5 September 2008
Gem put in the initial licence application in July last year. The company's Corporate Affairs Manager Angela Parr told Miningmx online that the Botswana government has now asked Gem to put forward a document setting out what it considers to be the key issues to be discussed during the final stage of negotiations. Parr said assuming the negotiations were successful, Gem would begin construction of the mine in the first quarter of next year with production due to start in 2011.
The ramp-up to full output of 1m carats/year would take place during 2012. Gem's interim results statement for the six months to end-June made it clear the provision of power and basic infrastructure would be two of the issues for discussion.
Gem bought the mine, which is located in a remote part of the Central Kgalagadi Desert, from De Beers.According to Gem CEO Clifford Elphick, "the provision of power and basic infrastructure to the Gope site by the government is important to the project's success."Botswana sources most of its power from South Africa but is now affected by the shortfall in its neighbour to the south.
Australian junior miner, Diamonex, is using diesel generators for the power required by its Lerala Mine that started production at the end of August.
Parr said it would be preferable to have power for Gope provided by Government through the national grid, but that the mine was not dependent on this.
"Development of the mine is subject to a host of issues and is not contingent on any one in particular," she said. "If power is not provided to the site and we must supply our own, we would look for a balancing concession on other items in the mining licence negotiations."
Gem CEO Elphick said capital expenditure estimates for the construction of the mine remained between US$450m and $500m.
"Various funding options are under consideration for this capital outlay, the bulk of which is expected to be debt-funded," he said. "A final decision will be made post the award of the mining licence."
Another issue to be finalised in the negotiations will be the marketing of the diamonds produced from Gope Mine. Parr said Gem had indicated in the mining licence application that it would be happy to sell those diamonds on tender in Botswana.
That would be in accordance with the government's new policy of developing a separate marketing channel for diamonds produced in the country by new operators outside De Beers' Central Selling Organisation single channel.
Diamonex has agreed to this, and the terms of the mining licence offered by the government for the proposed AK6 Mine also specified this marketing requirement.
African Diamonds, the junior partner in AK6, has accepted the requirement but senior partner De Beers has not, resulting in the current legal dispute between the two partners over the mine.
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