In the media

Diamondcorp goes hunting Kimberlites in big game country

18 November 2009


Author: Alastair Ford

One drill hole does not make a mine, but all great projects have to start somewhere. Results have just come back from the initial drillhole that Diamondcorp has sunk into its J1 kimberlite target in Botswana, and so far so good. The drilling intersected kimberlite from a depth of 17 metres all the way down to the bottom of the hole at 340 metres. The rig has now moved 200 metres across to the other side of the 10 hectare geophysical anomaly, and results from the current work will be out next week. So things are moving pretty fast at J1, all told, but only after a long hiatus.

In fact it was back in the early 1980s that work first got underway at J1, which at that stage was still locked firmly inside the De Beers portfolio. De Beers drilled a couple of holes to 50 metres, but was then sidetracked once and for all by ongoing work at its nearby J2 project. J2 ended up becoming the Jwaneng mine, one of the largest diamond producers in the world, and with that on its plate, operations at J1 just sort of slipped down the “to do” list. By the time it had made it back to the top of the pile, De Beers had already said goodbye under ‘use it or lose it’ legislation.

For fans of nearology, the successful drilling of a 300 metre-plus kimberlite just eight kilometres south of Jwaneng will surely be of interest, notwithstanding the long odds on any kimberlite being both diamondiferous and economic. “It’s the first one. It’s a great result from the first hole”, says Paul Loudon, Diamondcorp’s chief executive. “One hole doesn’t make a good deposit, but it’s a good start”.

Once the results of the second hole come in next week it ought to be possible to infer what sort of volumes of kimberlite rock J1 may contain. If the second hole shows kimberlite down to similar sorts of depths, then Paul speculates there could be around 50 million tonnes. But, speaking as a man who’s had to roll with the punches as the credit crunch intensified, Paul is fairly sanguine about the possibilities of failure too. “If we don’t get an economic grade we move on”, he says, simple as that.

Diamondcorp has earn-in rights to a Botswana exploration portfolio containing at total of nine identified kimberlites, of which J1 is considered to be the lead target. The historic De Beers work seemed to indicate that a grade of as much as 35 carats per hundred tonnes (cpht), might be obtainable from the project, although that assessment was based only on drilling to a depth of 50 metres. However, Paul reckons that if stones at J1 came in as having a similar carat value to those at Jwaneng, which is widely recognised as the source of the world’s most valuable diamonds, then anything better than a grade of 10 cpht would be economic. No wonder he says that the work at J1 is “potentially very exciting”.

Meanwhile, in South Africa, Diamondcorp’s Lace project remains on care and maintenance, and, says Paul, “it will stay that way until such time as we can raise more money to fund development”. One reason for pushing ahead with work on J1 at this time is that any exploration success would reflect well on the company’s share price, especially in the current diamond market, in which, as Petra Diamonds recently reported, prices have been improving markedly. A nice boost to Diamondcorp’s bombed out shares ahead of any potential raise for a restart at Lace would be welcome indeed.

Paul is quite candid about this. “The price that we can finance at will in some way be determined by the Botswana drilling”, he says. But if that makes it sound as if the company is holding itself up as a hostage to fortune, there’s plenty running in Lace’s favour right now. “It’s a 25 year diamond resources economic at current prices”, says Paul succinctly. “We just need development capital”. Skipping lightly over the fact that a certain section of the resource didn’t live up to expectations, it’s by and large true to say that Lace was scuppered by the collapse in diamond prices in 2008. At that stage it was on track to re-start production, but never quite made it.

Financing the restart of a small diamond project was unlikely to make anybody emerge from the trenches as 2008 came to a close. Financing one that was experiencing certain technical complications looked like being a near impossibility. But Diamondcorp’s directors are no strangers to capital markets. They cut their cloth accordingly, surviving on small raisings, and looking to the future with the new exploration portfolio. With the diamond market at last showing signs of recovering its poise, it’s possible that Diamondcorp will emerge into 2010 as a company with not one, but two viable projects on the go. You never know.

Useful links

Mining news links sites

Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment.
Miningmx is a new online mining media enterprise, a publication held in joint venture with Finance Week, a business unit of Media 24 which is, in turn, a division of South Africa’s largest media group, the US-listed Naspers Limited.
Informed comments and independent mining news.
Resource Investor
Resource Investor provides unique independent news, analysis, commentary and analytics on the sectors with the goal of empowering readers with information.

© 2017 – DiamondCorp Plc  |  Register for alerts |Glossary | Sitemap | Disclaimer
Produced by: Russell & Associates