New lease on life for Lerala Diamond Mine

The Australian Securities Exchange (ASX) listed  Kimberly Diamonds Limited has secured a 10 million Australian dollars (AUD$) loan (about P72.8 million) to reopen the Lerala Diamond Mine. The loan was secured from a Chinese lender, Zhejiang Huitong Auction Co Ltd, and the first disbursement of AUD$5 million has already been received. The remaining AUD$5 million will be disbursed by the end of the 31st July 2015.

Kimberly Diamonds Managing Director, Noel Halgreen has said that the funding will allow Kimberly Diamonds to immediately take key steps towards the re-commissioning of the Lerala Diamond Mine, which, once re-opened, will provide Kimberly Diamonds with significant revenue streams for the life of mine of approximately 7 years with significant potential for extension. Halgreen also noted that Kimberly Diamonds will require a further AUD$5 million to complete the re-commissioning of Lerala, and is in discussions with third parties to raise the required funds. The company did not say when the mine will be re-commissioned except that “It has a number of key contracts to be put in place before it will be able to finalise the timeline for re-commissioning.”

An announcement made on the ASX highlights the key terms of the loan agreement as that Kimberly Diamonds will pay a 5% annual interest and the loan will be settled in full in 2 years. Zhejiang may elect for one third of the loan to be repaid in Kimberly Diamonds shares at a 20% discount to the volume weighted average price of Kimberly Diamonds shares and the loan is secured by a security interest over Kimberly Diamonds shares in Mantle Diamonds Limited.

According to the announcement, the Lerala Diamond Mine comprises five diamondiferous pipes totalling 6.66 hectares in size. The kimberlites were discovered by De Beers in the early 1990s, and most recently, Mantle Diamonds Limited operated the mine between February and July 2012, producing 73,403 carats from 0.26 metric tonnes (Mt) of ore. Kimberly Diamonds acquired Mantle in February 2014, and will be modifying the plant at Lerala to enable the plant to reliably treat 200 tonnes per hour and 1.4 million tonnes per annum. The current total Resource estimate for the Lerala kimberlites is 10.3 Mt at an average grade of 31.5 carats per 100 tonnes (cpht) equating to approximately 3.3 million carats.