An independent desk-based review of the discounted cash flow (DCF) model for mining company URA Holdings’ Gravelotte emerald mine, in South Africa, shows the potential profitability of the project over a 17-year life-of-mine (LoM).

The review, conducted by ACA Howe International, revealed a net present value (NPV) before tax, at a 10% discount rate, of $22.39-million, with an internal rate of return (IRR) of 76%, indicating that the project would turn profitable from the second year of operations.

The average total operating cost would amount to $54.70/t, inclusive of extensive security protocols to mitigate the risk of gemstone theft, with a capital expenditure (capex), excluding sustaining capex, of $2.58-million.

Operating expenditure, meanwhile, would come in at $67.28-million over the LoM.

Overall, total payable ore is expected to amount to 1.23-million tonnes.

The estimated total profit before tax over the LoM will be $79.5-million, with a payback period of 2.5 years.

“We are extremely encouraged by the results of the ACA Howe review, which confirms the potential robust economics of the Gravelotte emerald mine. The high IRR and positive NPV underscore the significant potential value this project can bring.

“With the initial production startup capex already completed and the mine now back in production, we are well-positioned to advance this project and capitalise on the opportunities it presents,” URA Holdings CEO Bernard Olivier said on July 2.

The model is based on the current inferred Joint Ore Reserves Committee (Jorc) resource of 29-million carats and an allowance for a small portion of the Jorc exploration targets of up to 344-million carats that are below the inferred resources to be upgraded and mined in years 14 to 17 of production, based on the significant exploration that is planned, he added.

The ACA Howe review involved an assessment of the mining and processing estimates used in URA's DCF model. The review verified the accuracy of the input data as reasonable given the level of planning completed to date and ensured that the proposed mining method and processing flowsheet are suitable for the deposit.

Key factors, such as mining costs, processing costs and the overall economic assumptions, were evaluated to ensure the reliability of the model.

The operational plan envisages a gradual increase from 30 000 t/y to a steady state of 90 000 t/y over six years at a mining cost of $6.67/t mined, reaching a steady-state cost in year seven.

The processing plant infrastructure would include a Hadfield jaw crusher, vibrating screens, trommel and Angelon optical colour sorter.

The plant is designed to maximise recovery while minimising damage to the emeralds. The processing flow involves crushing, screening and sorting, followed by secure storage of the emerald concentrate.

Mining at Gravelotte will be conducted using conventional openpit methods, including drilling, blasting, loading and hauling with hydraulic excavators and articulated dump trucks.