karowe is preparing surface stockpiles to supplement the total feed if required. Upon reaching nameplate capacity, Karowe will continue operating comfortably for another 14 years beyond its original open pit lifespan.
“The underground project also comes at a time when the outlook for the diamond market is stronger than it has been for many years, representing an exciting growth opportunity for our shareholders and stakeholders in Botswana,” Thomas adds.
Karowe underground development outlined
Shaft pre-sink start-up is scheduled for Q3, 2021, which will be followed by the completion of early civil works in Q4, 2021. The continuation of detailed design and engineering of the underground mine infrastructure and layout, commencement of bulk power supply infrastructure with substation construction is also scheduled to start in Q3, 2021. The start of engineering on the tailings dam expansion and completion of other site related infrastructure will also take place in 2021.
Canada-based JDS Energy & Mining Inc. is, the appointed EPCM contractor for the execution of the Karowe underground project. The company is currently building up the onsite project team in conjunction with Lucara’s owner’s team and is working in close cooperation with the Karowe diamond mine operations team.
Access to the underground mine will be via two vertical shafts, the production and ventilation shafts. The shafts will be concrete lined with the production shaft acting as the main air intake and the ventilation shaft as the exhaust.
Detailed design and engineering work on the production and ventilation shafts is now 90% complete, and has resulted in the following changes to the 2019 feasibility study:
- production shaft diameter has increased from 8 m to 8.5 m;
- ventilation shaft permanent headframe, hoists and internal conveyances have been removed;
- parallel pre-sinking of both shafts;
- ventilation fans and coolers to be located on surface;
- in shaft grouting of water strikes changed from grout curtain installation from surface;
- planned development of an additional sublevel to assist in drilling of drawbells; and
- removal of 670L de-watering galleries.
The planned depth of the production shaft remains at approximately 767 m, but final planned depth of the ventilation shaft has increased marginally to 733 m from 716 m.
Increased schedule time related to shaft sinking has been a result of the following design changes: i) increased production shaft diameter, ii) time allowances for in shaft grouting during sinking operations planned at known water strike horizons, iii) holing through all shaft stations between shafts, iv) additional ground support for underground stations/level breakouts.
Pre-sink construction contract and shaft sinking equipment procurement were awarded to UMS Botswana and UMS South Africa respectively (UMS). METS International, a subsidiary of UMS, was awarded the shaft engineering contract. UMS is in the process of mobilising crews to Karowe to initiate pre-sink works.
With the exception of an additional sublevel (340L) to assist with drill and blast of drawbells, the design, layout and infrastructure of the underground mine remain unchanged from the feasibility study. Detailed engineering and design of the underground infrastructure and layouts will commence in Q3, 2021 and are expected to be competed in Q3, 2022. Underground mine development is scheduled to commence in H2, 2024 with underground production ramp up starting in 2026. Full production is scheduled for the end of 2026.
Civil works for the underground expansion progressed through detailed design, and construction activities ramped up through Q1, 2021 with completion of the construction area terraces, laydown areas, shaft pad preparations, along with commencement of shaft collar box cut construction and blasting within the shaft columns in preparation of civil works.
Hoist houses, hoist foundations and shaft collars are now well advanced and on time for commencement of pre-sinking which is planned during Q3, 2021. As construction and mining activities ramp up, focused attention will continue to be paid on the continuation of safe operations.
Temporary power for shaft sinking is required until such time as the upgrade bulk power supply infrastructure is commissioned in Q4, 2022. A three-phased ramp-up of the generator capacity is planned to support the increasing power requirements related to the shaft sinking activities. A power supply and services contract for the temporary generators has been signed with Aggreko International Projects.
Mobilisation has been initiated with the generator pad established. Commissioning of Phase 1 is scheduled during Q3 2021 to support the start of pre-sink activities.
During 2020, Lucara negotiated and signed a self-build agreement with the Botswana Power Corporation (BPC) for the construction of two substations and a 29 km long 132 kv transmission line from BPC’s newly established Letlhakane substation to the Karowe mine.
The planned route follows an existing regional 400 kV line and then runs parallel to the existing 11 kV transmission line currently supplying bulk power to the Karowe mine. The new power infrastructure will provide the required power for the current open pit, processing plant and the underground mine expansion.
Commissioning of and handover to BPC is scheduled for Q4, 2022. Construction of substations is scheduled to commence in Q3, 2021 and power line construction in Q1, 2022.
As with any major mining project, there are a lot of moving parts, and a lot of smaller timeframe scheduling commitments that need to be delivered but it’s all systems go for Lucara and its appointed contractors. This operation has, for the large part always, run like a well-oiled machine and confidence levels that this new project will flow smoothly is high.
“The last element of this project is training – which has already been initiated, to help develop the skills locally that will be required for underground mining in approximately five years’ time. With the start-up of the underground Khoemacau operation in country – Botswana has already started to establish the necessary skills. Lundin Gold, a also a member of the Lundin Group of Companies, has recently completed the construction and commissioning of a new underground mine in Ecuador, and was largely required to develop those skills in country themselves. We will benefit from that experience and will also be in a position to apply lessons learned,” Thomas concludes.