With an agreement signed with
In early February, De Beers and SouthernEra inked a deal that calls for joint mining of the Marsfontein project (including the M-1 pipe), as well as a diamond marketing agreement.
De Beers has a 60% interest in Marsfontein and manages the project, though the waste-stripping and mining have been contracted out. The remainder is held by SouthernEra, which will treat the ore at its 2,000-tonne-per-day plant, situated 17 km by road from the M-1 pipe.
Under the marketing agreement, any production from either Marsfontein or SouthernEra’s wholly owned Klipspringer project will be sold through De Beers’ Central Selling Organisation.
“De Beers went away happy, but, more importantly, SouthernEra went away happy,” the latter’s president, Christopher Jennings, told The Northern Miner during a site visit. “We will remain fiercely independent, but we will also work harmoniously with De Beers.”
The South African giant announced that several South African black-economic-empowerment (BEE) groups are gaining minority stakes in the Marsfontein project. Effective Jan. 1, 1999, De Beers transferred its rights in Marsfontein to a new company in return for 200 million rand. De Beers is now selling up to 49% of this company to a consortium of four BEE partners consisting of New Diamond Corp., Domba Investments, Umnotho we Sizwe Investment Holdings and Vuwani Projects. De Beers says it is “keen to involve local communities in the economic empowerment process, not only to ensure that they benefit but also to ensure that they have [a say in the] decisions affecting them.”
While the transaction does not affect SouthernEra’s 40% interest in Marsfontein, Jennings said his company welcomes the news: “This is a group of people who have not had a chance in the past, and we see this as an opportunity to bring them in as full partners into this exciting project. This is a new collaborative venture that, I believe, will be a model for the rest of Africa.”
Commercial production of the M-1 pipe began in August 1998, and, despite its small size, the operation has proved exceptionally profitable. “If you take the grade, this is US$500-per-tonne rock and the mining costs are about US$20 per tonne, so it’s a phenomenal margin,” said Jennings. “This doesn’t happen often and we’re happy to begin our investment in South Africa with a deposit of this quality.”
The partners mined 650,875 carats from the M-1 pipe between September and mid-February, when diamonds of one carat or more accounted for more than 80% of the total value. The first 390,000 carats were derived from an enriched weathered overburden that graded about 500 carats per 100 tonnes (cpht), and most of these diamonds sold at about US$200 per carat. More recently, the pipe has been averaging about 330 cpht and, in early 1999, the remaining 197,006 carats of the 1998 production were valued at an average of US$130.74 per carat.
The M-1 pipe will be mined to a depth of 100 metres by March 2000, and the partners plan to extend the depth of the pit to 150 metres, generating another 150,000 tonnes of ore by the end of that year.
Targets being evaluated near the pit include a diabase dyke that hosts kimberlite stringers, and a potential elluvial resource that may have been deposited downslope from the M-1 pipe.
Elsewhere at Marsfontein, De Beers and SouthernEra are exploring another target, M-3, which is an elongated kimberlitic body with a strike length of 100 metres and a true width of up to 10 metres.
As is the case with the M-1 pipe, the weathered material overlying M-3, which consists of 3 metres of sand and 6 metres of gravel, is proving to be diamond-bearing. The partners dug a trench across the kimberlite and took a bulk sample from the top 2 metres of the gravel horizon; the sample yielded 211.5 carats (including one 13-carat stone) and generated a grade of 137 cpht. Further testing of the remaining 4 metres of gravels is under way, and the M-3 kimberlite will also be bulk-sampled and treated.
“We still have tremendous potential at Marsfontein,” said Jennigs, who added that the mine life will likely be extended as a result.
Meanwhile, in hilly terrain about 9 km west of the M-1 pipe, SouthernEra has been exploring and developing the Leopard and Sugarbird kimberlite fissures at the Klipspringer project.
The Leopard fissure has been divided into two 1.5-km sections: Ingwe, to the east, which has an inferred resource of 1.98 million tonnes, including an upper portion containing an undiluted resource of 361,500 tonnes grading 70 cpht; and Ndau, to the west, which has an inferred near-surface resource of 700,000 tonnes with no grade yet attributable.
In the Ingwe section, stoping is under way in the upper portion, above the 1,490-metre level. Development of three adit haulages at 35-metre vertical elevations from each side of the Ingwe section started in January. An underhand shrinkage stope is in production and a longhole open stope will be mined on a trial basis in April.
Monthly production at Ingwe is expected to reach 16,000 tonnes by December, when mining is scheduled to begin on the upper 100 metres of the Ndau section. Cash costs are projected at US$25 per tonne.
Adits and a decline will provide access to the top 750 metres of the fissure during the first 2-3 years of production, with shafts to be used subsequently. For the first time in South Africa, the ownership of a single fissure has not been broken up into multiple owners; consequently, SouthernEra will be able to choose the location of its shafts on purely economic grounds.
“In terms of revenue at our Klipspringer mine, the numbers look good,” said Jennings. “We will have at least 15 years of mine life from underground mining at Klipspringer, but, as we continue to expand our fissure reserves, we expect to be there for a lot longer than that. So, to the people who say SouthernEra will fade after M-1 is mined out, this is not our intention.”
The Leopard fissure has been delineated along a 3-km strike length, yet data suggest that both the Leopard and M-1 kimberlite systems are part of a single, 14.5-km system, with 8 km of this system occurring on properties wholly owned by SouthernEra.
SouthernEra’s exploration team has made other kimberlite discoveries at Klipspringer in the past year. These include the Eland fissure and Kudu pipe, situated between the Leopard and Sugarbird fissures, as well as new fissures on the Meinhardskraal farm, immediately north of Marsfontein.
SouthernEra’s wholly owned dense-media-separation (DMS) plant is running at full capacity of 100 tonnes per hour. On a daily basis, the plant processes roughly 6,000 carats from 2,000 tonnes of material.
A $2.3-million, 50-tonne-per-hour treatment plant, built next to the existing one, incorporates crushing and scrubbing, as well as a separate DMS section. Concentrates are to be treated through the existing recovery plant, which uses standard X-ray technology, glove boxes and an acid plant for cleaning.
Beginning in March, the new plant will be processing a 40,000-tonne bulk sample of M-3 gravels and a 2,000-tonne bulk sample of M-3 kimberlite. Thereafter, production ore from the Ingwe section of the Leopard fissure will be treated, as will additional bulk samples from gravels that extend south from M-1.
The production of 300,000 carats to SouthernEra’s account last year has vaulted the company to second place, behind De Beers, in the ranks of South Africa’s diamond producers, ahead of both Trans Hex and state-owned Alexcor.
Said Jennings: “We’ve gone from an exploration team to having an absolutely first-class, top-notch mining group that is capable of doing anything that anyone in the diamond world will require, from designing mines to operating and running plants. Now, with cash flow c
oming in, our challenge is to spend the money wisely.”
The outlook is not so rosy for SouthernEra in war-torn Angola, where the company has walked away from two modestly profitable alluvial diamond operations — Cassanguidi and Luo — because of security concerns, as well as heavy sediment flow into the operations.
SouthernEra’s wild card and chief asset in Angola remains its 51% interest in the kimberlite rights to the huge Camafuca pipe, which is in the high-risk Lunda Norte province. SouthernEra is maintaining a small team at the pipe and recently took a 20,000-tonne bulk sample that has yet to be treated.
Camafuca was extensively drilled and bulk-sampled by De Beers between 1960 and 1981 and data from that program indicate that the pipe possesses a high-grade rim.
In 1971, De Beers pegged the value of Camafuca’s diamonds at US$35 per carat. (At the time, diamonds were priced at about one-sixth of their current value.) However, Jennings suspects that both the grade and value of Camafuca’s diamonds have been systematically underrated, owing to extensive thievery and an 80% recovery rate generated by the pan plants of the 1960s.
With the Chicapa River flowing along the length of the 160-ha pipe, SouthernEra is considering setting up a large-scale dredging operation that would exploit the deposit to depths of 40 or 50 metres.
A US$6.5-million payment on Camafuca is due on April 20, 1999, but SouthernEra may delay making the payment, as it did last year by adding US$500,000 to the total.
“We’re looking around at other opportunities in Angola, but we are disturbed about security there,” said Jennings.
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