The Effect of Improved Mineral Resource Management on the Net Present Value of the Camutue West Kimberlite Diamond Deposit in Angola

Abstract

Angola is rated as a high-risk investor destination, fueling a high cost of equity rate. Bank loans are not easily secured for exploration programs with no proof of return from an established Diamond Resource. The Camutue West kimberlite was mined without a properly developed Diamond Resource model, and no investment was made in exploration drilling. The resource model was extrapolated to avoid capital spending. The exploration drilling program initiated in 2023 provided an opportunity to compare the extrapolated model to the actual result. It provided an opportunity to determine the value of the risk in avoiding capital spending compared to the cost of exploration drilling. Diamond valuation is a unique process that requires the final product to be in high quantities to determine the expected recovery price. Access to such samples could come at a very high cost if not exposed on the surface. This motivated the research to apply open pit optimisation techniques to assist exploration programs in adding value. Capital spent on the resource estimation, drilling and sampling program has been proven to increase the mine's value compared to the orebody extrapolation method. This proved that there was no replacement for a high- quality resource estimation, drilling and sampling program. Open pit optimisation techniques can be applied to reduce exploration drilling depth, assisting with quality control standards. These techniques also help generate earlier revenue for added value to the mine. Diamond mining companies must investigate the best techniques and drilling equipment to ensure high-quality exploration results. The success in achieving an optimal NPV result is highly dependent on an accurate geological model. Shareholders need to commit to proper exploration programs to achieve the best results for all stake holders involved.