Desperately seeking the suitor after Gem’s Ghaghoo diamond mine

This article has been edited to remove the statement that Diacore is part of the Beny Steinmetz group. Miningmx apologises for the error.

Puzzling questions in the Botswana diamond mining sector at present concern which company has  just walked away from buying Gem Diamonds’ Ghaghoo mine as well as the identities of the “other interested parties” that Gem says it is still in discussion with.

A prime suspect initially was London-listed Botswana Diamonds (BOD) but  MD James Campbell denies any involvement.

BOD has an exploration JV with Russian diamond giant Alrosa as well as its own exploration projects in the Orapa region and a 15% “free carry” on an exploration JV in the Gope region. Campbell and BOD executive chairman John Teeling previously developed the AK6 project in Botswana’s Orapa region and sold it to Lucara Diamonds which now operates it as the Karowe mine.

Two other possible candidates so far not ruled out are Pangolin Diamonds and privately-owned diamond trading and cutting firm Diacore.

Diacore has cut a number of the world’s most famous diamonds including the 203 carat De Beers Millenium Star but it seems the multinational group is keen to integrate its operations  into the mining side and so secure its own dedicated sources of diamond production.

In May this year London-listed Firestone Diamonds announced it had granted an option to sell its Botswana operations – including the BK 11 mine – to Amulet Corporation for $5.1m in cash. Amulet is a “Canadian special purpose vehicle”  formed specifically for this deal   by  group of private investors led by Gareth Penny and the  Diacore group.

Penny is a former MD of De Beers who is currently non-executive chairman of major Russian mining group Norilsk Nickel  as well as non-executive chairman of Pangolin.

The interest in BK 11  is not the first time Diacore has moved to gain direct exposure to diamond mining companies.  The company was described  in May 2015 as an “anchor shareholder” in South African alluvial diamond miner Rockwell Diamonds by Campbell who was then the Rockwell CEO.

Rockwell subsequently fell on hard times and is currently in provisional liquidation with liquidation applications to be heard in March next year but an offer has been made by Ascot Diamonds to acquire the business as a going concern.  According to information on the De Beers website Ascot Diamonds is a subsidiary of Diacore.

Johannesburg-based Diacore executive Ori Temkin did not return a call made by Miningmx.

Pangolin is a recent entrant to the diamond exploration business having listed on the TSX in 2013.    Pangolin did not reply to emailed questions sent by Miningmx.

Another  TSX-listed diamond junior operating in Botswana is Tsodilo Resources which is evaluating the BK16 kimberlite find in the Orapa region.  Tsodilo president and COO Mike de Wit told Miningmx that Tsodilo was not the company that walked away from Ghaghoo and neither was it talking to Gem about the mine.

Gem Diamonds acquired  Ghaghoo   –  previously called Gope   – from De Beers in 2007 and spent more than $85m developing an underground mine via a decline shaft because the diamond-bearing kimberlite pipe is covered by 80 metres of sand overburden.  The mine was commissioned early in 2015 but was placed on care and maintenance in February this year.

An authoritative diamond industry source told Miningmx the likely reason it’s proving difficult to pin down who is talking to Gem is probably because “it’s the rats and mice who are looking at this mine.  Anybody who is seriously involved in the Botswana diamond industry  knows the obvious problems associated with Ghaghoo.”

According to the source, those problems include Ghaghoo’s remote location in the Central Kalahari; difficult ground conditions; on-going opposition from “greenies” hostile to the mine because of its location in a sensitive region and, above all, the 80m of sand overburden on top of the kimberlite pipe.   That makes mining by traditional opencast methods prohibitively expensive which is why Gem went for a decline shaft to gain access.

The source commented, “if there was just 15m to 20m of overburden then the mine would be viable as an opencast operation. But they will not be able to get the necessary production economies of scale using that existing decline shaft which means a large capacity vertical shaft may have to be sunk at considerable cost.”


  1. Dear Fellow Readers,

    I am amazed at time at so-called “Mining experts”.

    The problems bedeviling the Ghagoo diamond mine ( previously Gope) are as follows :

    1. The $/ct achieved was below at <$150/ct of the $220/ct of Reserves. This rendered this mine not feasible despite the high cpht grade thus necessitating a rethink of ramp-up phase.
    2. The mine never achieved commercial production due to under capitalisation by the time the turndown of the rough diamond prices. It was foreseen that it will burn cash for a while , thus was curtailed given that the C&M costs were estimated at $3-$5 Million.
    3. Shortly after commencing the C&M period, there was flooding which geotechnically compromised the C&M period thus requiring more Capex , hence the sale process was initiated. But these geotechnical challenges are surmountable with an appropriate cheque-book heft.

    Now as readers will know, finding these diamondiferous kimberlite pipes is challenging, it is inconceivable for Gem to just sell without compelling reasons. Although, Gem does have a history of capital misallocations , namely Ellendale purchase etc.

    Frankly , the overburden is a NON issue as the mine is built. The problem is the $/ct vs operating costs. The bounty of 20Mcts is worth pursuing , but will require someone with a clear mine-to-market capability superior to GEM given the aforementioned. So frankly, Botswana Diamond is ruled out BUT Lucara might be a suitable party to take this project forward.

  2. This mine and the predicament it finds itself in now cannot be acceptable, was the Board not familiar with the mining technical risk or the financial numbers beforehand or did they just ignore it?

Comments are closed.