Friday, 2 October 2015

KAGEM PROMISES LONG-TERM MINING BENEFITS

 By MacPherson Mukuka in Lusaka 


The world’s single largest producing emerald mine - Kagem in Lufwanyama District – looks set to continue benefitting Zambia for the next 25 years, according to an in-depth technical study of its prospects by independent experts.
The estimated reserves at the mine reinforce the company’s potential long-term commitment to Zambia in the form of taxes and royalties, dividends, skills development, secure employment, and community support, said Kagem Mining Ltd, which is 75 per cent owned by London-listed Gemfields plc and 25 per cent by the Zambian government.
According to the report by UK-based mine analysts SRK Consulting, Kagem has a projected lifespan of 25 years with a combined measured, indicated and inferred mineral resource of 1.8 billion carats of emeralds and beryl expected over that period of time - an average of 44.7 million carats annually. With a carat being equal to 0.2 grams, the mine could yield up to 360 million grams or 360 tonnes of gemstones over the updated estimate of its projected future mine life.
“The Kagem team is dedicated to develop the full potential of the mine over the long-term, and with the necessary resources and the support of a continued stable legislative environment, we look forward to retaining our position as a global champion and Zambian flagship company within the coloured gemstone sector,” said Ian Harebottle, Gemfields Chief Executive Officer. “This will result in increased levels of employment, job security, skills development and additional benefits for the entire country such as increased foreign exchange generation, payment of taxes, creation of local wealth including contracts provided to local companies, and added support for community projects.”
Mining specialists from SRK Consulting made a comprehensive review of Kagem’s operations and analysed hundreds of core boxes in Kagem’s core library of sections drilled into the earth across the mine in order to build up a high-tech 3D geological model of the mine and evaluated the likely volume of emeralds available for long-term open-pit mining. It is this state-of-the-art computerised approach to coloured gemstone mining introduced by Gemfields that has transformed the project and enabled Kagem to constantly improve efficiencies and optimise returns at the mine.
According to the report Kagem would need to invest up to an additional US$84 million of capital expenditure in the mine over the next four or five years and a total of US$516 million over the life of the mine, thereby providing for an increase in the ore mining and processing capacity of the mine from the current 90,000 tonnes per year to 180,000 tonnes per year being projected for 2018, with the inclusion of the Fibolele pit.
Since Gemfields took over operation of the mine in 2008 it has invested US$60 million in turning Kagem around from its long history as a loss making mine to one where it has been able to increase achievable prices on the global markets tenfold and become one of Zambia’s larger taxpaying mining companies, contributing more than US$359 million to Zambia’s direct foreign earnings in the past few years alone.
Taxes paid to government are expected to grow during the life of the mine, in addition to  more than US$100 million of mineral royalties that could be generated, said the report
Responsible mining remains entrenched in Kagem’s approach to business, and with the added years of operations still ahead, the mine continues to translate its emerald success into tangible benefits for the community through its community development initiatives such as the Nkana Community Hospital and Chapula Secondary school currently under construction.
Kagem’s investment in developing local human capital has resulted in increased job security for its employees, who are now permanent and pensionable, as well as the development of future manpower. The company has just recently unveiled a US$345,000 scholarship program for geology and mining engineering students at the University of Zambia (UNZA) and Copperbelt University (CBU).
Mr Harebottle said: “Today’s updated resource statement highlights the long term opportunity that exists at our Kagem emerald mine in Zambia. As the first recorded Measured Mineral Resource and Proven Ore Reserve Statement for Kagem, and possibly the first of its kind across the entire global coloured gemstone sector, the significance of this report is not only a milestone event that bears testament to the quantity and quality of work carried out by SRK and the Gemfields team at Kagem, but also provides further evidence to the continued growth potential, positive momentum and considerable opportunity inherent within the open pit mine plan. This, together with various other expansion opportunities that are already at hand, the impact that our continued global marketing and promotional initiatives are expected to generate, provide me with high level of confidence in Gemfields’ ability to deliver against the considerable targets we have set ourselves.”

Source: Langmead and Baker 

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