The company concerned is Tanzanite One — the AIM-listed producer whose Merelani Mine produces around 20 percent of total tanzanite production. The mine is situated in the Merelani tanzanite mining area, which is the only known source of tanzanite in the world, and is situated in the Simanjiro district of Northern Tanzania, 70km south-east of Arusha.
Company CEO Ian Harebottle says 2007 carat production is planned to rise by around 24% above the 2006 level of 1.2 million carats. “Our plan is for subsequent carat production to increase by over 15% year on year for the next three years till 2010,” he adds.
Such sharp growth can be expected to necessitate expansion, and while trackless mining and stoping are included in the plan (world firsts in coloured gemstone mining) clear details of this aspect are not available at this stage. “The project team will have a revised life of mine plan completed by year-end,” Harebottle reveals, “and this will of course detail expansion requirements to achieve long-term production goals.”
As far as grades are concerned, an improvement in mining capabilities continues to push them higher. “The 2006 level of 77 carats per tonne represented a 40% improvement over 2005,” he reveals. But he is cautious that these may come down somewhat on the back of the planned increase in the scale of mining, although with an overall increase in revenues and profits. Average quality for quality export prices for rough tanzanite were 9% higher last year, reflecting an improvement in the quality of material produced, backed up by a steady increase in demand.
OPTIMISTIC OUTLOOK FOR 2007
“As far as sales and net profit are concerned, we are optimistic that 2007 will result in increases in both, compared with the 2006 figures of US$36 million (R250 million) and US$1.8 (R12.5 million) respectively,” Harebottle predicts.
Turning to exploration, recent drilling has confirmed that the mineralised zone at Tanzanite One extends to a depth of 1 200m on Block C — substantially deeper than the known down- dip extent of only 400m three years ago that gave a life of mine of 12 to 14 years. “But while the known down-dip has tripled, this does not necessarily mean that the size of the resource and life of the mine will show three-fold increases as well,” he explains. “More exploration work needs to be done to confirm findings before a formal statement can be made.”
Current mine life is projected to be between 12 and 14 years, and Tanzanite One’s resource in 2004 was 63-83 million carats which, at an average price of US$12/ carat in the rough, represents somewhere between US$756 million (R5.3 billion) and US$996 million (R7 billion) in the ground.
“However,” Harebottle points out, “the outcome of the 2006 deep hole drilling (DHD) programme, which intersected mineralisation at more than three times the depths earlier intersected, has prompted the initiation of a review of this resource statement.”
In terms of mine development expansion, upgrades to all existing shafts have continued and include a 150m extension of Main shaft to 450 metres on dip. Extending this shaft down-dip is part of the Group’s long term growth plan to intersect fold stacks at greater depths. “The current Main shaft surface installation is able to support mining a further 350 metres deep to a total down-dip extent of 1 100m,” he reveals, “and both CT and Askari shaft winders are currently being upgraded to enable these operations to be mined 800m on dip, with subshafts planned to below 800m on dip.”
The second drilling phase brought the combined metres drilled during the DHD programme to 2 501. The project has produced some encouraging findings, according to Harebottle. “It has revealed that the ore zone appears to thicken at depth; and also that the ore body intersected at depth during the second phase of drilling is not only physically the same as the ore body currently being mined, but chemically too,” he claims. “This geo-chemistry plays a big part in tanzanite formation and crystallisation.”
While the Group’s key focus remains that of growth within its existing 8 squ km mining license area during 2006, the company is now in a position where it can begin to explore possible growth into new areas both within and external to tanzanite, Harebottle maintains. “This follows the significant strides Tanzanite One has made towards becoming a leader in the field of coloured gemstone exploration and mining, with all possible opportunities for growth being treated with due caution,” he points out.
Harebottle calculates that, due to efficiency improvements, total underground development in 2006 reached 4 671m – a 23% improvement on the 3 780m achieved in 2005. “Development in 2007 is expected to increase a further 35% to 6 350m,” he says.
“Further exploration expenditure has been approved for continued evaluation of key target sites, and will include surface drilling of exploration areas and the training of an in-house, shallow-hole core drilling team,” Harebottle adds.
“We have a number of plans in place in terms of increasing our resource base,” he continues.
“Development work in preparation for mechanisation is continuing and efficiencies are expected to improve with the commencement of mechanised stoping,” he predicts.
“Mechanisation trials are scheduled to commence during Q3 of 2007, and additional stoping reports are due at that time,” Harebottle states. “Ore handling capabilities are ever-increasing with the establishment of ore-pass systems within the shafts. In addition,” he concludes, “a programme to stope out identified old production areas will ensure maximum future extraction of ore reserves.”