HomeDiamonds & GemstonesManhattan plans alluvial diamonds and gold growth

Manhattan plans alluvial diamonds and gold growth

Manhattan Corporation, a South African company involved in mining and mining equipment supply, has plans for the multimillion- rand growth of both its diamond and gold operations.

The company operates alluvial diamond mines in the Northern Cape and a gold mine on the East Rand. It has spent close to R1 billion on its diamond operations and could invest anything up to another R1 billion on future diamond and gold expansion over the next three years.

It also provides turnkey solutions to diamond mining projects based on its own in-house expertise of implementing and running projects and testing its equipment designs firsthand. Its product range includes grinding mills, girth and pinion gears, gear reducers, grinding media and mill liners.

“We are currently running three alluvial diamond operations. We were operating five, but put three on care and maintenance during the economic crisis,” Manhattan chairman Chris Pouroullis says. “We have subsequently switched one back on and we are pushing to maintain high levels of production efficiency,” he explains.

“Our current ore treatment rate is about 400,000 tonnes per month (tpm), and at peak we are doing about 650,000 tpm. Installed capacity is about 800,000 tpm. “There are a couple of machines we would need to invest in to reach that capacity, but the bulk of our infrastructure is in place for 800,000 tpm,” he adds.


A view of the Varuno diamond
mine processing plant.

“We intend to get there,” says Pouroullis, “but we certainly want to maintain our current efficiency levels, specifically cost per tonne, therefore to increase our output we need to ensure that we don’t over-expose ourselves and end up becoming inefficient,” he declares.

“We are operating upstream from Douglas in the Northern Cape in an area stretching 80 km down the Orange River to the confluence of the Vaal and the Orange at Douglas. Mining the pure Orange diamonds along this stretch is difficult, but the Orange diamonds are bigger than those of the Vaal and the grades are higher, so the price per carat is higher,” Pouroullis explains.

Manhattan’s biggest operation is Varuno, where it is running six rotary pans with an installed capacity of some 900 tonnes per hour (tph) ROM. That’s about 450,000 tpm. The second mine is Simus, which has a capacity of about 250 tph ROM, or 125,000 tpm. And third is Octo, with an installed capacity of about 400 tph, or 200,000 tpm.

“We are progressing our mining and geological programmes and developing modelling techniques to identify the characteristics of our orebody. In fact we have 16 different classification parameters on our orebody that will help us to associate good gravel areas with our scoring mechanisms,” he explains.

“Once we consolidate the data into our geological database, we are able to map new deposits and to classify our entire deposit portfolio into different quality categories. While we have a large resource, we are in a continuous programme to establish additional resource,” Pouroullis points out.


Primary trommel at Simus diamond

But he adds that although most of this takes place in the company’s 80 km zone, it is looking in other parts of South Africa and Africa. “We are not a mining company that is satisfied to be mining specifically in the current zone of influence, but would rather look for opportunities wherever they arise, and if they meet our criteria we will consider them as potential future mining projects,” he says.

“Looking at our position, just before the market crashed we had expanded from one to five operations in 18 months, preceded by 18 months of exploration. Within three years we had done significant exploration and installation of mining plant, and we had moved into a mining programme.

“If we identify an area and decide to take it further we could complete our exploration, modelling, resource characterisation, acquisition of plant and machinery, installation, sampling, testing and ramp-up of production within three years – and we could be into positive cash flows within 18 months,” Pouroullis emphasises.

“A 900 tph operation like our Varuno mine will involve an investment in the order of R200 million-plus from exploration to production,” he estimates.

Manhattan also has a gold operation on the East Rand called Beta Gold. It is currently on care and maintenance because it does not have its own gold plant and was toll treating at Pamodzi, but this came to an end because of Pamodzi’s situation. “We decided to put the mine on care and maintenance, and to raise finance to put our own process plant in place,” Pouroullis says.


Production in full swing at Varuno

Beta has a resource of more than four million ounces, (close to a million ounces in the indicated or better categories), and with additional work additional resources can be converted; it is shallow and dry; it yields grades at plus 4.0 g/t; and most of the orebody is at less than 400 metres in depth.

“We believe our gold operation can run comfortably at about 50,000 tpm, and that’s the size gold plant that we are looking at installing. This throughput would yield somewhere between 50,000 and 70,000 ounces a year. This will involve an employment of 2,000 to 2,500 people, which is quite significant for the East Rand,” he says.

“The investment for this operation would amount to between R300 and R400 million to put up the plant and to develop the underground infrastructure to handle 50,000 tpm. There are about 20 established shafts accessing the orebody, but we need to equip them with hoisting capacity, ventilation and underground mining equipment.

“I believe that finance will be settled and the project will be initiated before the end of this year – that’s our objective. This would mean starting the construction phase by the beginning of 2011, which would mean production by late 2012 or early 2013,” he predicts.

“In the interim, we could enter into a toll agreement with one of our neighbouring operations to treat ore. Hopefully within the next few months Pamodzi East Rand will have resolved its issues, and it probably has 100,000 tpm of spare capacity. We could quite comfortably deliver 50,000 tonnes of dry ore to Pamodzi’s gold plant within 12 months, he says.


A view of the Varuno operation.

“So it doesn’t mean that we would only get into production in three years when our plant is ready. We can probably start producing six months after financing has been received. That means mid 2011.”

Pouroullis confirms that Manhattan would consider other mining opportunities outside South Africa. It would look at mining opportunities that have similar characteristics to its area of expertise. “We have quite well entrenched expertise in open cast diamond mining, and in underground gold mining, so we would be prepared to look at similar areas – for example opencast coal mining would be an opportunity. We would also look at underground gold, platinum or other similar commodities that would require similar technology,” he says.

“We would like to select one potential additional commodity in the future, and focus our efforts then on three different commodities – our current diamond and gold operations and, for example, coal. If you carefully select your commodities that are characterised by different market dynamics, you can have fairly stable revenue generation,” he points out.

“We are looking at diamonds, gold and coal in a number of African countries. We have been approached by a number of international companies which have access to resources in Africa and want our technical expertise to joint venture with them, or to take over the deposits and operate them,” Pouroullis reveals. “I can’t say that we have selected any particular one at this stage. Sub-Saharan Africa is the area we are looking at currently, but exactly where in Sub-Saharan Africa we will operate depends on the quality of the opportunity,” he concludes.