Montepuez production suffers owing to lower ore grade

The Montepuez ruby deposit, in Mozambique, owned by gemstone mining and marketing company Gemfields, produced 1.2-million carats of rubies and corundum in the three months ending March 31, a decline compared with the two-million carats produced in the previous year’s quarter.

The company notes that this reduction is largely the result of the Montepuez deposit’s diminishing ore grade.

The company released its third-quarter report last month, altering Montepuez’s previous production guidance of between 10-million and 12-million carats to be between eight-million and ten-million carats of rough rubies and corundum. Gemfields explains that, while it will be processing considerably more ore, the ore will be of a “predominantly lower grade”.

The 1.2-million carats produced by Montepuez during the quarter under review had an average grade of 7 ct/t, compared with the previous year’s third quarter, which produced two-million carats, at an average grade of 30 ct/t. Further, Montepuez’s total operating costs during the third quarter increased to $6.5-million, compared with the $5.8-million spent over the same period last year. The report also noted that, as a direct result of the decreased production, unit operating costs increased to $5.42/ct, compared with $2.90/ct in third quarter of 2016. Gemfields also pointed out that, despite lower production, the quantity of premium-quality rubies recovered increased by 92%.

During the quarter under review, Gemfields mined 169 900 t at Montepuez, with the strip ratio decreasing to 4.4 as a result of mining the exposed ore in the Mugloto and Glass pits, where stripping had been completed in previous quarters.

“The current quarter saw 181 800 t processed, an increase of almost 170% on the 67 600 t processed in the quarter ending March 2016. This increase is attributable to the completion of the upgraded processing plant which, despite not yet reaching its target capacity, attained an average operational rate of 132 t/h during the quarter under review,” Gemfields reports.

It explains that Montepuez’s upgraded processing plant includes a new scrubber, a degrit unit and a dense-media separation unit. The processing of prescreened material and an overall reduction in plant stoppages also contributed to the achievement of these record tonnages.

The company further notes that the construction at the Montepuez camp is proceeding to plan and is expected to be fully completed later this month. This forms part of a staff welfare initiative aimed at improving the operational base camp at Namanhumbir, which includes new permanent housing units, paved roads, a new kitchen and dining space inclusive of an entertainment area. The site also has sports facilities, which include volleyball, tennis and badminton courts.

Gemfields notes that significant improvements in the camp infrastructure included a new 250-seater canteen at the camp, as well as the expansion of information technology infrastructure across the licence area, with a larger overall footprint covering the mine, offices, workshop and living and recreation areas.

At the time of the release, Gemfields CEO Ian Harebottle said the quarter under review delivered mixed results; however, he asserted that the company remained “delighted” that demand for coloured gemstones continued to increase.

Harebottle also stated that Montepuez had, once again, performed “extremely well”, as it significantly increased the quantity of ore and the quality of the gemstones produced. “The upgrade to the existing wash plant also [resulted in] an increase in processing rates and, while it is yet to achieve optimal levels of performance, it has already delivered [an estimated] 170% increase in ore processed, compared with the quarter ending March 2016.”

He stressed that the lower production experienced during the quarter, as well as the changes to the targeted total production figures, would not impact on the company’s upcoming auction schedule.

Other Operations
Harebottle noted that, following an internal review, Gemfields has decided to withdraw from the Coscuez transaction in Colombia and its operations in Sri Lanka. The company truly believes that its portfolio of high-quality assets in Africa, as well as other potential expansion opportunities in Zambia, Mozambique and Ethiopia, is likely to deliver considerably higher returns, with shorter payback periods, than some of the other jurisdictions it had previously been evaluating.

With regard to other licences in Mozambique, the third-quarter report notes that Megaruma Mining – Gemfields’ 75%-owned Mozambique subsidiary – holds two ruby mining titles located in the Montepuez district of Mozambique.

These titles each share a boundary with the existing Montepuez ruby mining deposit and cover about 19 000 ha and 15 000 ha respectively. Gemfields states that “exploration activities, such as high-resolution aeromagnetic survey, geological mapping, and core drilling totalling 497 m over eight holes, have been completed in the area. “The exploration input will be helpful in completing the environmental-impact analysis process which is in progress.”

Moreover, exploration licence 5061L, held by Mozambique-registered joint venture (JV) company Eastern Mining, in which Gemfields holds a 75% interest, was converted and issued as a mining title by the Ministry of Mines on November 29, 2016, for 25 years.

The licence covers an area of 116 km2 and shares its western boundary with the southern licence of Megaruma. The transaction for this acquisition has been completed and the JV relationship is now operational.

 

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