Abstract
SYNOPSIS Because of their high degree of geological complexity, kimberlite-hosted diamond deposits are exceedingly difficult to evaluate for economic viability. Accordingly, standard mineral asset evaluation protocols (e.g., the Cost-, Market-, and Income Approaches defined in the SAMREC Code) may not hold sufficient predictive abilities for these deposit types, especially at the early stages of exploration. Here we present a novel tool, a cost filter approach towards preliminary evaluation of economic viability of southern African kimberlite-hosted diamond deposits, using the AK6 and BK11 diamond deposits from the Orapa diamond field as case studies. The development of this cost filter is underpinned by elements of both the Market Approach (i.e., comparisons to similar deposits) and the Income Approach (i.e., use of net present value (NPV) calculations) for mineral asset evaluation. Importantly, the cost filter is constrained through modification of only two primary variables (the average diamond value and the diamond grade) and thus differs significantly from other cost filters that rely on estimation and assumptions for every parameter input into an NPV calculation. The cost filter correctly predicts the sub-economic status of the BK11 diamond pipe, and is thus presented as a useful geo-economic tool for early stage kimberlite evaluation within the local southern African context. The approach and its theoretical underpinning foreseeably hold vast potential for use in the economic evaluation of other ore commodities, particularly where socio-economic and political risk factors can be negated by employing a geographic constraint. Keywords: diamond, economic viability, kimberlites, southern Africa, cost models filter.
Highlights
Sub-Saharan Africa has an established diamond resource industry which began with the first alluvial diamond discovery in the Gariep River (South Africa) in 1866, followed shortly thereafter by the discovery of the first kimberlitic diamond on the farm Koffiefontein and the Jagersontein and Dutoitspan pipes near Kimberley, all in 1870 (Davenport, 2013)
In the last two decades, southern Africa has continued to contribute vastly towards the world’s total diamond output, both in terms of value and volume, producing around 40–50% of global supply (Zimnisky, 2017; Kimberley Process Statistics 2004–2016), with the remainder produced predominantly by Russia, Australia, and Canada. Despite both the historical and present day importance of southern African diamond supply, parts of the region are regarded as being mature mineral provinces with diminished exploration potential (e.g., South Africa), while other parts are hampered by various geopolitical risk factors (Campbell, 2019), and many of the region’s tier-1 diamond operations are approaching the end of their production lifespans
The successful exploitation of a diamond deposit depends on a diverse array of geological, mining, metallurgical, financial, political, and social parameters (Kjarsgaard, Januszczak, and Stiefenhofer, 2019)
Summary
Sub-Saharan Africa has an established diamond resource industry which began with the first alluvial diamond discovery in the Gariep River (South Africa) in 1866, followed shortly thereafter by the discovery of the first kimberlitic diamond on the farm Koffiefontein and the Jagersontein and Dutoitspan pipes near Kimberley, all in 1870 (Davenport, 2013). Open pit operations at Orapa and Jwaneng are predicted to end in 2030 and 2035 respectively, while Venetia is in the process of moving from an open pit to underground operation (Table I) These local supply factors, compounded by the predicted 1–4% annual increase in natural diamond demand (Linde et al, 2016), emphasize the need for continued exploration efforts to identify diamondiferous kimberlite pipes in sub-Saharan Africa that can be developed at lowered financial risk.
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