De Beers’ rough diamond production for the third quarter of 2019 has decreased by 14 per cent to 7.4 million carats, a production report from the mining giant released today has revealed. According to the global diamond miner this was due to planned reductions in South Africa and Canada.
The continued downward trajectories in the global rough diamond market has also suppressed production guidelines “we continue to produce to weaker market demand due to macro-economic uncertainty as well as continued midstream weakness” states De Beers Directors in the report.
In Botswana where De Beers operates 4 mines under the bracket of Debswana, a 50-50 partnership with Government of Botswana production closed the quarter with flat figures at 5.7 million carats. Orapa Mine which encompasses 2 other small operations in Letlhakane and Damtshaa realized an upswing in production as figures jumped by 22 per cent due to a planned increase in the grade of material treated.
However this was offset by low output at the Prince of Mines, Jwaneng where production declined by 18 per cent due to planned lower grade. Jwaneng produces top gem diamonds, and the mine alone accounts for more that 70 % of Debswana revenues. It is considered the world’s richest diamond mine by value.
OTHER DE BEERS OPERATIONS
In Namibia through Namdeb Holdings , another 50-50 partnership with host Government (Namibia) , production decreased by seven per cent to 0.4 million carats, as the Elizabeth Bay land operations were placed on care and maintenance in Q4 2018. In Namibia De Beers through Namdeb Holdings operates inland mining operation and a marine diamond recovery through DebMarine in the Namibian coast of Atlantic Ocean.
De Beers Consolidated Mines in South Africa registered major production downswing as output declined by 60 per cent to 0.5 million carats due to lower mined volumes at Venetia Mine. Venetia Mines is fast approaching its transition from open pit to an underground operation. Another contributory factor to the subdued output in South Africa was Voorspoed which its production ended in Q4 2018 when it was placed on care and maintenance in preparation for closure. Across oceans in Canada, Production decreased by 34 per cent to 0.8 million carats primarily due to the closure of Victor Mine which reached the end of its life in Q2 2019.
ROUGH DIAMOND SALES
During Quarter 3 of 2019, De Beers rough diamond sales amounted to 7.4 million carats, 7.1 million carats on a consolidated basis from three sales cycles, which compares to 5.0 million carats of sales, 4.6 million carats on a consolidated basis from two sales cycles in Q3 2018. These mirriors rough diamond sales volumes were therefore higher due to an additional sales cycle in the period compared with the previous year. De Beers however underscored in the production report that overall demand for rough diamonds remains subdued as a result of challenges in the midstream with higher polished inventories and caution due to macro-economic uncertainty.
In July this year De Beers announced that it has decreased its rough diamond production in Q2 by 14% to 7.7 million carats and revised its full-year guidance downwards to ~31 million carats in response to a backlog of polished diamond inventories in the midstream and weaker trading conditions. In addition to declines in production, the average prices De Beers achieved for their rough diamonds fell by 7% to US$151/carat during 1st half of 2019 compared to US$162/carat 2018 H1 figure, this was driven by a 4% reduction in the average rough price index and a change in the sales mix in response to weaker conditions.
De Beers’s rough diamond sales were also very slow in August (cycle 7) the provisional revenues at the seventh sight of 2019 totaled to $280 million. This was significantly lower than the $503 million sold at Sight 7 2018 by 44 %. Cycle 6 was also low; it registered the lowest amount earned from a sale since December 2015 at $250 million. The company says production guidance will remain unchanged at ~31 million carats, subject to trading conditions.
This week Minister of Finance & Economic Development, Dr Thapelo Matsheka approached parliament seeking lawmakers approval of Government’s intention to increase bond program ceiling from the current P15 Billion to P30 billion.
“I stand to request this honorable house to authorize increase in bond issuance program from the current P15 billion to P30 billion,” Dr Matsheka said. He explained that due to the halt in economic growth occasioned by COVID-19 pandemic government had to revisit options for funding the national budget, particularly for the second half of the National Development Plan (NDP) 11.
Botswana Stock Exchange (BSE) has this week revealed a gloomy picture of diamond mining newcomer, Lucara, with its stock devaluated and its entire business affected by the COVID-19 pandemic.
A BSE survey for a period between 1st January to 31st August 2020 — recording the second half of the year, the third quarter of the year and five months of coronavirus in Botswana — shows that the Domestic Company Index (DCI) depreciated by 5.9 percent.
Botswana Diamond PLC, a diamond exploration company trading on both London Stock Exchange Alternative Investment Market (AIM) and Botswana Stock Exchange (BSE) on Monday unlocked value from its shares to raise capital for its ongoing exploration works in Botswana and South Africa.
A statement from the company this week reveals that the placing was with existing and new investors to raise £300,000 via the issue of 50,000,000 new ordinary shares at a placing price of 0.6p per Placing Share.
Each Placing Share, according to Botswana Diamond Executives has one warrant attached with the right to subscribe for one new ordinary share at 0.6p per new ordinary share for a period of two years from, 7th September 2020, being the date of the Placing Warrants issue.
In a statement Chairman of Botswana Diamonds, John Teeling explained that the funds raised will be used to fund ongoing exploration activities during the current year in Botswana and South Africa, and to provide additional working capital for the Company.
The company is currently drilling kimberlite M8 on the Marsfontein licence in South Africa and has generated further kimberlite targets which will be drilled on the adjacent Thorny River concession.
In Botswana, the funds will be focused on commercializing the KX36 project following the recent acquisition of Sekaka Diamonds from Petra Diamonds. This will include finalizing a work programme to upgrade the grades and diamond value of the kimberlite pipe as well as investigating innovative mining options.
Drilling is planned for the adjacent Sunland Minerals property and following further assessment of the comprehensive Sekaka database more drilling targets are likely. “This is a very active and exciting time for Botswana Diamonds. We are drilling the very promising M8 kimberlite at Marsfontein and further drilling is likely on targets identified on the adjacent Thorny River ground,” he said.
The company Board Chair further noted, “We have a number of active projects. The recently acquired KX36 diamond resource in the Kalahari offers great potential. While awaiting final approvals from the Botswana authorities some of the funds raised will be used to detail the works we will do to refine grade, size distribution and value per carat.”
In addition BOD said the Placing Shares will rank pari passu with the Company’s existing ordinary shares. Application will be made for the Placing Shares to be admitted to trading on AIM and it is expected that such admission will become effective on or around 23 September 2020.
Last month Botswana Diamond announced that it has entered into agreement with global miner Petra Diamonds to acquire the latter’s exploration assets in Botswana. Key to these assets, housed under Sekaka Diamonds, 100 % subsidiary of Petra is the KX36 Diamond discovery, a high grade ore Kimberlite pipe located in the CKGR, considered Botswana’s next diamond glory after the magnificent Orapa and prolific Jwaneng Mines.
The acquisition entailed two adjacent Prospecting Licences and a diamond processing plant. Sekaka has been Petra’s exploration vehicle in Botswana for year and holds three Prospecting Licenses in the Central Kalahari Game Reserve (Kalahari) PL169/2019, PL058/2007 and PL224/2007, which includes the high grade KX36 kimberlite pipe.