In June 2010, a definitive feasibility study updating previous work to a confidence level to support project approval was completed.
A formal decision was made in July 2010 to proceed with the construction of the diamond mine which is estimated to require a capital investment of approximately US$120 --$130 million (based on ZAR:US$ exchange rate of 7.00 to 7.50), which includes the process plant and all mine site and off-site infrastructure.
Project development activities commenced upon approval and Dowding Reynard and Associates ("DRA") were selected as the engineering, procurement and construction management contractor. The project development focus areas in 2010 were the critical path activities to ensure that ramp up to full production in the first quarter of 2012 is achieved. By year end 2010 engineering was 40% complete and all major equipment orders had been placed and procurement was 55% complete. The earthworks contract for the site civil works and the access road upgrade was awarded and the contractor mobilized to site in September 2010.
During 2010, parties affected by the mine development were relocated in accordance with the Botswana Land Board assessment report as a minimum. Relocation and resettlement claims were finalized to all parties' satisfaction.
Agreements were reached with Botswana Power Corporation for the supply of power to project and Debswana Diamond Company (PTY) Ltd, to use their existing construction camp. The bulk power line contract was put out to tender and the contract was awarded in March 2011.
In 2011, amendments to certain provisions of the mining license with the Botswana Government were concluded. The mining license was amended to allow the sale of the entire Karowe production of diamonds either through open tender sales or exclusive contract, the commercial production start date was removed and the mine lease area expanded.
Also, in 2011 activities across engineering, procurement, construction, and the development of the operations team advanced the project significantly. By year-end engineering, procurement and fabrication activities were essentially complete and project construction was 90%. Delays to the project schedule as a result of a steel industry strike action in July impacted the overall project schedule and the handover to operations shifted from end Q4 2011 to end Q1 2012.
As at December 2011, the project had achieved 1,000,000 hours without a lost time injury (LTI) and no environmental incidents have been recorded. Environmental and community relations activities as detailed in the Environmental Management Plan were well executed throughout the year. A competition to name the mine as it transitions into production was well supported and Karowe (meaning "precious stone", in a local dialect) was selected. Several community projects, including village clean-up campaigns and health and wellness initiatives, in conjunction with the community members, were completed. Archaeological monitoring of all construction areas continued through the year and no artifacts were discovered on site or at the Boteti housing sites in Letlhakane.
The 25km 33kVA power-line from the Orapa sub-station to Karowe and the mine site sub-station, were completed during 2011 and handed over to the Botswana Power Corporation. The mine switched to grid power to support commissioning activities.
The Karowe Mine was officially opened by the President of Botswana, His Excellency Lieutenant General Seretse Khama Ian Khama on August 17, 2012.
The information in this section which is of a scientific or technical nature has been derived from the following technical report:
AK6 Kimberlite Project, NI 43-101 Technical Report revision and update on the AK6 Kimberlite Mine, Botswana", dated December 31, 2010 prepared by MSA Geoservices (Pty) Ltd. and authored by Messrs. Ian McGeorge, Consulting Geologist (BSc (Hons), Geol. MSc, CGeol, FGS), Mike Lynn, Senior Project Manager (BSc (Hons), Geol, MSc), Johannes Ferreira, Consulting Geostatistician (MSc, DEA Geostatistics, PrSciNat) and Rob Croll, Consulting Engineer (BSc (Min Eng)), Dave Blair, Consulting Environmental Scientist (BSc (Hons) Zool., Pri.Sci.Nat) and Dr. Kym Morton, Consulting Hydrogeologist (PhD FGS FSAIMM, Pri.Sci.Nat), each of whom is a "qualified person" within the meaning of this term in National Instrument 43-101 (the "AK6 Kimberlite Technical Report").
Copies of the above-mentioned technical reports are available under the Company's profile on SEDAR at www.sedar.com.