Dineo Faku
LONDON-listed Gem Diamonds opened Botswana’s first underground diamond mine, Ghaghoo, in the Central Kalahari Game Reserve on Friday. The market expects the flagship new-generation operation to be the firm’s strongest investment case.
Ghaghoo is Gem Diamonds’s second operating mine – the other is the Letšeng mine in Lesotho. Ghaghoo would focus on achieving world-class benchmarks in health, safety, social and environmental impact, the company said on Friday.
Botswana, the top diamond producer, is home to De Beers’s Jwaneng, the richest diamond mine by value. Jwaneng has been operating since 1982.
Ghaghoo is on the ancestral land of San people who were evicted from the area. It is expected to create 250 jobs when its phase one production level is achieved next year.
Phase one was focused on confirming the grade, prices achieved and recovery processes, the company said on Friday. The results from phase one would define further development plans at Ghaghoo.
Gem Diamonds chief executive Clifford Elphick said the potential of the ore body, coupled with the economic benefits to shareholders, employees and the nation of Botswana, would soon be evident.
The first tender for the mine’s production was scheduled before the end of the year. By the end of June $82 million (R876m) of the total capital budget of $96m had been spent.
“The mine and our investment to date demonstrates our commitment to the country and to the people of Botswana.
“We see considerable opportunities [for] playing an important role in the country’s future and bringing jobs and economic opportunities to the surrounding communities,” Elphick said.
A report by Charles Stanley Securities last month noted that the development of the Ghaghoo mine remained in budget and within the time frames detailed. Commissioning had produced 2 400 carats to June, including a diamond of 20 carats and two of 10 carats.
“This compares favourably to the largest stone recovered during the exploration phase of 7 carats.”
Gem Diamonds planned to assist local communities with access to water. It had also established a community trust, which had commissioned community projects.
Gem Diamonds had completed a series of extensive studies and assessments relating to the environment, local communities and broader social impacts of the Ghaghoo mine. These were expected to ensure the mine operated to stringent international standards.
“This is a strategic priority for the company in a rapidly changing environment for the global mining industry, and will contribute further to the modernisation of the diamond mining industry to ensure long-term sustainability.”
Gem Diamonds’s financial results for the half year to June were ahead of market forecasts as revenue rose 54 percent year on year to $148.9m. Attributable profit was up 129 percent to $19.7m.