It is the Lerala diamond mine, situated in eastern Botswana some 80 km south of Selebi Phikwe, and developed by Brisbane-based specialist diamond explorer DiamonEx Limited, which is listed on both the Australian and Botswana stock exchanges.

“After completing our feasibility study and applying for and obtaining our mining lease, we started construction less than a year ago, and our first production will be happening in the new year,” says managing director Dan O’Neill. ‘‘We will ramp up to full production by the end of Q1 in 2008,” he adds.

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Early stages of construction at
the DiamonEx site in Botswana

LOW CAPEX MINE
“We were very fortunate in terms of infrastructure,” O’Neill explains. “a tarred main road is only 15 km away; a 29 km water pipeline is under construction from a bore-field near the Limpopo River; and as far as power is concerned we will not be availing ourselves of the national power grid – we are going to make use of generators. Most of our workforce will come from the nearby village of Morola, so there will only be minimal on-site accommodation for security people and one or two supervisors,” he points out.

“The above factors have combined to make Lerala a low capex mine,” O’Neill reveals, “and total expenditure will be in the vicinity of US$22 million (about R155 million).’’ O’Neill says that the mine’s tertiary crusher is being manufactured in Germany and will be on site in January 2008, but will not be operational until the end of the first quarter.

Financing has come from three sources:

  • An US$8 million (R57 million) underwritten listed convertible bond over four years;
  • A US$7 million (R49 million) facility over eight years with the European Investment Bank (EIB);
  • And US$5 million (R35 million) in equity.

Going down to a level of 110 m, the Lerala mine has a JORC-compliant resource of 3.7 M carats at a grade of 27.4 cpht. The plan is for the mine to produce 330 000 carats a year, which gives an initial mine life of ten years. “But,” says O’Neill, “we are hoping to extend the life of mine by digging deeper.”

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Tertiary crusher housing with
temporary water supply
on the left

PRIORITY TARGETS IDENTIFIED
As far as the future is concerned, DiamonEx has identified several high priority exploration targets in the Martin’s Drift area which surrounds the Lerala project.

Most promising of these is the Tuli Block (100% owned by DiamonEx), which adjoins the Martin’s Drift area. It extends to the north and east within the prospective Limpopo mobile belt, which hosts several diamond deposits including Lerala.

“We have been granted prospecting permits in this region covering 12 400 km2,” O’Neill confirms, “but its obviously at a very early stage and there are no indications we can talk about at this moment in time.” He concluded by making the point that DiamonEx is looking for similar situations to Lerala – both in Botswana and in several neighbouring countries – but he would not name the countries concerned.

Currently there are some 20 international companies actively exploring for diamonds in Botswana. The general belief is that this intense activity will lead to the discovery of further kimberlites in the leading diamond producing country in the world. This in turn will mean new mines and even greater diamond production in the future.

However, the Botswana Department of Mines has adopted a conservative approach, and does not expect the country’s medium-term diamond production to exceed last year’s 35 million carats. Official estimates put output at between 30 and 35 million carats per annum over the next decade.