An investee company of Oakdale Resources plans to begin mining for diamonds in South Africa this month.
Following successful trial mining that recovered 105 carats of diamonds from the Cliff’s project, Vast Mineral Sands now plans to start full scale mining.
Oakdale (ASX:OAR) currently has a 1 per cent interest, with the right to increase that to 51 per cent, in Africa Mineral Sands, which owns a 74 per cent stake in Vast Mineral Sands.
Vast Mineral Sands estimates it can recover 25,000 carats of diamonds that will generate revenue of about US$6 million before royalties and operating costs.
“As they continue to create value in the asset, then we have the right to buy 51 per cent of African Mineral Sands, who control 74 per cent of Vast,” managing director John Lynch told Stockhead. “So as they generate more revenue going forward then we will ultimately end up with about 40 per cent of that revenue.”
Oakdale plans to raise its stake to 51 per cent this year.
Diamond-rich South Africa
According to South Africa’s Chamber of Mines, although diamond mining has been taking place in South Africa for almost a century and a half, the country’s diamond sector is far from reaching the end of its life.
The country’s three largest mines are in the process of expanding production, which will extend their lives to anywhere between a quarter and a half a century.
De Beers, a well-known name in the industry, is South Africa’s largest diamond producer, recovering some 8 million carats each year.
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Oakdale shares were unchanged in Wednesday morning trade.