Industry News by Nemesis

De Beers Sells Kimberley Mines to Ekapa, Petra for R102m Cash

December 1, 2015

Kimberley Mines

South African diamond-mining company De Beers Consolidated Mines (DBCM) has sold its Kimberley Mines to a consortium made up of Ekapa Mining and the London-listed Petra Diamonds.


Petra CEO Johan Dippenaar on Tuesday announced the acquisition of 49.9% of Kimberley Mines in consortium Ekapa Mining, an established Kimberley-based diamond tailings producer, which is acquiring 50.1% of the historic Northern Cape asset.


The binding agreement involves the takeover as a going concern of tailings dumps, a processing plant and employees for R102-million cash, funded by Ekapa Mining and Petra according to their percentage interests.


Tailings resources total 7.2-million carats. DBCM’s new-order mining right expires in 2040 for the initial mineral resource of 2.8-million carats, with the mines also having 93.2-million tonnes of ore deposits at a grade of 4.4 cpht on a total area spread over 3 981 ha.


Tailings grades are 11 carats per 100 tonnes (cpht) for the first three years of operation by Ekapa Minerals, reducing to 6 cpht after the higher-grade tailings have been treated.


The Combined Treatment Plant, which incorporates modern technology, has a capacity to process 6-million tonnes a year of a range of ore sources, including run-of-mine material.


Ekapa Minerals expects to produce at a rate of 700 000 ct a year in the first three years, generating revenue of R920-million a year at a diamond price of $95/ct.


The acquired assets are poised to be cashflow positive in the first year, with initial working capital of R200-million financed 100% by Ekapa Minerals on a standalone basis.


Ekapa Mining CEO Jahn Hohne said Ekapa Minerals would be operated by the people of Kimberley for the benefit of the area and complied with the shareholding requirements of historically disadvantaged South Africans.


An application for a Section 11 transfer of the DBCM mining right to Ekapa Minerals would be made to the Department of Mineral Resources.


DBCM CEO Phillip Barton told Creamer Media’s Mining Weekly Online in May that Kimberley Mines no longer met DBCM’s strategy of holding large, long-life, low-cost assets and disposing of the operations as a going concern to lower-cost operators ahead of the planned 2018 closure would avoid job losses.


Kimberley Mines employs 353 people directly as employees and another 300 indirectly as contractors.


DBCM’s other Kimberley interests, including its diamond sorting hub, Big Hole responsibilities and Stockdale Street as the registered head office, remain unchanged.


Since its establishment in Kimberley in 1888, the company has been mining the area's primary kimberlite pipes of the Bultfontein, De Beers, Dutoitspan, Kimberley and Wesselton mines, which resulted in the accumulation of the tailings now on offer.


In the last four years, Kimberley Mines has produced three-million carats from these tailings and another 2.4-million carats can be recovered to the end of 2018.


Diamond mines sold previously by DBCM to Petra include the Kimberley Underground, Cullinan, Finsch and Williamson mines.


Jagersfontein was sold to Superkolong-Reinet; Rooipoort to a Reinet-led consortium; and Namaqualand Mines to Trans Hex.


Simultaneously, DBCM has increased its own capacity by 30% in the past four years to 6.4-million tons a year through the Venetia diamond mine in Limpopo and the Voorspoed mine in the Free State.


Diamonds were first discovered in South Africa in 1866 along the banks of the Orange river between Hopetown and Douglas.


The search continued into the hinterland and dry diggings began at what became known as New Rush in 1870 and 1871.


The mining camp was renamed Kimberley. Diamond mining initiated further exploration and great interest in South Africa’s mineral potential was ignited. In 1886 gold was discovered on the Witwatersrand and minerals-based economic development ensued followed by what became, in 1910, the Union of South Africa and later the Republic of South Africa.


DBCM commissioned the Combined Treatment Plant in 2003 at a capital cost of R780-million.


The National Union of Mineworkers said earlier this year that it was totally opposed to the sale of the Kimberley Mines by DBCM, claiming that the company had failed to prove that it had exhausted all avenues of seeing to its profitability beyond 2018. 

Source: Mining Weekly

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