JOHANNESBURG (miningweekly.com) – London-listed Gem Diamonds has upped the full-year production guidance for its 70%-owned flagship Letšeng mine, in Lesotho, from between 90 000 ct and 95 000 ct to between 95 000 ct and 100 000 ct, saying on Tuesday that the mine had delivered an “exceptional” performance in the six months ended June 30.

“The extension of the contract with the Alluvial Ventures treatment plant to the end of 2015, a new and larger mining fleet, as well as improved plant availability have all contributed to a positive revision of [the] full-year 2014 production guidance,” the company said in a trading update.

The diamond operation saw across-the-board improvements over the half-year, posting a 29% increase in carats recovered to 54 678 ct, which was driven by the mining of a larger portion of the higher-grade Satellite pipe together with technical improvements in plant liberation and throughput.

This increased revenues from Letšeng by 80% to $147.8-million for the six months.

Letšeng's Plant 1 and 2 treated 1.3-million and 1.4-million tonnes of ore respectively in the period, 36% of which was sourced from the Satellite pipe and 64% from the Main pipe.

The balance of ore was treated through the Alluvial Ventures plant, 33% of which was sourced from old stockpiles and 67% from the Main pipe.

Recent infill drilling programmes, improved estimation techniques and detailed geological studies at the diamond mine had also resulted in a “significant” increase in the project’s indicated resource base, in tonnage, by 132% to 187.1-million tonnes – an addition of over 100-million tonnes to the initial indicated resource category.

DIAMOND SALES
The six-month period under review was characterised by strong demand for diamonds across the spectrum, particularly for large, high-value rough stones, providing a “buoyant” market for the mine.

Letšeng held five tenders during the first half of the year, achieving “excellent” results with an average price of $2 747/ct – a 58% increase compared with the first half of the prior year – bringing the 12-month rolling average to $2 543/ct.

During the period, 37 exceptional rough diamonds achieved prices greater than $1-million, while five rough diamonds achieved in excess of $60 000/ct.

In addition, three diamonds of exceptional quality – a 162.02 ct, a 161.31 ct and a 132.55 ct – were sold for $11.1-million, $2.4-million and $7.5-million respectively.

During the period, 377 ct were extracted for own manufacturing at a rough value of $4.2-million.

CEO Clifford Elphick said Letšeng’s strong first-half performance reflected the current mine plan and the technical improvements and optimisation programmes that were currently under way.

“Letšeng continues to prove its world-class asset status. The ongoing focus on [maintaining] low capital expenditure is delivering value, resulting in increased diamond liberation and reduced diamond damage. This has, in turn, supported strong sales and robust demand throughout the period,” he commented.

During the period, Letšeng successfully renegotiated its contract with the mining contractor, resulting in “greatly improved” unit costs for the next eight years.

ONGOING DEVELOPMENT
Meanwhile, the operation’s new coarse recovery plant project remained on track for completion in the second quarter of 2015.

X-Ray Transmissive sorters had been ordered, which would ensure improved recovery of the high-value type II diamonds.

The design of the Personnel Control Centre was well advanced and the selection of the personnel X-ray scanner supplier was planned for early in the third quarter.

“It is expected that this scanner, together with the improved surveillance, fully hands-free and auditable diamond recovery will result in significant security improvements for this project,” the company outlined.

Work to identify opportunities for additional ongoing incremental improvements to throughput and diamond breakage at both of the Letšeng plants had progressed to the point that the first phase of the upgrade at Plant 2 had been approved for implementation.

Phase 1 of the project would start in the third quarter and be completed by the first quarter of 2015.

“It will deliver an increase in treatment capacity of 250 000 t/y, as well as further reducing diamond damage, at a capital cost of around $5-million. This will lay the foundation for further improvements in both treatment capacity and diamond damage reduction in subsequent phases, which still need further development,” Gem Diamonds said.

GHAGHOO

Meanwhile, the group’s wholly-owned subsidiary, Gem Diamonds Botswana, continued development of the Ghaghoo mine, in Botswana, with 2 400 ct having been recovered during the commissioning of the plant.

Optimisation of the treatment plant processes was ongoing during the commissioning phase and the production build-up to 60 000 t/m was still expected to be reached by the end of the year.

To date, three production tunnels were progressing within kimberlite on the first production level, while an exploratory tunnel and training stope had been developed in the kimberlite at 130 m below the surface.

“High volumes of water from basalt fissures have recently been encountered in one area and, besides contributing to difficult mining conditions, have necessitated the procurement of additional pumping capacity and the drilling of additional dewatering boreholes,” the company noted.
 
Drilling of the second ventilation hole was complete, while the third and final hole had been drilled to a depth of 121 m and should be completed in July.

The first tender for Ghaghoo's production was scheduled to take place before the end of the year.

By the end of June, $82-million of the project’s total capital budget of $96-million had been spent.

The group remains on track to pay a maiden dividend to shareholders at the end of the financial year.