Gem Diamonds reports Q1 Indonesian production, sales
Thursday, April 24 2008 - 02:48 AM WIB
BDI Mining was acquired by Gem Diamonds in May 2007 for US$78.2 million. It owns 80% of the Cempaka alluvial diamond mine in south Kalimantan, Indonesia in partnership with the Government of Indonesia which owns the remaining 20%. BDI Mining also owned the Woodlark Gold Project which was subsequently sold for US$27 million.
The alluvial deposits at the Cempaka mine consist of the Danau Seran and Cempaka paleo-channels. The former, which is significantly smaller but was of a higher grade, was mined since the commencement of the operations in 2004, and is almost depleted. Mining moved to the Cempaka channel in the second half of 2007.
BDI Mining?s Cempaka mine produces high quality white diamonds as well as an array of coloured diamonds. Limited capital and mining expertise had hampered production and thereby increased unit costs. This provided the opportunity for the Company whose operational strategy at Cempaka was to ramp up cubic metres processed, driving down unit costs and simultaneously seek better diamond prices through improved sales techniques. All three of these initiatives were successful with cubic metres processed up from an annualised 130 000 bcm on acquisition to 672 000 bcm annualised by year end. Annualised processing of 960 000 bcm is targeted.
Some 10 400 carats from Cempaka were sold during 2007 prior to Gem Diamonds acquisition of BDI Mining at an average price of US$218 per carat. A revision of this sale process was under?taken by Gem Diamonds and in 2008 an average price of US$331 per carat has been achieved, representing a 51% increase over previous prices.
At these levels, Cempaka remains a small operation for Gem Diamonds. To maximise the return on investment, production levels need to increase. Feasibility studies in this regard are ongoing and results are expected in late 2008.
Production
Mining in Q108 was predominantly in the Cempaka channel as opposed to the Danau Seran channel in the comparative period. Production for Q108 was as follows:
| ? |
Q108 |
Q107 |
% Change |
| Gravel mined and treated (mt) | 0.54 | 0.13 | 315% |
| Overburden stripped (mt) | 1.82 | 0.74 | 146% |
| Strip ratio | 3.35 | 5.88 | - |
| Carats recovered | 6 004 | 4 845 | 24% |
| Grade (cpht) | 1.10 | 3.83 | -71% |
| Au/Pt conc produced (kg) | 4.5 | 3.1 | 45% |
The build up of gravel treated continued in the first two months of Q108 culminating in the achievement for the first time of the targeted 216 000 tonnes in February 2008. The recovered grade was lower than expected but improved grades are anticipated in the areas being mined for the balance of 2008.
Rainfall led to widespread flooding and adversely affected production in March 2008. The mining block in Danau Seran channel was flooded and will take several weeks to dewater. The mining face in the Cempaka channel was less severely affected and will be available earlier than the Danau Seran block.
Sales
| Q108 |
Q107 |
% Change |
% Change |
% Change |
||||
| Cts sold | Total tender value US$ millions | Achieved US$/ct | Cts sold | Total tender value US$ millions | Achieved US$/ct |
Cts sold |
Total tender value US$ millions | Achieved US$/ct |
| 15 041 | 5.0 | 331 | 7 661 | 1.7 | 225 | 96% | 194% | 47% |
Expansion and Development
A DMS plant has been procured for Cempaka and will be delivered in Q208. This will enhance the mine?s recovery process.
The delivery of the mining fleet for the expanded production and conversion from contactor to owner mining is largely complete. (end of excerpt)