A long-anticipated feasibility study on the Klipspringer diamond project in South Africa envisions a 336,000-tonne-per-year operation cranking out 1.69 million carats over 11 years.
Since 1997,
The study, completed by an independent South African consulting group, concludes that another two years of underground development are required to achieve sustainable monthly throughput of 28,000 tonnes. Mined ore would be treated in a 50-tonne-per-hour processing plant already on-site.
Minable reserves stand at 3.6 million tonnes at a recoverable grade of 47 carats per 100 tonnes. SouthernEra had estimated the fissure’s volume at 4.3 million tonnes, spread over a strike length of 3.4 km and down to a maximum depth of 630 metres.
Capital costs are pegged at US$6.6 million, to be repaid 1.5 years after full production is reached. Financing is to be arranged in South Africa.
Annual pretax net cash flow is projected at US$4.3 million, or US$40.3 million over the mine life. Including taxes, the total projected cash flow exceeds US$26.2 million.
A total of US$166 million in revenue is expected to be generated over the mine life, based on averaged realized diamond prices of US$100 per carat.
The internal rate of return is nearly 43%.
SouthernEra lost $2.3 million (or 9 per share) on revenue of $7.7 million in the three months ended June 30, compared with earnings of $1.7 million (7 per share) on $16.5 million in the corresponding period of 1999. Included in the recent period were $7.6 million in amortization charges and exploration writedowns.
Attributable output from the Marsfontein joint venture in South Africa topped 130,185 carats and was sold for an average of US$123 per carat. The volume is down from the 156,918 carats produced in the previous quarter and reflects lower grades as miners dig deeper in the M1 kimberlite pipe. Primary reserves are expected to be depleted in the third quarter; however, stockpiles should keep the plant fed for the remainder of the year and most of 2001. SouthernEra expects its share of M1 output to top 225,000 carats in 2000.
The company owns a 40% interest in Marsfontein. The remaining stake is divided among
Meanwhile, SouthernEra’s new board of directors has revised compensation policies for themselves and officers. Senior officers will no longer receive 300% of their salary if terminated as a result of a change in company control; instead, termination pay is to be limited to one year’s salary and require at least one year’s employment. Agreements falling under the previous arrangement are being contested.
Also, directors are to receive options alone for services rendered, except for management-related duties. Exercise prices are to be at least $1.50 per option, with maturity dates set at five years instead of 10. Similar terms also hold for options that are granted to directors or senior officers.
SouthernEra expects to announced the names of its new chief executive and chief operating officers shortly. Steve Banning, who was both president and chief executive officer, left shortly after the new board of directors was elected at the company’s annual meeting in June.
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