RESERVE ESTIMATES
Tsavorite like other gemstone presents the following main challenges in its identification and the subsequent derivation of reserves and resources:
- It is not possible to assay for green garnet and therefore, to identify and quantify, it has to be physically recovered.
- Green garnet shape, size, color, and clarity, all of which (from a statistical basis) means that a “parcel” of crystals must be recovered to give an indication of the average characteristics and subsequent worth. (In the International Code definitions and specifically mentioned in the SAMREC and JORC codes it is recommended that a minimum size parcel of 2,000 carats is collected)
In practice, reserve or resource figures quoted will be for tones of mineralized material that can be measured under the stipulated rules, however, where the tanzanite content and associated value cannot be stated accurately, it is included based on the available historic information.
- Inferred Resource: That part of a resource from which tonnage, grade and diamond (Tsavorite) value can be estimated with a low level of confidence. It is inferred from geological evidence, and assumed, but not verified by geological and/or grade continuity. A sufficiently large parcel is not available to ensure a reasonable representation of the (Tsavorite) It is based on information that may be limited or of uncertain quality and reliability.
- Indicated Resource: That part of the resource for which tonnage, densities, shape, physical characteristics, grade and (Tsavorite) value can be estimated with a reasonable level of confidence. It is based on information at locations that are too widely or inappropriately spaced to confirm geological and/or grade continuity, but are spaced closely enough for continuity to be assumed. Sufficient (Tsavorite) have been recovered to allow a confident estimate of an average value.
- Proven Reserve: The economically mineable material derived from a measured or indicated resource. It is inclusive of diluting materials and allows for losses that may occur when the material is mined. Appropriate assessments, which may include feasibility studies, have been carried out, including consideration of, and modification by, realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction.
MINING METHOD AND EQUIPMENT SELECTION
2.1 The Mining Method
Initially, small scale open cast mining will be utilized to maximize the mineral potential inherent within the capping dolomitic zones. The extent of this will be limited to a band no more than 200m in width and to a depth of no more than 40m. Once the more richly mineralized lower levels have been exposed, underground mining is considered to be a more practical operation.
The underground mine is being designed for a capacity of 10,000 tones of ore and 20,000 tones of waste rock per annum. The mining rate will be increased gradually from an initial rate of about 7,000 tones per annum. This will necessitate to sink a total of 4 shafts each with a capacity to hoist 10 tones of ore per day.
Site preparation will involve clearing ground for access to the mine, vehicle parking and maintenance areas, changing rooms and ablution facilities, staff quarters, and a recreational area. The underground mining operation will entail drilling and blasting the rock, hoisting the blasted rock from the shaft using a pulley system or inclined shaft, loading the rock into trucks and hauling the rock to the processing plant.
The lifetime of the mining operations is estimated to be more than 30 years. Operation, inspection and maintenance of the mining shafts and its accessories will be carried out in accordance with recognized national and international standards. These operations may be carried out by the proponent or by sub-contractors.
2.2 Drilling and Blasting
Drilling and basting is one aspect in which productivity can be greatly improved relatively inexpensively. Drilling and blasting will be required, and conventional compressed air equipment will be used. This will comprise pneumatic rotary percussive rock drills with air legs, and axial water flushing. This is necessary to reduce dust resulting from the drilling operation.
Standard drill steels of varying length will be used. Standard bit diameters in the range 28mm – 32mm will be used.
A 2ft x 2ft hole pattern will be adopted to start with, and modified according to results. The objectives are to minimize damage and to break the rock into maneuverable fragments without damaging the sidewalls, and excavate the desired profile. Hole lengths of around 1.8 m will be ample in view of the tramming limitations, and will minimize drill holes straying into the sidewalls.
Low energy explosives such as 25 mm magnum buster, which offers a more gentle blast will be used. This will reduce over-break and minimize any risk of fracturing mineralized crystals. Detonation would be most safely provided by using capped safety fuse, igniter cord and delay starters. Alternative explosives and blasting methods will be considered when appropriate.
2.3Roof and Wall Support
Rock pillars with conservative dimensions will be left in situ and the loose sub-beds will be bolted with the longest bolts which can be man-handled in the shaft cross section. All loose material will be removed or restrained around the shaft collars to a distance of at least 2m.
2.4Material Hoisting
Two methods of hoisting will be utilized. Initially, 25 kg bags will be attached to a continuous haulage rope which is powered by electric mono-rope. The bags will be transported to surface where they will be cut from the rope and loaded into a truck for haulage to the plant. Later on the haulage capacity will be increased by installing a single drum hoist and establishing an incline shaft with a 3 ton capacity skip. The skip will transport all rock to surface where it will be tipped into a storage bin. Ore will be loaded into trucks for transport to the processing plant. Waste rock will be separated manually from ore underground, loaded into separate coco pans and discarded onto waste rock piles on the surface.
2.5Environmental Management, Health and Safety
- N. Mining Co. Ltd is in the process of developing a comprehensive Code of Practice that will satisfy relevant Tanzanian legislation, but will also draw on their experience in the global mining industry, which has highly developed safety practices. The Code of Practice will cover matters such as areas of responsibility, worker health and safety, working instructions for shaft operations, blasting timing and techniques, emergency procedures in case of accidents or any failure, first aid provisions, procedures for starting up and shutting down machinery, communication channels, safety drills, equipment and materials required, storm water handling, underground inspections and safety assurance, safety measures for the explosives magazine and security system for using explosives.
In addition to communicable diseases such as malaria, cholera, HIV, etc. workers can also suffer injuries and be subject to occupational diseases. All workers at J. N. Mining Co. Ltd will have access to medical facilities.
Of particular interest in the mining industry are diseases related to dust generated by drilling and blasting, such as pneumoconiosis, which is caused by very fine particles of silicate minerals building up in the lungs and reducing their efficiency. Minerals of the asbestos group are the most dangerous. The silicates present in the ore at Lemshuku area has much lower risk group than asbestos, but it remains prudent to use dust suppression measures such as water sprays and wet drilling techniques and to monitor the workers’ exposure to dust.
The Code of Practice will also encompass an Environmental and Social Management Plan (ESMP). Initially, it will contain the ESMP described in Chapter 8. A Code of Practice is a live system, which is not only put into daily practice, but is also updated whenever new information is obtained or new and better equipment or procedures are developed.
Time Schedule, Staffing and Closure
- Time schedule
- N. Mining Co. Ltd intends completing all construction and other preparation work within 12 months of renewing the mining license and to start mining and ore processing on a production basis after an additional 6 months. A gradual build-up in production is envisaged, with full production at steady state being reached from year 3 onwards.
- Staffing & Support
The personnel complement is outlined in the Employment and Training programme:Training in the various skills required for the above positions, including safety training, will be provided by J. N. Mining Co. Ltd. Up to 100% of the positions will be filled by local people.
- Closure
Closure requirements will depend upon the applicable legislation and standards at the end of the life of the operation. General closure plan as provided by J. N. Mining Co. Ltd is as follows:
- Underground Mine:
All entrances to the underground mine would be rendered safe by plugging the shafts with rock or building rubble and sealing the entrances with concrete.
- Plant and Industrial Structures:
At closure, the plant and other industrial structures would be demolished. Any salvageable items would be removed from the site and reusable materials such as metals, wood and plastics would be either offered to local communities or sold as scrap. The ground will be ploughed or scarified and re-seeded with indigenous plants.
- Buildings:
Structures that are considered to be usable may be left in place after consultation with the local communities and regional authorities. Other structures should be knocked down and the rubble used as landfill and for the plugging of disused mine workings. Demolition costs and rubble removal would be included in the above amount.
- Sites:
After removal of the structures and buildings, the various sites will be ripped or plowed and vegetated with indigenous species.
- Tailings Dump:
Deposition of tailings will be continuous throughout the lifetime of the operation, but the lower slopes of the dump will become inactive as the dump grows. Revegetation will require a layer of about 300 mm of topsoil. In order to reduce erosion and visual intrusion, the embankment structures will be progressively revegetated as the dump grows. The cost of Revegetation is included in the operating cost. At closure the tailings will cover an area of about 30 ha to a height of about 20 meters.
- Production Scheduling
It is planned to mine approximately 18,000 tones per year of mineralized ore and approximately 24,000 tones of waste per year from development faces of an underground mine. The estimated life time of the mine is 30 years
3.0 MINING EQUIPMENT
Selection of the types, number and capacity of mining equipment to achieve a daily production of 50 t/day of ore and 65 tonnes of waste is as follows:
3.1 Underground Mining Equipment:
Table 3.1 shows the required equipment for underground mining:
Table 3.1
Underground Mining Equipment
| S/N | Description of the Equipment | Quantity |
| 1. | Drilling Equipment (Jackhammers Pick hammers, and accessories) | 4 sets |
| 2. | Portable Air Compressors, XA175 | 2 units |
| 3. | Ventilation Equipment and accessories | 4 sets |
| 4. | Submersible water pumps | 4 sets |
| 5. | Mine Lighting Equipment (Chargers with 50 lamps & lamps) | 2 sets |
| 6. | Mono-rope and electric drive systems | 4 sets |
| 7. | Safety Equipment and accessories for mine workers | 200 sets |
| 8. | Mine Rescue equipment and accessories for two teams | 14 sets |
| 9 | Underground communication system | 1 set |
| 10. | Charging and blasting equipment | 2 sets |
3.2 Surface Mining Equipment
Surface mining equipment that will be used for surface based operations such as loading, haulage of ore and waste to designated stockpiles and waste dumps respectively. Table 3.2 provides a list of the required equipment.
Table 3.2
Surface Equipment and Processing Plant
| S/N | Description of Equipment | Quantity |
| 1. | Wheel loader, type CAT 935 | 1 unit |
| 2. | Rear Dump truck, Fuso/Isuzu model, 15 tones | 1 unit |
| 3. | Rear Dump truck, Fuso/Isuzu Model, 7 tones | 1 unit |
| 4. | Standby Power Generator, KVA 300 | 1 unit |
| 5. | Water Bowser, 10,000 liters | 1 unit |
| 6. | Workshop equipment and tools | 1 set |
| 7. | A 100 t/day Gemstone processing plant & Associated equipment (crushers, screens, pumps, motors & electrical parts, conveyor structures, etc.) | 1 set |
| 8. | Survey equipment (Plotters, Total Station, & accessories) | 1 set |
| 9. | Exploration equipment (sampling equipment, etc.) | 1 set |
3.3 Other Auxiliary Equipment
Other auxiliary equipment that will be needed for day to day operations to enable production of 50 tones per day of ore to be produced have been shown in Table 3.3. These include office equipment, administration, supplies, etc.
Table 3.3
Other Auxiliary Equipment for the Project
| S/N | Description of Equipment | Quantity |
| 1. | Office furniture & fittings | 2 sets |
| 2. | Computers, photocopiers, printers, telephones, etc. | |
| 3. | 4 WD pick-up trucks, Land Cruiser | 2 units |
| 4. | Forklift for the warehouse | 1 unit |
| 5. | Security system & equipment (scanners, video cameras, sensors, etc.)) | 1 unit |
| 6. | Kitchen ware and equipment | 1 set |
| 7. | Reserve domestic water tanks, SIM tanks, 20,000 | 4 units |
4.0 OPERATING COST ESTIMATION
Operating cost estimates include all costs for purchase of consumables, labor and other supplies for the mining project. Yearly consumption of these consumables is estimated based on existing prices of commodities at Arusha and surrounding environment. Those which cannot be sourced from Arusha and Moshi have been searched through the internet and some from used equipment web sites. In most cases, professional judgment and experience of the existing Tsavorite mining operations at Lemshuku have been used to come up with the cost estimates.
- Underground Mining Supplies
Underground mining supplies that will be required to produce 50 tones per day or 1,000 tones of ore per month has been estimated and presented in Tables 4.1 to 4.5. These costs are based on operating 4 inclined shafts which will be developed at different locations of the SML area.
Table 4.1
Underground Mining Consumables and Supplies
| Unit Operation | Type of Consumable | USD Cost/Yr. |
| 1. Drilling and Blasting Consumables:
|
Explosives:
|
60,000.00 |
| Drilling:
|
15,000.00 | |
| Compressor accessories:
• |
120,000.00 | |
| 2. Material Loading and transportation | Loading equipment:
|
200,000.00 |
| 3. Safety, dewatering and Ventilation costs | Ventilation System:
• R |
50,000.00 |
| TOTAL UNDERGROUND MINE SUPPLIES | 445,000.00 |
- Process Plant Supplies and Consumables :
Other mine supplies apart from the underground mine supplies listed above has been shown in Table 4.2
Table 4.2
Other Mine Supplies and Consumables
| Unit Operation | Type of Consumable | USD Cost/Yr. |
| Processing plant | Crushing & Screening:
|
70,000.00 |
| Tailings Dam | Pumping system:
|
10,000.00
|
| Laboratory | Chemicals & lab supplies:
|
5,000 |
|
TOTAL PROCESS PLANT SUPPLIES |
785,000 |
- Direct Mine Labor Cost
To be able to produce 18,000 tones of Tsavorite per year, a significant number of miners, processing plant workers, technical services, workshop, and other support workers must be employed to realize the anticipated production. Table 3.3 provides the direct labor requirement engaged with production and support services. Administration and Finance is considered separately and security is considered to fall directly under administration.
Table 4.3
Production Labor Requirement
| Department | Title | No. | Wage | $/Month | $/Year |
| Rate | |||||
| Mining | Mining Engineer | 1 | 2,500.00 | 2,500 | 30,000 |
| Mine Foreman | 4 | 2,000.00 | 8,000 | 96,000 | |
| Driller | 16 | 300.00 | 4,800 | 57,600 | |
| Blaster | 2 | 300.00 | 600 | 7,200 | |
| Lashers | 16 | 200.00 | 3,200 | 38,400 | |
| Monorope Attendants | 16 | 150.00 | 2,400 | 28,800 | |
| Loader Operator | 1 | 300.00 | 300 | 3,600 | |
| Truck Drivers | 2 | 150.00 | 300 | 3,600 | |
| Pickup 4WD truck driver | 1 | 150.00 | 150 | 1,800 | |
| Processing Plant | Processing Plant Engineer | 1 | 2,500.00 | 2,500 | 30,000 |
| Laboratory Technician | 1 | 800.00 | 800 | 9,600 | |
| Laboratory Attendant | 2 | 150.00 | 300 | 3,600 | |
| Plant Foreman | 1 | 500.00 | 500 | 6,000 | |
| Crusher Attendant | 1 | 200.00 | 200 | 2,400 | |
| Screen Attendant | 1 | 200.00 | 200 | 2,400 | |
| Thickener Attendant | 1 | 200.00 | 200 | 2,400 | |
| Tailings Dam Attendant | 2 | 200.00 | 400 | 4,800 | |
| Slurry & water Pump attendant | 1 | 200.00 | 200 | 2,400 | |
| Sorter | 2 | 400.00 | 800 | 9,600 | |
| Workshop | Mechanical Foreman | 1 | 600.00 | 600 | 7,200 |
| Electricians | 2 | 300.00 | 600 | 7,200 | |
| Mechanics | 2 | 300.00 | 600 | 7,200 | |
| Fitters | 1 | 300.00 | 300 | 3,600 | |
| Plumbers | 1 | 300.00 | 300 | 3,600 | |
| Welders | 1 | 200.00 | 200 | 2,400 | |
| Technical Services | Geologist | 1 | 2,500.00 | 2,500 | 30,000 |
| Samplers | 2 | 150.00 | 300 | 3,600 | |
| SHE Section | SHE Officer | 1 | 1,100.00 | 1,100 | 13,200 |
| SHE Attendants | 2 | 150.00 | 300 | 3,600 | |
| Medical Attendant | 2 | 300.00 | 600 | 7,200 | |
| TOTAL LABOR COST | 88 | 12,000 | 35,750 | 429,000 |
- Administration & Financial Costs
Financial and administrative expenses will be expenses incurred in running the mining and Tsavorite processing operations at Lemshuku including managing the miners, assets, supplies and other consumables, security, safety, health and environment. Include also financial transactions, legal and statutory obligations related with the running of the Lemshuku mining project, etc. Table 4.4 presents the breakdown of these costs.
Table 4.4
Financial and Administration Costs
| • | DESCRIPTION OF THE COST ITEM | AMOUNT (US$) |
| • | Financial costs: US$ 2,000 per month x 12 months
(bank costs, inventory procurement costs, office stationery, etc.) |
24,000 |
| • | Motor Vehicle Costs 2 pick ups | 18,060 |
| • | • Buildings & Fence maintenance:
(Repairs will be needed during the one year period) |
4,000 |
| • | Salaries: | 429,000 |
| • | Security costs:
• Security equipment servicing, supplies & Patrolling |
20,000 |
| • | Workers Canteen costs for 100 workers | 72,000 |
| • | Consultants Fees (Technical & Financial) | 20,000 |
| • | Licensing and legal Fees: | 11,800 |
| • | Public relations & Community support: | 10,000 |
| • | Medical & health care costs | 24,000 |
| TOTAL | 632,860 |
- Other Support Services Cost
Other support services costs are those to deal with the geology, survey works, environmental, etc. These have been estimated as shown in Table 4.5.
Table 4.5
Support Services Costs
| SN | Description | Amount |
| (US$) | ||
| Surveying Cost:
• Plotter material costs (ink cartridge) & total station service costs • Field costs |
10,000 | |
| Geological Costs:
• Geological material costs • Rock sampling costs |
24,000
|
|
| Mine Rehabilitation works:
• Water/soil/air sampling costs • Field costs, including tree seedling gardening • Other environmental rehabilitation costs |
54,000
|
|
| Total | 88,000 |
- Overhead Expenses
These costs are considered to be costs associated with the corporate management of the project, including costs related to the Board of Directors meeting, Shareholders meetings, not related with the direct day to day running of the project. Table 4.6 shows the breakdown of the overhead expenses:
Table 4.6
Overhead Expenses
| SN | Description | Amount |
| (US$) | ||
| • | Head Office Administrative Costs and Communications | 40,000 |
| • | Directors Fees and Board meetings | 50,000 |
| • | Office Rent and Other Costs | 21,000 |
| • | Traveling Costs Internationally | 40,000 |
| • | Traveling Costs within Tanzania | 18,000 |
| Total | 169,000 |
Summary of the operating costs for the Lemshuku project is presented as Table 4.7.
Table 4.7
Summary of Operating Costs
| SN | Description of the Cost Code | Amount |
| • | Underground Mine Supplies | 396,337.00 |
| • | Processing Plant Supplies & Consumables | 72,748.00 |
| • | Direct Mine labor Cost | 429,000.00 |
| • | Other Support Services Cost | 88,000.00 |
| • | Administration and Financial Costs | 316,860.00 |
| • | Overhead Expenses | 169,000.00 |
| TOTAL | 1,471,608.00 |
5.0 CAPITAL AND DEVELOPMENT COST ESTIMATES
- Infrastructure Requirement
To be able to support the anticipated production of Tsavorite development of the infrastructure at the project site will be necessary. Table 5.1 provides a list of the infrastructural development requirement for the project.
Table 5.1
Infrastructure Requirement for the Project
| Description of the Infrastructure | No. of Units | Cost in US$ | |
| • | Administration Office & Change House building | 1 | 23,000 |
| • | Warehouse | 1 | 14,000 |
| • | Engineering & Workshop building | 1 | 26,000 |
| • | Workers canteen & Kitchen | 1 | 11,000 |
| • | Fuel storage tanks & pumps | 1 | 12,000 |
| • | Electric power extension and transformer | 1 | 17,000 |
| • | Processing plant foundations | 1 | 12,000 |
| • | Water supply system, including drilling boreholes | 1 | 24,000 |
| • | Access road construction | 1 | 15,000 |
| • | Tailings Dam construction & water circulation system | 1 | 45,000 |
| • | Explosives storage building | 2 | 10,000 |
| TOTAL | 209,000 |
- Capital Cost
It is estimated that the project would require capital funding of USD 1,195,000 without HMS Plant and Capital funding of USD 2,695,000 (Reviewed) with HMS Plant. This money will be provided by the Joint Venture Partners.
- Working Capital
This refers to the amount of cash that should be able to sustain operations for 2 – 4 months before payments on sales start flowing into the company’s bank account. Expenses on fuel and oils, mine and processing plant consumables, etc., will be covered by this amount during the first two months.
6.0 REVENUE GENERATION
- Projected Revenue Generation
Revenue estimates for Tsavorite to be mined is very much dependent on the quality of the gem that has been mines, however, according to the green garnet One system, there are five grades of the green garnet that can be mined, which are shown in Table 6.1.
Table 6.1
Definitions of Grades of Tsavorite
| Grade | Clarity | Description |
| A | Clean Crystal | Inner area of the crystal should be clear and inclusion free. The outer edges of the crystal may contain needles and/or inclusions if these can be removed during performing. The material may include a crack or needle only if this occur along a possible sawable direction.
Cut stones will have a good to exceptional colour |
| B | Slightly included Crystal | Material is predominantly clean, but may include limited needles, feathers and inclusions. Sawing of the material will produce smaller fine quality green garnets.
Also included crystals with a lighter color Cut stones will have a light to good color |
| C | Included Crystal | Heavily included, containing several cracks, needles and inclusions.
Require cobbing to obtain clean material.
Normally cut into the rounded cabochon form or other low-yield shapes, e.g. flats. |
| D | Opaque | Extremely cracked and fully included material. Normally undergo abrasive tumbling and made into beads. Sometimes suitable for a cabochon cut. Impossible to obtain faceted stones. |
| Low Grade | Poor quality opaque material that may be used for low-grade beads or carvings.
|
|
| Specimens | Crystals that have good prismatic orthorhombic structure. |