Camafuca gets final approval

Angola’s Council of Ministers has approved the operating agreement for the Camafuca diamond project, 20 km southwest of Lucapa.

The council also okayed the creation of Sociedade Mineira do Angola, which will operate the project in Angola’s Lunda Norte province.

A first-phase feasibility study at Camafuca, completed in late 2000, places total inferred mineral resources at 209.5 million cubic metres averaging 0.11 carats per cubic metre for about 23.2 million carats of diamonds valued at US$109 apiece. The resource runs to a depth of 145 metres.

The initial mining plan at Camafuca calls for the dredging of 6.13 million cubic metres running 0.18 carats per cubic metre over five years. The targeted area comprises the southeastern portion of the Camafuca kimberlite.

Ore would be pumped in slurry form to a land-based dense-media-separation plant. Cost for the dredge and plant are pegged at US$16 million. Operating costs are estimated at US$55 per carat, based on diamond evaluations of US$117 per carat. Annual recovery is pegged at 220,000 carats.

Construction of the dredge and processing plant would begin once mining licenses are in hand; production would gear up in about one year.

With cash flow of US$40 million and an internal rate of return of 185%, payback is anticipated in a year.

SouthernEra (SUF-T) holds a 32% carried interest in the project and has been relieved of two 7% net profit interests owing to third parties. Welox, a private Hong Kong-based company affiliated with the Leviev diamond-trading group, has a 33% stake. The remaining interest in the project is divided between Empressa Nacional de Diamantes de Angola (Endiama) with 20%, and Sociedade Mineira do Lucapa 15%.

Welox will fund 100% of the capital required for the development of the Camafuca mine.