AIM-listed Aussie junior Dwyka Diamonds (DWY-L) and black economic empowerment partner Kolong Investments have struck a deal to reprocess tailings material from De Beers‘ Kimberley underground mines in South Africa.
Dwyka will hold a 40% equity interest in the project, which will operate under the Superkolong banner. Dwyka expects the US$2.9-million operation to be funded via bank debt. The project is expected to generate more than US$1 million in profit during its first year; Dwyka’s share of profits will be determined once financing is finalized.
Construction of the processing plant is ongoing, with first production expected in November. The deal calls for guaranteed diamond feed grades and tonnages, and set diamond prices. The partners expect that feed tonnages will be rapidly increased as the plant hits its stride.
De Beers’ Kimberley mines comprise five kimberlite pipes — the De Beers, Kimberley, Bultfontein, Dutoitspan, and Wesselton pipes. The latter three are still in operation, while the Kimberley mine closed in 1914 and the De Beers mine was shuttered in 1990.
In August of 2004, De Beers opened a 20,000-tonne-per-day combined treatment plant to allow for the extraction of diamonds from the tailings dumps, which were previously considered uneconomical to mine. The operation’s diamond production increased to more than 2 million carats in 2004 from 593,630 carats in 1995. De Beers also upgraded Kimberley’s old plant. In all, the plan has extended Kimberley’s life until at least 2011.
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