Key points
- MRDI estimated Marshall Fork’s indicated resource at 364,900 carats and inferred resource at 549,700 carats, totalling 914,600 carats over one million square metres.
- AGRA Simons estimated capital and operating costs of $39-million (U.S.) over a two-year period, with net revenue of $52.1-million (U.S.) based on the indicated resource.
- The pretax project rate of return exceeds 100 per cent on the base case, using an average sales price of $150 (U.S.) per carat.
- The mining technology, developed by Seacore Ltd. of Cornwall, U.K., uses a horizontal mining system capable of excavating over 4,000 cubic metres per day.
Diamond Fields International has received positive results of an independent scoping study
undertaken by AGRA Simons, of Vancouver, B.C., for an initial sea
diamond mining operation on Diamond Fields’ 100-per-cent owned Marshall Fork feature
near Luderitz, Namibia. The Marshall Fork feature is one of four known
diamond-bearing features on Diamond Fields’ primary concessions totalling 660
square kilometres near Luderitz, Namibia.
Diamond Fields retained AGRA Simons to prepare a scoping study to develop
capital and operating costs parameters for the recovery of diamonds from the
Marshall Fork feature. AGRA Simons estimates that diamond mining at Marshall
Fork could commence within one year of Diamond Fields’ decision to proceed
with an operation as outlined in its study. Diamond Fields plans to proceed
to a full feasibility study. Diamond Fields’ management is very encouraged by
the findings of the study as they clearly support the company’s belief that
the Marshall Fork feature has the potential to host a highly profitable sea
diamond mining operation.
The scoping study is based on an independent resource estimate completed
by MRDI, a division of AGRA Simons. MRDI’s estimate showed that Diamond
Fields’ Marshall Fork main feature contains an indicated resource of 364,900
carats and an inferred resource of 549,700 carats totalling 914,600 carats over
an area of one million square metres.
Scoping study financial analysis
The AGRA Simons scoping study estimates capital and operating costs of
$39-million (U.S.) over a two-year period. Net revenue based on the indicated
resource estimate is $52.1-million (U.S.). Net revenue is
based on an average sales price of $150 (U.S.) per carat for the 95 per cent+ gem quality
diamonds typically found on the property, less a 10-per-cent royalty payable to the
Namibian government prior to export for sale. Over 10,000 carats of diamonds
recovered from bulk sampling operations were sold in 1999 for an average price
in excess of $160 (U.S.) per carat. Net revenues increase to $86.0-million (U.S.) for
the base case plus recovery of 50 per cent of the inferred resource and
to $119.8-million (U.S.) for the base case plus recovery of 100 per cent of the inferred
resource. There would be no change to the capital and operating
costs in recovering any or all of the inferred resources. The pretax project
rate of return exceeds 100 per cent on the base case.
Financial Analysis Summary
(millions of U.S. dollars)
Net revenues and project cash flows
include 10% royalty payment.)
Capital Operating Net Pretax
Expen- Expen- Revenues Project
diture diture Cash
Flow
Base case
$10.8 $27.7 $52.1 $13.7
Case 1 (50% of inferred)
10.8 27.7 86.0 45.5
Case 2 (100% of inferred)
10.8 27.7 119.8 81.4
Considering the indicated resource only, the scoping study base case
projects that the mine would produce at an initial rate of over 250,000 carats
per year. With the estimated productivity of the mining method, an average
sediment thickness of only 1.3 metres and depending upon the recovery of all
or a portion of the inferred resources, the initial production rates could be
significantly higher. Namibian Minerals successfully
mines diamonds from its concession that adjoins Marshall Fork on the south
with an average sediment thickness in excess of 3.0 metres. Namco’s production
for 1999 was projected to be approximately 260,000 carats on the adjoining
feature.
Mining technology
The scoping study estimates (with an accuracy of +/- 30 per cent to 35 per cent) are based
on proposed mining technology developed by Seacore Ltd. of Gweek, Cornwall,
U.K., an established marine drilling and civil engineering company, and 50 per cent
owned by AGRA Simons. The technology proposed in the scoping study is a
horizontal mining system using an articulated, slewing mining arm and pump
assembly attached at the base of a rigid, heave compensated slurry pipe. This
system, capable of excavation at a rate of over 4,000 cubic metres per day,
would deliver diamondiferous gravels to a nominal 100 tonne-per-hour DMS plant
aboard a support vessel. Deployment and recovery of the mining system via a
through-the-hull moon pool would be performed by standard marine drill
recovery equipment. The proposed mining system is based on proven technology
components and would also be suitable to conduct premining development of
Diamond Fields’ other diamondiferous features off Luderitz. Further analysis
of the suitability of the proposed system would be undertaken as part of a
full feasibility study.
The company’s 100-per-cent-owned Marshall Fork feature is currently held under an
exclusive prospecting licence. Commencement of mining at Marshall Fork is
subject to the conversion of the relevant portion of this licence to a mining licence.
With total resource estimates of over two million carats, there is strong
growth potential beyond Marshall Fork. Phase 3 reconnaissance sampling work
has just been completed with a primary focus on the Boat Bay gravel feature.
New resource estimates from this work will be released upon receipt of the
final data from DeBeers Marine and review by Diamond Fields.
DFI Resource Estimates
(February of 2000)
Area Indicated Inferred Total
Marshall
Fork 364,900 549,700 914,600
Diaz Reef
features 524,200 81,100 605,300
Staple
Basin area
(Boat Bay) 150,700 73,800 224,500
Shallow
waters – 276,000 276,000
Totals 1,039,800 980,600 2,020,400