Clifford Elphick, diamond entrepreneur
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Gem buys troubled Gope for $34m
Allan Seccombe
Posted: Tue, 29 May 2007

[miningmx.com] -- GEM Diamonds has bought a political hot potato in the form of the Gope Exploration Company in Botswana, which has identified a kimberlite in the middle of the Central Kalahari Game Reserve.

Survival International has linked the Botswana government’s forced relocation of hundreds of indigenous Bushmen from the reserve to the discovery of diamonds, something the Botswana High Court found in December 2006 to be inaccurate.

“De Beers also considers that the current situation may have a negative impact on the reputation of the diamond industry in Africa and therefore may be detrimental to consumer confidence in African diamonds,” it said in an undated note on its website after the Botswana High Court ruling.
reputation of the diamond industry
De Beers, which jointly owned Gope with Xstrata, has sold the deposit to Gem for $34m. It stopped exploring the deposit in 2003.

The sale of Gope is the latest of a string of sales of non-core assets following the putting up for sale of Cullinan and the sale of parts of the Kimberley operations as well as its 42% interest in the Fort à la Corne prospecting joint venture in Canada, said De Beers spokeswoman Lynette Gould.

“We concluded some years ago, as we have repeatedly stated, that we did not believe that Gope was a project for De Beers,” she said.

“We were concerned that by exiting in the middle of the controversy this would create the perception that there was a connection between diamonds and the relocation of the Bushmen,” she said.

The High Court’s finding last December that the relocations had nothing to do with prospecting and its order that the Bushmen be allowed to return to the Reserve cleared the way for De Beers to sell the asset, she added.

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Gem Diamonds will revise the environmental impact and management programmes that formed part of a feasibility study completed by De Beers and its partner in 1998.

Gem's shares gained four pence each to trade at 1,120 each by midday.

“Gem Diamonds recognises the imperative of finding a sustainable resolution to the environmental and community related issues in the Central Kalahari and embraces the opportunity to work with the people of Botswana and other interested parties in achieving this aim,” said Gem CEO Clifford Elphick.

The development strategy for a mine would be formulated after consultations with relevant communities, he said. The Gope license covers 35 square kilometres in the park of 55,000 square kilometres. The Botswana government has indicated it will permit mining there.

Gem raised $600m in February, half of which it has already earmarked for its projects in Lesotho, Democratic Republic of Congo and Central African Republic. It has also bought BDI’s alluvial diamond operation in Indonesia.

Elphick has said GEM will grow aggressively over the next three years. Already it is forecasting annualised production of a million carats by 2009.

Acquiring an asset in the world’s richest diamond province, Botswana, was an obvious next step for Gem, which listed on the London Stock Exchange in mid-February this year.

Gem will hold talks with the Botswana government to include them as equity partners in the potential mine once revision of the feasibility study has been completed.

Gope's kimberlite deposit is a "significant ore body", Elphick said. It has an indicated resource of 79 million tonnes down to 400m below surface at a grade of 19 carats per hundred tonnes. The diamonds are valued at $121 a carat.

"Should the findings of this updated feasibility study prove positive an application for a mining license will be made," Elphick said.