London-listed Botswana Diamonds (BOD) has bought Gem Diamonds’ Ghaghoo mine in central Botswana for $4m in cash through a joint venture deal with partner Vast Resources (VAST)
According to BOD chairman John Teeling, “VAST are funding the acquisition cost and initial development capital and our initial 10% free carry. BOD is the operator for the project and has marketing rights equivalent to our shareholding in Okwa (the JV vehicle with VAST). This is a very good development for BOD.”
He added, “BOD has acquired its 10% carried interest in Okwa in consideration of the services it has provided to Okwa and does not currently have a funding commitment to Okwa nor does BOD currently intend to provide further funding under its earn-in arrangements.”
The Ghaghoo – previously called Gope – mine has long been a hugely troubled operation which Gem Diamonds bought from De Beers in 2007. Gem then spent some $85m developing the mine which came into operation in 2015 but was shut down in February 2017 after the recovery of less than 150,000 carats of diamonds. Reasons given were poor diamond market conditions at that time and “operational issues.”
An authoritative diamond mining industry source told Miningmx in 2017 that “anybody who is seriously involved in the Botswana diamond mining industry knows the obvious problems associated with Ghaghoo.”
Those problems include the mine’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 the 80m of sand overburden on top of the kimberlite pipe.
That makes traditional opencast mining methods not economically viable which is why Gem developed a decline shaft to get into the kimberlite pipe but that, in turn, brought its own problems because of the difficult ground conditions.
The mine is currently flooded after an earthquake in 2017 ruptured the underground water seal. There is also a sinkhole “caused by the partial collapse of a portion of the crown pillar possibly due to overmining” which covers “an area on the first level of eight in the kimberlite pipe and limits the access to this particular zone of higher-grade kimberlite.”
Despite all this – according to Campbell – after a thorough due diligence his assessment is that “we believe there are significant opportunities to improve Ghaghoo’s operating and financial performance through both the application of new and optimization of existing technologies along with a strongly recovering diamond market.
“Gem Diamonds advanced underground mine development and the surface infrastructure already in place means a return to production is potentially possible with an overall objective to target a return to name plate capacity of 1.25 million tonnes yearly.”
Miningmx’s diamond mining industry source remains unconvinced commenting today that, “maybe they could sell the water pumped out of the mine to the local San communities.”
Teeling and Campbell have a highly successful track record in junior diamond mining in Botswana. They ran junior miner African Diamonds which started development on the AK6 kimberlite project which was taken over by Canadian major Lucara Diamonds in 2010. Lucara developed AK6 into the highly successful Karowe mine.