Diamond Fields, Trans Hex join forces in Namibia

Circumventing the need for financing, Diamond Fields International (DFI-T) has teamed up with South African miner Trans Hex Group to exploit the junior’s marine diamond property, off the coast of Namibia.

Last fall, an independent feasibility study concluded that Diamond Fields would need US$28.1 million to advance Mining Licence 111 to production. A dredge-and-pump-type operation, similar to that formerly run by Namibian Minerals (nmr-t) (T.N.M., March 5-11/01), was envisioned.

The new plan calls for Trans Hex to supply two conventional airlift vessels in return for a share of the production proceeds. Trans Hex, which has been mining alluvial diamonds for more than 20 years, will also manage the project.

Diamond Fields will market any diamonds produced, though Trans Hex will play a consulting role. Such an arrangement would continue for at least seven years.

Resources on Mining Licence 111 are pegged at 6.1 million cubic metres containing 1.1 million carats (including 81% defined as probable reserves). A cutoff grade of 0.15 carat per sq. metre was used.

The feasibility study estimates the project will generate an after-tax internal rate of return (IRR) of 54%, and payback of capital within 16 months. If probable reserves alone are considered, the mine life would be shortened to 5.8 years; the IRR, 46%; and the payback period, 18 months. The estimates are based on the cutoff grade noted and on average diamond values of US$175 per carat.

At the time of the study’s completion, Diamond Fields noted that the sampling activities providing the basis for the estimates were conducted using tools not specifically designed for the geological environment at its Marshall Fork and Diaz Reef deposits. Although the company believes the suspected sampling bias will be in its favour, the actual difference in carats between sampling and mining won’t be known until mining begins.