The partners in the Camafuca diamond project in Angola have accepted a feasibility study that says initial mining of part of the weathered kimberlite resource can be profitable.
The study, provided by operator
The project, on the Chicapa River in Lunda Norte province, about 800 km east of Luanda, has a resource of 209.5 million cubic metres, grading 0.11 carat per cubic metre, with a value of US$109 per carat. It is held in the Camafuca Pipe, a kimberlite covering a 160-ha area.
The study’s mining strategy treats the kimberlite resource as a rippable, soft-rock host rather than a hard-rock deposit. A marine-type dredge with a capacity of 550 cubic metres per hour would excavate the deeply weathered kimberlite and feed a kimberlite-water slurry to a conventional dense media separation plant to separate the heavy minerals.
The feasibility study concentrated on a planned first phase that would mine a 6.1-million-cubic-metre resource in the southeastern part of the property — a resource grading 0.18 carat per cubic metre and which is valued at US$117 per carat.
The study estimates that the project can be brought into production at a capital cost of US$16 million.
Operating costs would run US$9.76 per cubic metre, which translates into a cash production cost of US$55 per carat and an operating margin of US$62 per carat. The net cash flow, before interest expenses, is expected to be US$40 million for an internal rate of return of 185%. The project would pay back the capital cost in about 12 months.
Once the permits are in place, SouthernEra expects it can have the dredge and processing plant in operation in about nine months. The company plans to start with a small-scale dredging operation to see if the proposed mining method will work as outlined in the feasibility study. Once the operation is running, other dredges can be added to increase production.
Nacional de Diamantes holds a 20% interest in the Camafuca project, and Lucapa a further 15%; the two Angolan companies jointly hold a 14% net profits interest. SouthernEra is carried for a 32% interest. Welox, which is affiliated with the Leviev diamond-trading group, holds a 33% interest and is financing the project.
SouthernEra dealt Welox the option to earn its 33% interest in April, in exchange for US$7 million in project financing and a commitment to take on half of SouthernEra’s obligations. Also, Welox received warrants on half a million SouthernEra shares.
SouthernEra holds minority interests in four other projects in Lunda Norte and a half-interest in another.
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