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 Ghaghoo diamond mine.

Project Description
Originally scoped as a six-million-tonne opencast mine, following the global financial crisis in 2008, Gem Diamonds’ board undertook to review all capital projects and decided to develop a small underground mine instead of a large-capital openpit operation.

Based on the revised plan, the Botswana government granted the company a 25-year mining licence at the end of 2010.

The Ghaghoo mine is being 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 $267/ct.

The mine is situated near the south-eastern border of the Central Kalahari Game Reserve, a remote area characterised by arid conditions 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.

A build-up to a steady-state production rate of 60 000 t/m is planned for 2015. About 200 000 ct to 220 000 ct are expected to be extracted from 720 000 t/y.

Phase 1 of the project will confirm the grade, diamond prices and 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
Commercial production will start in the second half of 2014.

Latest Developments
The development of the Ghaghoo mine is progressing well and on schedule, with 2 400 ct having been recovered up to June 30 during the commissioning of the plant.

Optimisation of the treatment plant processes is ongoing during the commissioning phase. The planned full production of 720 000 t/y for 2015 remains on track.

To date, three production tunnels are progressing within kimberlite on the first production level, Level 1, at 154 m below surface, while an exploratory tunnel and training stope have been developed in the kimberlite on Level 0, at 130 m below surface. High volumes of water from basalt fissures have recently been encountered in one area and besides contributing to difficult mining conditions, the volumes have necessitated the procurement of additional pumping capacity and the drilling of additional dewatering boreholes. This has been dealt with quickly and efficiently and, barring any further material ingress, is not expected to impact 2015 production.

Drilling of the second ventilation hole is complete and holing in is imminent. The third and final hole has been drilled to a depth of 121 m and was expected to be completed in July, well ahead of the actual requirement to have this ventilation capacity available. The rescue equipment for deployment in these shafts in the case of an emergency has been delivered to the mine and is being commissioned.

The first tender for Ghaghoo’s production is scheduled to take place before the end of 2014.

As at June 30, 2014, $82-million of the total capital budget of $96-million had been spent. The balance of $14-million will be spent in the second half of 2014.

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

On Budget and on Time?
Phase 1 development at Ghaghoo has been achieved on time and within budget. The processing plant is being commissioned. The planned full production of 720 000 t/y for 2015 remains on track.

Contact Details for Project Information
Gem Diamonds Botswana, tel +267 3182 796 or fax +267 3182 795.
Gem Diamonds public and media relations Sherryn Tedder, tel +44 20 3043 0280 or email stedder@gemdiamonds.com.
Redpath South Africa COO Lawrence Schultz, tel +27 11 570 4300, fax +27 11 974 2075 or email Lawrence.schultz@redpathmining.co.za.