EXPLORATION 1998 — SouthernEra revs-up plant at Klipspringer in South Africa

Potgeitersrus, South Africa — Three years of exploration at the Klipspringer project have turned what started as a single showing into a significant diamond producer.

Operator SouthernEra Resources (SUF-T) recently celebrated its success by commissioning a 2,000-tonne-per-day diamond recovery plant. By year-end, the company hopes to recover nearly 940,000 carats of diamonds, which, if achieved, would make it the second-largest producer in South Africa, after De Beers Consolidated Mines (DBRS-N).

Plans call for the mining of two fissures — Leopard and Sugarbird — and two pipes — M1 and the Sugarbird blow (a pipe-like enlargement of the Sugarbird fissure) — over a mine life of 13 years. However, confident that it will expand known resources and make new discoveries, SouthernEra expects production to continue for several decades more.

“We are finding kimberlite occurrences all over the place,” SouthernEra President Christopher Jennings told The Northern Miner on a recent site visit.

Combined resources at the four deposits stand at 8.9 million tonnes. The bulk of these are contained within the fissures, with Leopard hosting 3.8 million tonnes grading 0.75 carat per tonne, and Sugarbird hosting 4.48 million tonnes at a grade not yet established. The M1 pipe contains 512,400 tonnes grading 3.08 carats, while the Sugarbird blow hosts 77,000 tonnes grading 1.57 carats.

The M1 pipe and Sugarbird blow will be mined by open-pit methods, while the fissures will be mined using underground techniques. Cash costs are expected to average US$15 per tonne for open-pit mining and US$25 per tonne for underground mining. The low cost of underground mining is a reflection of competent host rocks and the ease of access to the ore by way of adits rather than large vertical shafts.

Situated 35 km from the town of Potgeitersrus in the rolling hills of Northern province, the Klipspringer property covers 50,000 ha, spread over several contiguous and closely-spaced farms. Most of the mineral options and rights are wholly owned by SouthernEra; on a few farms, those rights are shared with South African-based Randgold or, in one case, with De Beers.

SouthernEra started work at the project in early 1995, after investigating a kimberlite showing in a small pit dug several years earlier by De Beers.

“We were told the fissure measured only 5 to 10 cm, but we measured it at 1.25 metres,” recalled Jennings. “And it was clear De Beers planned on returning, as they covered the pit with soil and corrugated iron.” An 11-tonne sample taken from the Leopard fissure yielded results sufficiently encouraging to induce SouthernEra to acquire its current land position. A detailed program of soil sampling, trenching and drilling was subsequently initiated, leading to the fissure’s extension to 2.1 km in length and the determination of its average width to be 1.1 metres. A further 4 km of strike length is suggested by anomalous soils and geology.

“It’s been a mammoth job chasing that fissure,” said project manager Ed Speer. “And we still haven’t closed it off.”

Encouraged by the Leopard results, SouthernEra began a program of regional soil and stream sediment sampling, and, eight months after the discovery of the Leopard fissure, a parallel fissure was discovered 750 metres to the north. Drilling has traced this fissure, dubbed Sugarbird, along 4 km of strike length and has shown its average width to be 1.3 metres. Two near-surface enlargements of the Sugarbird fissure were identified in the second half of 1996; the more important of the two came to be known as the Sugarbird blow.

Resources for both the Leopard and Sugarbird fissures are projected to 600 metres below surface, though drilling has only reached depths of 200 metres.

This is not considered an unusual practice, as historical data indicates that South African fissures generally maintain continuity and grade consistency at depth, as well as along strike.

In early 1997, the project took on a new direction when the high-grade M1 pipe was found 12 km east of the Leopard fissure. The pipe is situated on the Marsfontein farm, which is a 65-35 joint venture between SouthernEra and Randgold.

With the third drill hole hitting kimberlite, and some later holes returning up to 10 carats per tonne, the pipe became SouthernEra’s primary focus.

“It was pretty much a success right from the start,” noted Speer.

By the end of 1997, the company had sunk 150 holes in the pipe, accounting for nearly half of the 55,000 metres that were drilled that year. A feasibility study was initiated, as was the construction of a recovery plant. In addition, the mineral rights to the M1 pipe and the major portion of the Sugarbird fissure and blow were acquired. (SouthernEra had already acquired the mineral and surface rights to the Rusland farm, which hosts the Leopard fissure and a portion of the strike extent of the Sugarbird fissure).

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Section 17

SouthernEra had planned to start mining the M1 pipe this month, however, its plans were curtailed earlier this year when 29 heirs of the original owners of mineral rights to a portion of the land hosting the pipe got a South African court to place a temporary injunction against development of the pipe. The dispute concerns the legality of the transferral of mineral rights to Randgold and SouthernEra by the Ministry of Mineral and Energy Affairs.

“The Mining Department said the heirs have no title,” said Jennings. “Our attorneys are very confident . . . and feel that this is a classic case for the application of

Section 17.”

That section of the South African Mining Act stipulates that the minister of Minerals and Energy Affairs may issue prospecting licences or mineral rights to an applicant in cases where beneficiaries fail to claim those rights within two years of the benefactor’s death. The onus is on the applicant to convince the minister of the applicability of the section and, as compensation for the potential resurgence of any heirs, a sum of money must be placed in a trust fund.

In the case of Marsfontein, Randgold was issued a prospecting licence in late 1995, which was renewed one year later. This was followed, in late 1997, by the granting of mineral rights (several decades after the original owners had died, SouthernEra asserts).

SouthernEra says the heirs are basing their claim on South African’s new constitution, which they believe protects their rights despite the existing mining legislation. Court proceedings are scheduled to begin March 16.

As a result of the dispute, SouthernEra set aside its plans for the M1 pipe and drew up a mining plan for the Sugarbird blow instead, where reserves are sufficient for four months of production.

“Production won’t be as high as we originally anticipated, but we will still be producing,” said Jennings. “And this is a credit to our team.” The blow will be mined on 5-metre benches to a depth of 60 metres, at a stripping ratio of 11-to-1. Ore will be hauled 5 km to the diamond recovery plant for processing. The deposit is expected to yield a total of 96,250 carats that should, based on the valuation of 130 carats sold after bulk sampling of the blow, fetch US$100 per carat on the market.

SouthernEra has scheduled the start of mining of the M1 pipe for June, which would mean 358,000 tonnes of M1 ore could be processed by year-end. A total of 805,500 carats is expected to be recovered from the pipe this year, and another 544,500 carats in 1999.

The M1 pipe will be mined at a stripping ratio of 7.4-to-1, and a dilution factor of 15% will be assumed. The current pit outline is projected down to 100 metres, though the deepest hole drilled so far intersected kimberlite with a true thickness of 12 metres at a depth of 200 metres.

“The grade is so high, it will take a high stripping ratio right down to 260 metres,” noted Jennings.

A parcel of 441 carats was valued at an average of US$140 per carat. The parcel has since increased to 760 carats, which was being sorted during our visit.

Diamonds will be recovered using standard techniques. The primary ore is first sent through a ser
ies of crushing, washing and screening processes designed to concentrate the material. All the heavy minerals, including the diamonds (which have a specific gravity of greater than 2.7 grams per cubic centimetre), are further concentrated using heavy-media separation. This material is then fed through a final recovery circuit, where it will be further reduced and subjected to X-ray sorting.

Here, the concentrate is fed through a sorting machine and passed under an X-ray tube. Optical scanners pick up the luminescence from any passing diamonds and trigger a jet of high-pressured air that forces the diamond-bearing material through a mechanically-controlled flap. The diamonds are then sorted in a hands-off glove box.

“Our philosophy was to use proven technology and bring the mine into production,” said project manager David Gadd-Claxton. “The only part we’ve tried to get clever with is the thickener,” he added, describing how that part of the circuit will be refined to the point that, within three years, all slimes (fine material that is detrimental to the environment) will be mixed into the tailings, rendering the slimes dam unnecessary.

He also expects the plant’s water requirements (100 cubic metres per hour) will be cut in half once steady-state production is reached.

The “bread and butter” of Klipspringer are the Leopard and Sugarbird fissures. During 1997, the company drove a 320-metre adit into the Leopard fissure for grade confirmation. A test stope is currently being developed, and development of the Sugarbird fissure will get under way once the pit reserves have been exhausted.

“So far the [Leopard] fissure has behaved itself,” said Gadd-Claxton.

Like other South African fissures, the Leopard fissure occurs as a series of lensoids and horsetails that are displaced along strike. Weathering has penetrated the fissure as deep as 70 metres below surface.

Ore will be extracted by shrinkage mining methods, though both overhand and underhand techniques are being tested. The Leopard fissure is expected to provide 50,000 tonnes of ore for processing in 1998, which, at an anticipated recovery rate of 70 carats per 100 tonnes, translates into 35,000 carats of diamonds. The Leopard’s diamonds are valued at US$120 per carat, based on the sale, in mid-1997, of 4,832 carats for roughly that amount. Another 1,200 carats were being sorted during our visit.

The current underground mine plan calls for 458,000 tonnes to be mined in 1999, 850,000 tonnes in 2000 and a steady annual rate of 1 million tonnes for the remainder of the mine life. Life-of-mine cash costs are anticipated at US$25 per tonne, leaving a substantial operating margin per tonne mined.

SouthernEra estimates that between two and three years of reserves in the fissures are accessible by adits rather than shafts, thus reducing the overall capital costs of underground development.

“The problem at similar projects elsewhere in South Africa is that ownership is held by several people, thus causing inefficient positioning of shafts and, subsequently, inefficient mining,” explains Gadd-Claxton. “We have the luxury of being able to plan this project properly and position our shafts at optimal spots.”

On the exploration front, SouthernEra recently discovered a new kimberlite fissure, boosting the number of kimberlite occurrences found to date to 12.

The fissure occurs on the company’s wholly owned Meinhardskraal farm, situated to the north of Marsfontein and 12 km from the recovery plant.

Three reverse-circulation holes intersected the fissure over a strike length of 750 metres. The easternmost hole hit two intervals of kimberlite separated by 5 metres of granite; the second hole, collared 150 metres to the west, intersected three closely spaced intervals of kimberlite; the third, collared a further 500 metres to the west, hit 2 metres of kimberlite with a true width of 1 metre.

All three holes were drilled to test soil anomalies along a coincident 2-km-long geophysical anomaly.

“The mineral chemistry at Meinhardskraal is far better than at Marsfontein,” said Jennings. “And I’m confident we will be mining

fissures to the north.”

In 1998, SouthernEra plans to spend US$3.3 million of its US$23-million budget on exploration at Klipspringer.

In other news, SouthernEra has signed an agreement in principal to increase its interest and take over the operatorship of the Luo diamond concession in Angola’s Lunda Norte province. The agreement will see the company earn 30% of the production from the project’s riverbed and floodplain deposits.

Previously, SouthernEra held a 10% interest in the riverbed gravels and a 35% interest in the floodplain gravels.

The riverbed and floodplain gravels average 3.15 and 0.31 carats per cubic metre, respectively. The size of the diamonds from the floodplains average 0.31 carat, while those from the riverbed average 0.75 carat.

Material from the deposits are processed in a rotary pan plant. Production this year has averaged 265 cubic metres per day, or 150 carats of diamonds.

A second plant will begin operation in late March, and is expected to enable overall monthly production of 3,000 carats of diamonds in 1998.

Earlier this year, SouthernEra sold 5,758.4 carats of diamonds for US$151.18 per carat, for net proceeds of US$471,415. A total of 24,748 carats averaging US$308.30 has been sold to date. The recent sale is from stones recovered during the fourth quarter of 1997 and the first twelve days of January.

SouthernEra is currently excavating a new diversion channel to prepare a further 2.5 km of riverbed for mining planned for early May. The diversion channel will also provide additional floodplain material for processing.

During the excavation work, a 106-carat stone was recovered; it is described as clear and colorless, with no apparent internal flaws. A valuation of the diamond has not yet been done.

Elsewhere in Angola, SouthernEra has initiated a program of

large-core-diameter drilling to test the Camafuca kimberlite pipe, situated near Calonda in Lunda Norte province. The company holds a 51% interest in the pipe.