Deep Blue Minerals – Diamond Operation

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Deep Blue Minerals – Diamond Operation – Alexander Bay, South Africa

Kazera has a 64% beneficial interest in Deep Blue Minerals (“DBM”). Tectonic Gold (“TTAU”) holds a residual 10% interest and 26% of the share capital is reserved for Black Economic Empowerment Partners as required by South African law.

The operation is located within the 80km long Alexkor diamond fields, which lie between two historic De Beers operations. The area has been mined for diamonds since 1928 and more than 10 million carats of gem quality diamonds have been recovered over the last ninety years or so. It is estimated that there are at least another 2 million carats left in the tenement.

In 2020, a Feasibility Study was prepared on Cliffs, one of the mining blocks allocated to DBM, which resulted in an ascribed inferred resource of 208,000 carats at a bottom cut-off aperture size of 1.6 mm at a grade of 6.0 ct/100m2 for the Cliffs mining area. DBM’s current focus is on deposits closer to the beach where diamonds tend to be of better quality and the amount of overburden is considerably less.

Mining at DBM is undertaken under contract from Alexkor RMC JV (“Alexkor”), a government-owned entity, which has the rights to all the diamonds in the area.

In 2020, DBM had a sub-contract to mine diamonds, but none of its own equipment. Since then, the Company has acquired its own mining contract as well as the equipment required to mine and process diamond gravel. This includes a diamond mining plant and new heavy plant, including a front-end loader and a 75 ton low-bed transporter, to allow the sharing of equipment between DBM’s diamond operation, and WHM’s HMS operation. At DBM, this is specifically used to target areas containing prospective high quantities of diamond gravel, which the Group believes creates a very cost-effective approach by prioritising potentially rich diamond deposits first.

Part of the agreement with Alexkor requires that it processes the diamond gravels and undertakes all diamond sales, but with Alexkor’s Muisvlak processing plant operating sporadically, the ability to process diamond gravel and, accordingly, produce diamonds for sale has been greatly constrained.

In June 2022, DBM agreed to take on the task of getting the Muisvlak plant running as, without it, neither DBM nor the majority of the other contractors in the area had any way of processing their diamonds. DBM was successful in doing this but was forced to withdraw its assistance due to political and economic factors. Operating difficulties at Muisvlak endure and the resulting blockage in the diamond mining process for DBM and all other diamond miners in the area because of a forced reliance on Alexkor to process our diamonds and take them to market has been hugely frustrating for all.

Accordingly, DBM commissioned the building of a diamond specific pulsating jig, together with a Flow Sorter, which have arrived at site and, once commissioned, will enable DBM to bypass the Muisvlak plant completely and allow it to deliver small volumes of very high concentrate diamond gravels to Alexkor for final sorting and sale.

DBM anticipates that this equipment will be commissioned and in operation from February 2024 and will allow a quick ramp up in production and positive cash flow.

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