Kazera Global Share News (KZG)

(Sharecast News) - Kazera Global updated the market on progress with its diamond mining operations within subsidiary Deep Blue Minerals (DBM) on Thursday, where diamond production was now underway.
The AIM-traded firm said initial operations had been focussed on areas identified by management as likely to be high in diamond content.

It said that, since beginning operations, around 33,000 tons of overburden at the Cliffs East Mining Site had been removed from the inland diamond deposits at Blocks CL284, CL286 and CL288, exposing about 3,800 tons of diamond-bearing gravel.

The gravel had been removed, and was currently undergoing in-field screening to ensure that only gravel containing diamonds was transported for final diamond recovery.

Initial evaluations were that diamond content would "comfortably exceed" the average predicted grade of six carats per 100 cubic metres.

The first auction in which the company was expected to participate would be at the beginning of the fourth quarter, with "anecdotal evidence" indicating that diamond prices were holding up well despite the Covid-19 pandemic.

Kazera said additional progress had also been made with site offices, with a supply store and rest room now built and site establishment works to comply with government regulations completed.

DBM had also acquired its own contract for the mining of land-based diamonds, which meant that it was no longer mining under a sub-contract.

Kazera noted that DBM had met its South African legal obligations by concluding negotiations with "carefully chosen" Black Economic Empowerment partners (BEP), bringing community, political and commercial contacts to the project and valuing the operation at more than £6.6m.

The valuation was based upon the value ascribed to DBM in the feasibility study by Dr Johan Hattingh, who compiled the competent person's report.

Kazera said it had provided a loan of ZAR 36.74m (£1.71m) to the BEP in order for the partners to acquire a 26% share in DBM.

The loan bore interest at 3.5% above the UK base rate, and would be repayable from fees and dividends.

"I am very proud of the way in which everyone has pulled together in these very trying times," said Dennis Edmonds, the director in charge of the Alexander Bay projects.

"It is a real testament to the quality of the team to have got into the full swing of production at the same time as getting the site fully established and achieving all other milestones whilst remaining comfortably within budget.

"We are excited by what the auction process will deliver."

At 1252 BST, shares in Kazera Global were up 10.77% at 0.72p.