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Patience pays off for De Beers/Mvela Posted: Mon, 13 Jun 2005 [miningmx.com] -- De Beers Consolidated Mines (DBCM) - the South African subsidiary of the De Beers group - and Mvelaphanda Resources (Mvela) have finally been granted two prospecting permits to look for new diamond mines in Limpopo Province. But it has taken three years for these permits to be granted in a business where a swift examination and turnover of land under option is viewed as one of the keys to success. De Beers and Mvela struck their deal in mid-2002 when the JV was set up with De Beers holding a controlling 66% stake and Mvela owning the balance. The agreement covered ground in Limpopo over which De Beers had applied for prospecting permits and the terms were that De Beers would operate and manage any large-scale mines discovered while Mvela would manage any other operations. Definition of a large scale mine was one with a potential annual diamond production valued at $70m or greater. Those terms were revised in May last year when it became clear Government had moved the goalposts on its BEE requirements concerning the award of prospecting permits over mineral rights which the State previously owned. Instead of a 26% BEE stake - as laid out in the country's new mining legislation - Government indicated it wanted the BEE partner to control the company that was granted such rights Mvela took a 51% controlling stake in the JV but it has still taken a further year for the first permits to be approved. Mvela investor relations executive James Wellsted comments the permits granted cover two of the "immediate targets" for exploration but adds there is a string of other applications still in the pipeline awaiting approval. "We understand that it takes time to go through the process which can be lengthy working between the regional office of the Department of Minerals and Energy (DME) and the DME's head office in Pretoria before finally obtaining the Minister's approval," he comments Looking on the bright side the granting of the approvals does show that De Beers still has a good working relationship with the DME despite the recent hostile attacks on the company by Lulu Xingwane - deputy minister of minerals and energy . That bears out comments made last week by Jonathan Oppenheimer - MD of DBCM - who says De Beers has a relationship with Government that is "fundamentally engaged and honest." Despite cross-questioning on De Beers' silence over the public attack Oppenheimer refuses to be drawn into a response. He maintains the group's policy of not commenting on the deputy-minister's inflammatory remarks saying; "we do not negotiate through the media." Oppenheimer also points to the fact that the DME has accepted De Beers' application for a mining permit at the proposed Voorspoed diamond mine in the Free State. The project is still at the feasibility stage and is due for final approval at board level later this year. Indications are Voorspoed will produce around 1m carats annually and cost about R1bn to develop. Key point is that De Beers has applied for the mining permit without having finalised its new BEE structure. Oppenheimer says the final structure of the BEE deal will be known by the end of the year. Asked how De Beers can apply for the permit under these circumstances Oppenheimer replies it's because the DME has accepted the group's intentions on BEE. That implies a working relationship and level of trust which is not apparent to investors from the combative stance taken by the deputy minister. Higher grade mining news. Straight to the point. Straight to your mailbox. Subscribe now for miningmx's free news alerts.
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