- Over P5 billion needed for underground project
- Company could finance it from own cash flow
- Underground mining would expand mine life to 2040
Lucara will make a decision on whether they will develop an underground mine at Karowe in the next two or three months, Managing Director Naseem Banu Lahri has told this publication.
This comes after the diamond company announced the results of a positive underground feasibility study for development of an underground mine at Karowe Mine. This would double the mine life and generate significant revenue and cash flow out to 2040.
Speaking with this publication on the sidelines of the Diamond Conference which was held in Gaborone last week, Lahri noted that even though they have positive results from the feasibility study, they have not decided whether they will go underground or not because there are a lot of decision points that need to be reached. “Such include financing,” she said.
According to the company’s released statements, a pre-production capital outlay of $514 million is needed for the underground project. This, however, seems to be not a problem for the company because it believes a significant portion of this cost can be funded from their cash flow. “The investment is expected to be paid back in less than three years as the underground allows us to exploit the highest value part of the orebody first and generate more than $5.25 billion in gross revenue,” the company said.
The Lucara Botswana MD noted that they are not under any pressure to decide whether to go underground now. “That is because if we go underground, we will need to start construction in the middle of next year,” Lahri explained. “Looking at the decision process, it should take about two to three months to actually make a decision.”
Lahri added that in efforts to expand their mines, they will continue to explore new technologies that will help identify new resources within the country.
But will the underground mining of Karowe not put the lives of those who leave in the surroundings of the mine in danger with tremours? “We mine responsibly and we have good people handling it,” she said. “So we believe that we are not negatively impacting on the environment. But as you know, mining has an impact on the environment from blasting. So to say we are not having an impact on the environment is not true. But we are about responsible mining,”
Are synthetic diamonds a threat to Lucara?
Research carried out by this publication shows that synthetic diamonds, which are often described as complete copies of natural diamonds since the same methods and procedures were used to recreate the them with the result that synthetics contain the same crystal lattice structure as natural diamonds, could be a threat on the market. The only remarkable difference between the two is that natural diamonds are more than 3.3 billion years old, making the gemstone extremely special and one of a kind.
Giant miner De Beers has tapped into the manufacturing of synthetic diamonds, arousing debate within the mining sector of how the modern gemstones could impact the natural ones in terms of value and sales. But for Lahri this is not a problem because synthetics are not wanted in Lucara’s main markets in Asia, mainly India. “They want the real thing,” she said. “They want the sparkle in the diamond.”
However, Lahri’s may be a brave face as synthetics may be having an impact on Lucara already. The company reported USD 45,3 million during the third quarter of this year, which is a slight fall compared to USD 45.7 million recorded for the same period of 2018.