In 2014 I spoke with the then Lucara Diamond chief operating officer, Paul Day on the sidelines of the Botswana Resource Sector Conference.
He said at the time that enhanced contained value per tonne at Karowe mine in Botswana provided an opportunity for an underground operation at the mine beyond 2026.
“I think if one was to take the balance of production, year to date, one would come up with a contained value according to the resource model of between $380 and $400 per carat; we have achieved well over $600 per carat,” he said.
“Initially we were planning to undertake such a study in 2017 and 2018, but in fact, we are looking at doing a conceptual study for underground development in the very near future.
“We are hoping that will come to fruition and if does indicate that then we will study further and inevitably that success will take the life of the mine well beyond 2026.”
In 2017, Lucara outlined plans for a $195 million underground extension of Karowe following the publication of a preliminary economic assessment that projected total production of 2.72 million carats in 2026 when the open-cast mine at Karowe was projected to be exhausted.
Then, in 2019, Lucara Diamond said it will prioritise the completion of a feasibility study examining the potential for underground production and the life of mine expansion in 2026.
The study was completed in November 2019, and Lucara indicated that it expected to double the mine life and generate significant revenue and cash flow out to 2040.
Lucara then approved a budget of up to $53 million in December 2019 for early works related to a proposed underground mine.
The pre-production capital cost of the underground project was set at $514 million.
When COVID-19 struck, Lucara had to revise its initial capital budget for the Karowe underground project until the uncertainty in global markets caused by the pandemic was gone.
No details were given concerning the budgetary cuts.
Lucara managed to renew its Karowe mining licence in January 2021 for a period of 25 years, securing mining rights until 2046 and marking a critical step in the formal sanction of the Karowe underground expansion project.
In 2022, Lucara updated the estimated capital cost for the Karowe underground project to $547 million (including contingency).
As a result of sinking delays and grouting events beginning in mid-2022 and which are ongoing, the company said it was evaluating the impact of the incurred delays against the overall project schedule and budget.
Several operational adjustments were implemented beginning in the fourth quarter of 2022 to address the challenges encountered.
Lucara said an update to the project schedule and budget to take into account these developments was expected to be completed before the end of the second quarter of 2023.
It spent $30.5 million on the Karowe underground project development during the three months that ended March 31, 2023, primarily on ongoing construction activities.
These include the main sinking in the production and ventilation shafts, the 11 kV transmission line to the project, the transition of the temporary power supply to a backup power configuration, and the rollout of a behavioural-based safety training programme.
Lucara said activities for the Karowe underground project in the second quarter of 2023 are expected to include sinking and grouting within both the ventilation and production shafts, procurement of underground equipment, including dewatering pumps, underground crush and convey systems, and the permanent stage winder.
The company will also initiate construction on the bulk air cooler system; develop a request for proposal for the underground lateral development work; and continue with the detailed design and engineering of the underground mine infrastructure and layout.
The capital cost estimate for the underground expansion in 2023 is $105 million.
Lucara noted that ramp-up to planned sinking rates for the ventilation shaft continued and additional cover grouting events are expected for both shafts in 2023 and 2024.
The Karowe underground project is expected to extend the mine life, with initial underground carat production predominantly from the highest value EM/PK(S) unit and is forecast to contribute about $4 billion in additional revenues, using conservative diamond prices.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
