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26 december 2016

excl_26122016_xx.jpgHaving 60 years of industrial diamond mining experience under its belt, ALROSA has long been successfully operating in several African countries, which are applying its expertise to a full extent. In 2012, the company formulated its Strategy for Developing Projects in Africa, which is being used as a guideline to explore and develop diamond deposits in Angola, Botswana and Zimbabwe considered to be priority projects by the Geological Research Unit of ALROSA. In an interview to Rough&Polished, Victor Ustinov, Doctor of Geological and Mineralogical Sciences, who is also heading the company’s Department for Evaluation of New Areas (based in Saint-Petersburg), talks about the search for diamonds in the Republic of Botswana in 2016.

Could you tell us about the search for diamond deposits carried out by ALROSA in Botswana?

ALROSA has been involved in diamond exploration in Botswana since 2014 within the framework of a joint venture with Botswana Diamonds, which is Sunland Minerals.

Sunland Minerals was established in 2013 based on the decision of ALROSA’s Executive Committee with the aim to identify primary diamond deposits in Botswana. This joint venture has two shareholders, which are ALROSA (50%) and Botswana Diamonds (50%).

The establishment of the joint venture was preceded by research performed by the Department for Evaluation of New Areas under the Agreement on Technical Cooperation between the geological services of the two companies signed in December 2011.

The main intended purpose of these studies was a comprehensive assessment of Botswana’s potential diamondiferous capacity, the selection of promising areas to identify primary diamond deposits and thus ensure long-term planning of geological exploration for ALROSA in the southern African region.

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And who is supervising the activities of the joint venture?

The managerial body is represented by the Board of Directors consisting of four people - two representatives from ALROSA and two representatives from Botswana Diamonds, who supervise the activities free of charge. ALROSA is represented in Sunland Minerals by Sergey Mityukhin and Viktor Ustinov and Botswana Diamonds by John Teeling (Ireland) and Kobelo Moholo (Botswana). Decisions within the joint venture are taken by majority vote.

Each year, the Board of Directors reviews and discusses the Work Program and Budget for the next year. Documents are initially agreed with the top management of Botswana Diamonds, and then with the top management of ALROSA. After agreeing on the main directions of work and budget, the partners develop a Program of Work (draft) for the first half of the year. Depending on the types and volumes of work the joint venture hires experts for temporary work (usually for two months) on a contract basis.

Proceeding from the results obtained during exploration in the first half of the year, the partners compile a program and budget for the second half. The works performed by the company are highly dynamic and rapidly adjusted according to current results obtained (taking into account new anomalies that require immediate verification, the need to drill exploration targets, and so on).

Field works are led by the Chief Geologist, who is also the Project Manager. In fact, this person is the joint venture’s Geology Director, whose candidacy is previously agreed by the Board of Directors. Decisions on hiring highly qualified personnel are also taken if agreed by both parties.

The joint venture submits financial statements in line with the national standards of Botswana on an annual basis. Also, the company is subject to external auditing, which takes place every year.

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What can you say about Botswana Diamonds?

Botswana Diamonds was established for geological exploration in Botswana, Zimbabwe and Cameroon and was listed on the London Stock Exchange in February 2011. The company’s largest shareholders include its directors, JPMorgan and investment firm Investec.

A major achievement of Botswana Diamonds is the prospecting performed by its predecessor, African Diamonds, of the AK 6 kimberlite pipe (Karowe) in the Orapa area, which was previously considered uneconomic to develop. This allowed us to estimate the reserves of the diamond field at 24 million carats, which subsequently led to the sale of this business and deposit to Canada-based Lucara. It is known that at present diamonds recovered from this deposit appear to be the most expensive in the world and one recently discovered stone weighing 1,109 carats (Lesedi La Rona or Our light) became the world's second largest diamond after the famous Cullinan.

The President of Botswana Diamonds is John Teeling, a well-known businessman, while the company’s Geological Survey Service is headed by James Campbell, who has more than 30 years of experience in the field of exploration and development of diamond deposits.

How is Sunland Minerals operating in Botswana?

The work of the joint venture is usually carried out in two stages during the year within the budget approved by ALROSA and Botswana Diamonds, which is financed on a pro rata basis, i.e. 50 to 50 per cent. The duration of each stage is about 6 months. Each stage includes drawing up a program of work and budget, which are reviewed and approved by the Board of Directors of the joint venture; the organization of exploration; its implementation; subsequent data processing; and developing recommendations for the next stage.

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Field works are performed by lead experts (geologists, mineralogists, geophysicists) from ALROSA, Severalmaz and Botswana Diamonds. Field works continue about four months in a year. Geologists and geophysicists working on their sites live in tents. Daily air temperatures reach almost 40-50°C in the shade. The mineralogical laboratory works on the basis of the joint venture in Letlhakane. The presence of qualified mineralogists in the field allows you to quickly perform sample analysis and thereby adjust the activity of geoscientists to study anomalous objects. Along with such experienced Botswanan geologists as Benjamin Mosigi, who has been engaged in the diamond geology for many years, there are young Botswanan professionals at Sunland Minerals, some of whom have received higher education in Russian universities.

The joint venture has no permanent administrative personnel, thus saving significant funds, while the company employs staff only to perform certain types of work.

The projects done by Sunland Minerals are a good example of ALROSA’s effective work overseas. It is noteworthy that this is the first experience of performing exploration by ALROSA along "Western" standards. There is no doubt that the company will discover new diamond pipes and its work will bring good results.

How would you formulate the main results of prospecting?

During 2014-2016, the works were carried out on 15 license areas of over 3,000 square kilometers. I would like to specify the following as examples of major results achieved:

- The company developed an optimal method of searching for buried kimberlites in Botswana.
- There were established mineralogical and geophysical prospecting models of kimberlite pipes.
- Based on the created models the company carried out grading of hundreds of objects by their prospectivity. Dozens of them were used for ground geophysical works and sampling, permitting to identify six most promising anomalies.
- Six complex anomalies were verified by way of drilling.
- There were stripped kimberlite-related rocks at the AN210-1 anomaly, which were represented by picrites.
- Fifteen sites were explored with minimal financial investments.
- The company is revaluating the kimberlite pipes in the Orapa diamond field.
- The company achieved a high speed of prospecting operations (unlike other companies, which are used to work on the same area for years with no results) - such speed, efficiency and quality of work are significantly increasing the likelihood of new diamond discoveries.

Some of the results produced by the joint work of ALROSA and Botswana Diamonds will be presented at the XI International Kimberlite Conference to be held in Botswana in 2017.

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Could you describe what was achieved by Sunland Minerals in Botswana in 2016?

In 2016, Sunland Minerals performed a great amount of exploration within a tight schedule covering 10 license areas (1,912 square kilometers) in the well-known diamond mining regions of Botswana: the Orapa Kimberlite Field (Blocks PL 260, PL 085 and PL 210), including such diamond deposits as Orapa, Damtshaa, Karowe, Letlhakane, the Gope kimberlite field (PL 135, PL 136, PL 137, PL 235 and PL 232) containing the Gagu diamond deposit, as well as in the area of a new kimberlite field, Zuve (PL 233 and PL 234) so far represented by a single pipe, which is KX 36.

Exploration works included geological and geomorphological routes, placer testing of sediments belonging to the platform cover (Kalahari Group) within the ranges of mineralogical and geophysical anomalies; integrated geophysical ground works; mineralogical studies; verification of geophysical anomalies by way of core-drilling; and laboratory analysis.

The company verified three complex geophysical anomalies by way of drilling; two of these anomalies are located in the Orapa field and one in the Gope field in central Botswana. The kimberlite bodies were not stripped. The anomalies are defined by dolerite bodies, similar in morphology and geophysical characteristics to kimberlites. The total volume of drilling in 2016 reached more than 2,500 meters.

An important part of the work done was sampling of multifaceted surface sediments in order to highlight the distribution areas of close-range transportation kimberlite minerals. It was found that at least 25% of the known kimberlites in Botswana do not appear in the geophysical fields. Therefore, the identification of distribution areas of kimberlite indicator minerals from their pipes is an essential element of exploration. And to identify kimberlite bodies we need to have a sampling density network of 200 x 200 m and larger.

The evaluation of diamond grade in the AK 21 kimberlite pipe turned to be an important part of the company’s exploration work. It included the study of the structure and material composition of the body by way of small-diameter core drilling (HQ-NQ), large-diameter drilling (300 mm) with reverse circulation, bulk sampling and beneficiation of samples for the purpose of identifying diamonds within fractions of +0.5 mm. Currently, the analysis of beneficiated samples continues.

In order to study the morphology and structure of the AK22 kimberlite pipe the company made ground geophysical surveys (magnetic electric surveys), as well as core drilling. Samples were selected for thermochemical decomposition to be performed by MSA in South Africa. While examining the beneficiated kimberlite core samples, Sunland Minerals’ mineralogists discovered a diamond splinter in a fraction of -1 + 0.5 mm.

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What was the most important in 2016 and what are the company’s work plans in Botswana in 2017?

The important thing was that the company performed a very large amount of scheduled work in a relatively short period of time. In 2016, it was the first time that the exploration areas and Sunland Minerals’ base was visited by a commission of managers and experts of the Ministry of Minerals, Energy and Water Resources (MMEWR) headed by Harold Melaetsa, Lesego Ungwang and Banabose Makosha. As a result of this inspection, it was noted that the work was being done with high intensity, based on modern technology and without remarks.

One of the main activities of Sunland Minerals in the coming year will be evaluation of the diamond grade of kimberlites in the Orapa area on Block PL260. It should be taken into account that cost-effective pipes in the Orapa kimberlite field include only those which contain $ 10-12 worth of diamonds per 1 tonne of ore, while their recovery costs stay at $ 8 per tonne of ore. Therefore, those pipes, which were previously considered non-commercial, may turn to be economically viable for development.

In addition, the company plans airborne geophysical operations in the licensed areas located within the Gope field, a set of ground geophysical surveys and placer sampling along with larger-size sampling of superficial deposits, as well as field mineralogical surveys.

Based on the decision of its Board of Directors, Sunland Minerals also plans to increase the number of license areas in new promising territories.

How do you see further organization of works at ALROSA on African projects?

It is clear that to maintain the leading position of ALROSA in the world the company will need permanent replenishment of its diamond resources and reserves not only in Russia, but also from new territories outside the country.

I believe that the company needs constructive transformations regarding its activities in Africa. Overseas territories and Africa should become a separate and important activity of ALROSA.

Along with such areas as Angola and Botswana, where ALROSA is currently engaged in exploration, there are other areas in Africa which are promising in terms of finding primary diamond deposits (Tanzania, Lesotho and others).

Cooperation with geological survey agencies in other countries and with major exploration companies appears to be an important aspect of work performed by ALROSA on new promising areas. In 2017, the company will continue its activity in Africa.

Galina Semyonova for Rough&Polished

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