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How diamond junior companies in Africa responded to the COVID-19 pandemic

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The diamond industry commenced the 2020 year on a very positive note having faced a challenging 2019.

There was an improved sentiment in the global rough diamond market with a pick-up in mid-stream demand and rough prices.

However, the positive sentiment was short-lived as the COVID-19 pandemic caused widespread uncertainty and disruption across the world.

To curb the spreading of the virus, governments across the globe introduced lockdowns and closed their borders.

This resulted in several diamond operations being mothballed or had their production capacity reduced late in March or early April 2020.

In this article, I explore how junior diamond miners with operations in Africa, are doing or have done to preserve their businesses amid the COVID-19 pandemic and how successful (or lack thereof) are they? 

Lucapa Diamond 

Lucapa Diamond has two operations in Africa –an alluvial mine in Angola and a kimberlite mine in Lesotho.

At its 40%-owned Lulo mine, operations were reduced to essential services on 1 April 2020 and activities were resumed at Lulo to approximately 50% capacity on 1 May 2020.

The carats recovered in the second quarter were impacted by the State of Emergency implemented in Angola as a result of the COVID-19 pandemic.

The company's second-quarter output at Lulo eased 24% to 2,944 carats compared to 3,868 carats, a year earlier.

Although slowed by the COVID-19 pandemic, Lucapa's auger drilling programmes in Angola in the third quarter continued to delineate additional alluvial diamond-bearing gravels, in both the terraces and leziria areas along the Cacuilo River.

During the Quarter 1,479 auger holes were completed for a total of 13,191m.

Priority was given to drilling terraces in Mining Blocks 28 and 46 to the south, to better define additional mining areas ready for the approaching wet season.

In Lesotho, Lucapa placed its 70%-owned Mothae mine on care and maintenance following the imposition of a 21-day lockdown in South Africa from 26 March 2020.

Lesotho is an enclave, surrounded by South Africa.

The care and maintenance programme implemented at Mothae ensured the asset is preserved and well-positioned to recommence mining operations when health protocols permit and the global markets recover.

Lucapa only re-commenced scaled mining operations at Mothae in October.

"Mothae is an important contributor to the Basotho nation and Lucapa and the Government of Lesotho are excited to have most of our teams and contractors back at the mine," said Lucapa managing director Stephen Wetherall at the time.

"We too look forward to implementing recently approved marketing initiatives that will see additional value derived for the Mothae high-value production."

Mining operations will be scaled to approximately 75% of nameplate capacity due to the COVID-19 protocols in place.

Lucapa also said no work was undertaken at the Orapa Area F kimberlite exploration project, in Botswana during the third quarter, in line with the company's focus on maximising revenue generation at its operating mines as a primary objective and the cash preservation measures brought about by the COVID-19 pandemic. 

BlueRock Diamonds 

BlueRock Diamonds, which has operations at the Kareevlei mine in the Kimberley region of South Africa, placed its mine on care and maintenance when Pretoria imposed a nationwide lockdown on March 26.

The company reduced costs to an absolute minimum with all but essential staff furloughed.

It also removed its products from the March 2020 diamond tender due to an absence of international bidders.

BlueRock, however, resumed both mining and processing operations at Kareevlei on 11 May 2020.

The AIM-listed diamond producer said at the time that expansion plans would remain on hold.

It had been reviewing its sales strategy before the COVID-19 pandemic to gain access to the Antwerp diamond market, which attracts significantly more buyers than the local South African diamond market. The COVID-19 situation precipitated this move as it agreed with Bonas-Couzyn N.V, part of the Bonas Group, to market the Kareevlei diamonds through its Antwerp facility.

BlueRock said the total cash cost of the COVID-19 lockdown had been significant in large part because the company has had to settle all of its creditors to restart operations without having any diamond sales. It, however, expected some of this impact to reverse in due course as working capital levels normalise. 

Southstone Minerals 

The Southstone Minerals, which owns the Oena Diamond Mine in South Africa, was forced to temporarily halt mining operations between March 26, 2020, and May 3, 2020, due to the COVID-19 lockdown.

It said its operations had since resumed although diamond tender prices remained under pressure as a result of the adverse effect on the world economy and the international travel ban.

For the three months ended May 31, 2020, the Company incurred a loss of $212,889 from continued operations, compared to a loss of $638,050 for the comparative period.

The main reason for the loss is related to the stoppage of operations and limited diamond tender sales for the third quarter. 


Diamcor suspended and placed its Krone-Endora at Venetia project in South Africa into care and maintenance when a lockdown associated with the COVID-19 virus was imposed in March 2020

The company also implemented short-term operational changes and cost reduction efforts at the project since the lockdown directive.

"During these unprecedented times, our focus remains the health and safety of our employees, consultants, and their families, and on doing our part to control the spread of this Covid-19 virus", said company chief executive Dean Taylor last March.

"We have overcome many challenges over the years, and in this case, we will continue to evaluate and revise our plans in the coming weeks so we may resume operations as soon as possible, and continue to build on the positive momentum we established entering 2020."

The company only resumed operations in October with reduced staffing levels.

Diamcor Mining recently said that it sold 2,426.63 carats of rough diamonds from Krone-Endora at Venetia project, generating revenue of $339,280 in the second quarter compared to $730,692, a year earlier.

The company said the diamonds sold were held in inventory as of March 31, 2020, and it realised an average price of $109.32 per carat in the six-month interim period ended September 30, 2020. 

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished