Kalahari Diamond - Project Information

 

 

Kalahari Diamond
Project Information



This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision.

Summary of Project Information (SPI)

Project number 20426
Project name Kalahari Diamond
Country Botswana
Sector Oil, Gas And Mining
Department Oil, Gas, Mining And Chemicals
Company name Kalahari Diamond
Environmental category B
Date SPI disclosed January 8, 2003
Projected board date February 13, 2003
Status Active
Previous Events Invested: March 18, 2003
Signed: March 3, 2003
Approved: February 13, 2003

Project sponsor and major shareholders of project company

Kalahari Diamonds Ltd. (KDL) was formed at BHP Billiton Group's (BHPB) initiative. BHPB is the world's largest diversified resource group in terms of market capitalization. BHPB has a market capitalization of $33 billion and revenues of $17 billion (2002). BHPB has interests in coal, iron ore, copper, oil, gas, aluminum, nickel, zinc, manganese, chrome, silver, diamonds and industrial minerals. BHPB produces and markets 8% of the world's production of rough diamonds by value from mines in Canada.

KDL's ownership is expected to be institutional investors (including IFC) about 40%; institutions involved in diamond cutting, polishing and retailing 40%; and BHPB 20%.

Total project cost and proposed IFC investment

KDL is seeking to raise between $12 and $20 million in equity by private placement to fund a 2/3 year exploration program. The proposed IFC investment is a $2 million equity investment in KDL.

Location of project and description of site

KDL will explore 90 prospecting licenses comprising over 78,000 sq. km in Botswana. Most of this area is arid and semi arid desert.

Description of company and purpose of project

KDL is a recently incorporated private UK company and will conduct operations through Godi (Proprietary) Limited, its wholly owned Botswana subsidiary. KDL will undertake a major review of existing geological information for the 90 licenses with a view to prioritizing and ranking areas that are considered more prospective. BHPB's proprietary airborne Falcon Technology will be utilized to conduct aerial surveys of these areas. If high priority target areas are identified, KDL will follow up with ground geophysics and sampling techniques. Confirmed anomalies will be drill tested to recover samples for assessment of diamond potential.

Development Impact
Botswana's rapid and consistent economic development and high growth rate has been based on the re-investment of its mineral wealth in education, health, and sustainable economic development initiatives. Although Botswana has a stable and democratic government and policies consistent with private sector development, exploration expenditure in Botswana is inconsistent with its diamond mineral potential. In 2001, diamond exploration expenditure in Botswana was only $4.5 million, compared to $17 million in Australia, and $81 million in Canada. This is partly due to the extensive sand cover renders exploration difficult. Botswana's ability to continue their impressive development performance will be facilitated by new mine developments. The formation of KDL and the introduction of the Falcon technology provide a step towards this objective.

The use of the airborne Falcon gravity gradiometer system will enable KDL to rapidly, with minimal environmental impact, obtain enhanced geological information on Botswana, including geological detail below the Kalahari sand cover that blankest about 70% of Botswana. The data collected will provide an enhanced understanding of Botswana's geological potential, and some of the data will be released to the Botswana Government as prospecting licenses are released. KDL is willing to make available any relevant data to the Botswana Government and IFC assistance has been requested to develop, in consultation with KDL and Government, appropriate mechanisms for dissemination and utilization of the Falcon data beyond its mineral application.

IFC's involvement will assist in making KDL a leader in sustainable mining development initiatives. IFC will have a positive role assisting mine development, facilitating community partnerships, local economic development, skills transfer, building environmental management capacity, and encouraging appropriate resource utilization and conservation practices (especially associated with game reserves).

Environmental and social issues - Category B

This is a category B project according to IFC's Environmental and Social Review Procedure. The aerial exploration work utilizing the Falcon system is an airborne system and environmental impacts will be minimal. During any subsequent ground exploration, environmental issues would be limited and associated with drilling of identified targets, water resources and water quality, habitat and ecology, solid and liquid waste management, vehicle impacts on desert environments, handling, use and storage of fuel and reclamation of exploration areas. Social issues include minimization of induced development, influx management and possible impacts on indigenous communities. These impacts can be minimized and mitigated with careful management.

The key environmental and social issue is that approximately one third of the exploration license areas lie within the Central Kalahari and Khutse Game Reserves that are managed conservation areas with an associated indigenous population of San Bushmen. The Botswana Government views the Game Reserves as areas in which mine exploration and development is allowable alongside conservation initiatives under strict conditions. For any prospecting in these areas, KDL will implement Government of Botswana guidelines associated with "Prospecting in the Central Kalahari and Khutse Game Reserves" as well as applicable World Bank Policies and Guidelines.

Any future mine development resulting from KDL's activities would be evaluated as a new project with a new environmental classification appropriate to its impacts. The company will then prepare a comprehensive Environmental and Social Impacts Assessment (ESIA) and Environmental Management Action Plan and undertake appropriate public disclosure and consultation. For any mine development, KDL has committed to achieve better than international best environmental practice and to ensure that project positive benefits outweigh negative impacts. IFC will play a positive role in ensuring that this occurs by for example, facilitating community partnerships and local economic development, building and/or monitoring environmental management capacity including that associated with resource utilization and conservation within the Game Reserves.

The Botswana Government has a successful record of using revenues from mining over last two decades to upgrade infrastructure and services and to improve educational and health standards and this provides a sound foundation for its economic diversification program.

To view the environmental documents for this project, click here

Location of environmental documents in locally affected community

All available documents will be disclosed at:
Kalahari Diamonds Limited. Plot 5035B, Fairground, Gaborone, BOTSWANA. Phone 267 391 2400, Fax 267 397 5281.
Armstrongs, Attorneys, Notaries and Conveyancers. 5th Floor Barclays House, Khama Crescent, Gaborone, BOTSWANA. Phone 267 353 491
IFC Office South Africa: 1st Floor Oxford Gate, Hyde Park Lane, Hyde Park, 2196, Johannesburg, SOUTH AFRICA.

To contact the project company, please write to:

Mr. John W. Bristow, General Manager,
Kalahari Diamonds Limited
PO Box 11946, Hatfield,
Pretoria, 0028, South Africa
Phone: +27 12 460 6574 / +27 82 571 3004 (C)