Name and Location
Ghaghoo underground diamond mine, Botswana.

Client
Gem Diamonds, through its wholly owned company, Gem Diamonds Botswana.

On July 25, 2011, Gem Diamonds announced the name change for its wholly owned Gope Exploration Company to Gem Diamonds Botswana. Gope Exploration Company holds the mining licence for the Gope deposit, which has been renamed the Ghaghoo diamond mine.

Project Description
Originally scoped as a six-million-tonne opencast mine, Ghaghoo will be built as an underground mine in a phased manner to take advantage of the Ghaghoo diamond deposit, which comprises a 2.1-million-carat mineable reserve with an average grade of 27.81 carats per hundred tonnes, at an average diamond price of $246/ct.

The mine is situated near the south-eastern border of the Central Kalahari Game Reserve, a remote area characterised by shifting sands and difficult road conditions. From a mining perspective, and to minimise the capital spend on Phase 1 of the mine, an access decline was selected as the most cost-effective method of accessing the deposit, which lies under a sand overburden of about 80 m.

Phase 1 of the project will confirm the grade, diamond prices and the recovery processes, including the use of autogenous milling, which is expected to increase diamond liberation. Results from Phase 1 will underpin a study aimed at defining the way forward for mining at Ghaghoo.

Value
Phase 1 will cost an estimated $96-million to implement.

Duration
Production at the mine was initially expected to start during the third quarter of 2013; however, two fatalities at the mine and adverse ground conditions are expected to delay the start of first production at Ghaghoo to the first half of 2014.

Latest Developments
Gem Diamonds remains focused on optimising its core operations and developing the Ghaghoo mine.

The 473-m-long sand portion of the access decline was completed in July 2013, with a further 500 m of basalt development being completed during the year.

Kimberlite ore was intersected on November 25 in the crosscut on Level 0, about 134 m below surface. This crosscut will be used to access the old sampling tunnels on the 140 m level to allow for the area to be dewatered and made safe before ore mining starts on the production levels below.

At the end of 2013, the access decline had reached a depth of 145 m and a further 50 m of decline development was required to reach the first production level breakoff at a depth of 154 m below surface.

A decision was taken in 2013 not to sink the planned 6-m-diameter ventilation shaft and to delay this to 2015. The replanning and a redesign of the ventilation system and escape way to smaller-diameter (1 100 mm) drilled holes have allowed for this deferment. The drilling of these ventilation and escape holes is progres-sing well and was expected to be completed before the end of the first quarter of 2014.

The processing plant will be fully commissioned, well ahead of a sustainable feed of run-of-mine ore becoming available from underground. A build-up to a steady-state production rate of 60 000 t/m is planned for the end of 2014. It is expected that 200 000 ct to 220 000 ct will be extracted from 720 000 t/y. Production readiness preparation is progressing well and is expected to be established before the end of the first quarter of 2014. All mining and other service support infrastructure has been completed and is operating satisfactorily.

Key Contracts and Suppliers
Redpath South Africa (incline sand tunnel contract).

On Budget and on Time?
The mine is on track for commercial production to start in the second half of 2014. Significantly, there have been no project delays as a result of logistics problems, despite the challenges of hauling goods and equipment about
160 km on sandy tracks.

As at December 31, 2013, $71.2 million, of a total of $96-million Phase 1 capital budget, had been spent.

Contact Details for Project Information
Gem Diamonds Botswana, tel +267 3182 796 or fax +267 3182 795.
Redpath South Africa mine manager Olaf Iverson, tel +27 11 570 4300 or email olafi@redpathmining.co.za.