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There's diamond in them thar hills!

Redaurum which has extensive diamond mining operations in South Africa and Zimbabwe has begun work on the first large-scale diamond mine in the USA. This will bring Redaurum's total annual production to over 75,000 carats per year, making it one of the biggest operators in the field.

North America's first large scale diamond mine has started commercial production at Kelsey Lake, close to the state border of Colorado and Wyoming. The new mine is expected to produce more than 25,000 carats of diamonds in its first year, mainly of gem quality, for its owners Redaurum Ltd, which also owns diamond mines in Zimbabwe and South Africa. Production at Kelsey Lake will be increased gradually to 150,000 carats a year in 1996-97.

Redaurum is a public company listed on the Toronto Stock Exchange but British managed and with shares traded in London. It will be seeking a full listing on the London Stock Exchange early in 1996.

Mr Anthony Hamilton, President and Chief Executive of Redaurum, said "We think Kelsey Lake diamond mine will excite a lot of Americans who have not believed, until now that is, that the USA has quality diamonds in any quantity. We have met with a lot of scepticism, but we are now about to prove that there is not only 'gold in them thar hills' but gem diamonds as well."

The start of commercial production at Kelsey Lake brings the number of Redaurum's operating mines to four with three others in Southern Africa. Total production from all of Redaurum's operations is anticipated to exceed 750,000 carats annually from 1997.

Redaurum and Auridiam Consolidated NL of Australia are equal joint venture partners in the kimberlite River Ranch diamond mine in Zimbabwe, close to the border with South Africa at Beit Bridge. Production at the River Ranch mine continues to rise following the commissioning of the stage III treatment plant in November which will increase ore treatment to 2m tonnes a year and produce above 450,000 carats of diamonds a year. A gem diamond of 65 carat has since been recovered.

Work is also continuing on the development of Redaurum's alluvial diamond mines at Quaggas Kop and Avontuur in South Africa. Redaurum completed the acquisition of an 80% interest in the Avontuur diamond mine and took over management control of the operation last month. The Avontuur mine is a producing alluvial diamond mine from a 796 acre property on the west coast of South Africa near Hondeklip Bay. The area is famous for its alluvial gem diamonds and is adjacent to two other operating mines of De Beers and Trans Hex, South Africa's two largest diamond producers.

Production increase

The purchase price of R5.5m ($2.1m) includes the acquisition of the mining permit and surface rights to the whole of the Avontuur property as well as all plant and equipment. Redaurum plans to increase production over the next year to at least 2,000 carats per month. The mine has been in limited operation since May 1994, producing approximately 260 carats per month of diamonds, 90% of which are gem quality, although the Avontuur property is known to have a diamond resource of 180,000 carats, valued conservatively at $35m, on approximately 10% of the property's acreage.

Also in South Africa, Redaurum is increasing production at the Quaggas Kop alluvial diamond mine. The company purchased 100% of the mine in July this year. The twin 10 foot rotary pan diamond recovery plant is operating at its capacity of 40 tonnes per hour, with the largest diamond recovered since operations recommenced on July 17 being a one carat gem stone.

Quaggas Kop mine has historically produced 85% gem quality diamonds. A second stage development will double the current plant's capacity. The new earthmoving fleet now on site will not require any further upgrade to cope with the additional throughput. Annual sales from production are anticipated to exceed $2m per annum.

Alluvial diamonds

Redaurum is also engaged in drilling alluvial diamond targets on the Konkiep River in Nambia where it has confirmed the presence of a well defined paleo-river channel containing a basal gravel horizon.

The gravel is of mid-to-late Tertiary age and is characteristic of the deposits further downstream on the lower Orange River that are well known for their high quality diamond production. Overburden varies from 8 metres to 15 metres in thickness.

Redaurum also has interests in diamond exploration projects in South Africa, Botswana, Namibia and Indonesia, in addition to it 50% joint venture ownership with Auridiam of an extensive diamond exploration programme in Zimbabwe.
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Title Annotation:North America's first large-scale diamond mine
Publication:African Business
Date:Feb 1, 1996
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