Key points
- First-half 2000 production was approximately 100,000 carats.
- MV Oceandia was withdrawn from operation on June 1, 2000, as upgrading it was uneconomic.
- Construction of the Nam 2 mining system is complete, with dry-land testing underway and commissioning expected in the fourth quarter of 2000.
- Diamond prices averaged $184 (U.S.) per carat for the six months ended June 30, 2000, versus an expected $155.
Namibian Minerals has recorded its progress on its Nam 2 mining system and exploration
activities, and a revised production outlook for 2000.
Lower production levels continued in the second quarter as a result of
more difficult than expected mining conditions for the company’s major
production vessel, MV Kovambo, the extended time in port required to upgrade
MV Namibian Gem, and the decommissioning of MV Oceandia. Production for the
first half of the year was approximately 100,000 carats.
After initial testing of ODM areas in the first quarter, the NamSSol
mining system supported by MV Kovambo returned to mining licence 51. More clay
than expected was encountered in these mining areas, causing tracking
difficulties for the machine and reduced mining rates. NamSSol has since been
relocated to other parts of mining licence 51 which have easier mining
conditions but are of lower grade.
The new Nam 2 second-generation mining system has been specifically
designed to deal with these more difficult mining conditions with more
tracking power, reduced weight pressure, cutters and water jetting and it will
be used in the areas where NamSSol cannot operate. Mining of parts of mining
licence 51’s diamond resources has therefore been deferred until the arrival
of the new-generation machine.
Production was also affected by the extended time required to upgrade
MV Namibian Gem in the second quarter. A complete engineering overhaul was
required to bring the vessel up to necessary standards. The vessel spent 2.5 months in port, which was substantially longer than expected.
MV Namibian Gem returned to production in late June and production levels have
already benefited this quarter. To concentrate on continuous production, the
proposed minor modifications to MV Ivan Prinsep have been deferred until 2001.
MV Oceandia was withdrawn from operation on June 1 as the cost to upgrade her
was uneconomic.
With difficult mining conditions for NamSSol, a delay in production from
Nam 2 and the removal of one ODM vessel from production, the
company’s target production for 2000 will not be achieved. The revised
production estimate from three vessels is in the range of 225,000 to 250,000
carats. Higher-than-expected diamond prices ($184 (U.S.) per carat for six months
to June 30, 2000, against an expected $155 (U.S.) per carat will to some extent
offset the lower revenues from revised production estimates. Cash at June 30,
2000, was $13-million (U.S.).
“Mining conditions have proved harsher than expected. The year 2000 is now a year
of consolidation as we continue to expand our technology to handle the even
more rigorous mining conditions and geological settings. We look forward to
resumption of growth in 2001,” said chairman and chief executive officer, Alastair Holberton.
Construction of Nam 2 mining system complete
Construction of the new Nam 2 mining system is complete, and dry-land
testing began last week. Namco’s first marine mining system, NamSSol,
revolutionized the ocean diamond industry with its ability to pump high
volumes of seabed material using advanced dredging techniques. Further
innovations have been added to Nam 2, which is specially designed to
facilitate mining through thicker overburden and more challenging geological
terrain. Dry testing of Nam 2 will continue over the next two months.
Namco’s new mining vessel, MV Ya Toivo, which will provide the operating
platform for Nam 2, arrived in Cape Town from Poland on July 3. Since November,
1999, extensive modifications have been carried out on the former British navy
vessel including deck extensions, the installation of a four-point mooring
system, a helicopter deck and a dynamic positioning system and the
refurbishing of onboard accommodation. Conversion of the vessel, at owner’s
cost, took one month longer than scheduled. The 8,000-gross-ton MV Ya Toivo
will be one of the largest diamond mining vessels deployed off the Namibian
coast.
Installation of the 100-tons-per-hour processing plant on the MV Ya Toivo
began on July 5 and is expected to take 16 weeks to complete.
Commissioning is now expected to be completed in the fourth quarter of 2000.
Following commissioning of Nam 2 and MV Ya Toivo, a full year of
commercial diamond production is planned for 2001 from the four mining
vessels.
Sampling to start in third quarter
Sampling is on schedule to start this quarter using a new drilling tool
jointly designed by Namco and German engineering company, Wirth. Following
completion of 2,500 line kilometres of geophysics over selected parts of Mining
Licence 36 in April, MV Zacharias was converted for sampling. A helicopter
deck, 10-tons-per-hour processing plant and complete launch and recovery
system were installed. Results from the geophysics were encouraging, with many
new geological features identified for testing. The sampling tool’s unique
ability to operate in a wide range of ocean floor conditions and to determine
the precise nature of the mining conditions such as sediment composition, clay
and minability, will enable the optimum mining systems to be allocated to
different parts of Namco’s concessions.
“The start of a continuous sampling program is one of our most
significant milestones. This tool will allow us to develop the full potential
of our ocean diamond resources,” said Mr. Holberton.
Second quarter and half-year financial results will be published in mid-August.
