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We'll double Letseng's throughput - Clifford Elphick, CEO of Gem Diamonds
In an interview on Radio 2000 @ 18:10 on 28 June 2006
[miningmx.com] -- GEM Diamonds, Clifford Elphick's diamond exploration company, plans to double capacity at its newly purchased Letseng diamond mining in Lesotho and plans an AIM listing before the end of the year, Elphick said on Wednesday.
Gem Diamonds had investigated the mine for 14 months, which was 76% owned by Matodzi and Brett Kebble's JCI before agreeing to buy it for R880m this week.
Kebble bought Gem Diamonds in to have a look at the 2.4 million tonnes per year Letseng when he was "in some trouble" in April last year, Elphick told the Moneyweb Power Hour broadcast on Radio 2000.
"We intend to double that quite quickly. We looked at that during the due diligence. We would like to push it to a five million tonne a year mine, like Finsch. That order of magnitude," Elphick said.
He expressed confidence that the Lesotho government, which holds 26% of
Letseng, would approve the deal, saying it would not have won through 10 other bidders for the asset without the government agreeing to it. Gem Diamonds had spoken directly to the government and through JCI and Matodzi.
"We wouldn't have got this far if we weren't confident the relationship was good," he said on Classic Business Day.
It was important to get a producing asset to balance early-stage projects in other parts of Africa, he said. It has an alluvial project in the DRC, which is at an advanced sampling stage.
The mine produces low volumes of diamonds, but of very high quality, he said. The mine used to be owned by De Beers, which shut it down in 1982 because of a very difficult market for diamonds. Elphick said if De Beers had been able to hold onto it through the bad times, it would now be a mine it would be happy to have in its portfolio.
Elphick, who used to work for De Beers and Anglo American, said he had asked Nicky Oppenheimer to
bring De Beers into the Letseng deal agreed this week, but an agreement between the world's leading diamond producer and its 45% owner Anglo American prevented that from happening.
The cost of expanding the mine's throughput would be not less than R250m, he said.
Gem Diamonds is busy with projects in the Democratic Republic of the Congo and neighbouring countries and needs to raise capital, he said, explaining the company would list on AIM before the end of the year.
A listing on the JSE is not out of the question in the future, he added.
Peter Gray, JCI CEO, said it had taken a lot of negotiating to agree the sale of Letseng, which is now subject to shareholder and regulatory approval.
"The next step is to sell our (58%) stake in Matodzi," Gray told Classic Business Day. "We do not want to own just a cash shell, which is what Matodzi will be. It will have some JCI shares and some mineral rights."
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