New Projects

Gemfields completed the acquisition of a controlling stake in an Ethiopian mining company in February 2015, Web Gemstone Mining plc (‘WGM’) that holds a 200km² exploration licence in southern Ethiopia. Exploration activity began in June 2015 in an area to the north of the licence, called Dogogo South Block. The area was selected based on favourable geological settings and evidence of past artisanal activity.

The exploration work conducted in the Dogogo South Block consisted of a geological mapping exercise, followed by a trenching and exploratory pitting exercise. These exercises confirmed the existence of reaction zones between pegmatites and talc-mica schists, with the occurrence of beryl also recorded in some locations. These exercises were followed by an exploratory diamond core drilling programme to confirm the depth continuity of potential reaction zones to 50 metres’ vertical depth, which was completed in December 2016. A total of 3,538 metres was drilled in 45 drill holes along eleven section lines.  Reaction zones were visually observed in all sections, and a level plan at 1300 mRL (about 25 metres below surface level) confirmed the presence of three sets of pegmatitic bodies.

A section by section geochemical analysis exercise for a suite of elements was carried out on the drilled core samples using a handheld X-Ray Fluorescence (“XRF”) instrument. The transverse sections were updated based on the drilled core logs and analytical results. A total of 308 core samples from 45 drilled holes were analysed by laboratory procedure at ALS Global in Ireland. The ALS Global analysis clearly shows a general agreement with the in-house XRF analysis exercise.

ACA Howe UK was engaged to provide an assessment of exploration carried out, an appraisal of the project potential and to provide recommendations for further work. ACA Howe consider that the exploration completed by WGM has been successful in identifying a favourable geological setting for a “Schist-hosted” type deposit, formed by an intrusion of pegmatites into a steeply dipping sequence of biotite-chlorite and talc-mica schists, similar to the geology at Kagem mine in Zambia. ACA Howe agree that a programme of bulk sampling is required prior to further surface exploration and core drilling in order to provide valuable insight on the presence of commercial sized emeralds, their distribution and quality.

Due to the encouraging results of the exploration programme, a bulk sampling exercise was initiated in early August 2017 in the Dogogo South Block to further advance understanding of the ore grade and value, and to determine the economic viability of the deposit in the process. Phase 1 has a rock handling target of 1.2 million tons over two years – 600k tons per year using two excavators. The objective of the exercise is to confirm the depth continuity of mineralization up to 1300 mRL, approximately 25 metres below the surface. Drilling & blasting is also required due to the terrain conditions. Blast-hole drilling commenced in mid-September 2017, and the first blast was successfully taken on 14 October 2017. The excavation strategy was revised based on the findings of the first month of excavation, and now focuses on the area along the strike, measuring 120 metres in length by 35 metres wide, covering part of existing artisanal pits. Multiple bands of pegmatite and reaction zone have been encountered and mapped during the bulk sampling exercise, confirming the results of the exploratory drilling exercise.

Gemmy-quality beryl and low-quality crystalline emerald have been recovered in encouraging quantities during the bulk sampling exercise since the first blast was taken in October 2017. These discoveries support all previous exploration work and provide important geological information that is helpful in guiding the ongoing operations. These findings are encouraging, and more exploration work (particularly bulk sampling) is required to accumulate data of sufficient quantity and quality to be used for resource estimation and thus determine the economic viability of the project.

The results of the bulk sampling exercise and preceding exploration activity were extremely encouraging, and the Company intended to apply for a full mining license by the end of 2018. Gemfields Limited, via WGM, has invested over USD 6 million in the project to date, which employed approximately 140 people (including contractors and casual labour).

However, on the 29 June 2018, a violent mob of approximately 500 people attacked company staff and assets and completely overran the license area, resulting in the total destruction and evacuation of the project and the injury of two employees. In a further assault on the 31 July 2018, the sort house was breached, and all emerald samples produced over the course of the bulk sampling exercise were looted. The emerald samples were a key value driver for determining the economic viability of the deposit, therefore the purpose of the bulk sampling exercise was defeated and must therefore be repeated from the beginning if the project is to resume. The offices, campsites and operations areas were totally destroyed, and all equipment, property and sensitive documents either looted or destroyed.

As a result of these events, the Company was forced to declare force majeure circumstances and suspend all operations pending stabilisation of the operating area and wider business environment. Unfortunately, the force majeure circumstances still prevail, and the site remains occupied by a small number of people who are illegally mining emeralds, therefore WGM has not been able to resume operations. Despite this, the Company has remained in regular contact with local, regional and federal government authorities, and carried out a community engagement programme to facilitate a return to work for WGM as soon as possible.

Since August 2016, Ethiopia has undergone a period of significant political unrest, culminating in the resignation of Prime Minister Hailemariam Desalegn in February 2018. Mr Desalegn was replaced by Prime Minister Abiy Ahmed in April 2018, a concession aimed at calming the restive state of Oromia, WGM’s home state.

Prime Minister Abiy’s administration has continued its attempts to entrench itself whilst pushing through widespread reforms aimed at liberalising the economy, which have resulted in widespread changes across the country. The PM’s agenda has experienced significant resistance from the former “Old Guard” administration and various ethnic nationalist/populist factions vying for power under the new administration, resulting in pockets of violence erupting sporadically across the country and are expected to continue until after the general elections scheduled for May 2020. The Borona Zone Authorities have communicated that the Company will be able to return to the license area within 3-5 months, therefore current planning assumes that operations will be able to resume following peaceful elections in May 2020.

The Mbuva-Chibolele mine lies on the same emerald belt as Chama pit of Kagem property is, but just on the opposite side across the Kafubu River to the west. This belt of favourable TMS is popularly known as Fwaya Fwaya – Pirala Emerald belt, and is intruded by a series of pegmatites. It continues further to the west hosting other emerald producing mines such as Grizzly, Pirala and Kamakanga. The Mbuva-Chibolele mine contains over 1000m of strike length of TMS cut by pegmatites suitable for the occurrence of emeralds.

Gemfields acquired the asset in 2004 after carrying out extensive geophysical survey and diamond core drilling leading to construction of a resource model. Trial mining began at Chibolele emerald mine in July 2006 and continued over a period of eighteen months. A competent person’s report was prepared by SRK, UK in 2016 incorporating all the exploration input and auction sale of emeralds produced totalling approximately US$ 2.2m.

Kamakanga emerald concession was acquired in 2005 through a wholly owned subsidiary Gemfields Mining Ltd. It is located 5 to 6 kilometres west-southwest along the regional strike of the well-known Fwaya Fwaya – Pirala Emerald Belt from the Chama operation of Kagem property.

Although the mine is presently inactive, it produced about 8,491 kilograms of unsorted material in 1997 from which 2,965 kilograms of cleaned and graded emerald and beryl rough were produced. Recorded emerald and beryl sales by the then operating company totalled US$ 8.7 million in the five-year period from 1994 to 1999. Gemfields has carried out further drilling to establish the resources which was verified by ACA Howe International (2005) and has plans to further develop the deposit in near future.

Gemfields acquired 75% controlling interest in two ruby concessions held under the JV company Megaruma Mining Lda. The two licences, which do not border one another, each share a boundary with the existing Montepuez ruby deposit and cover approximately 19,000 hectares and 15,000 hectares respectively. The Megaruma licences are expected to provide a platform, alongside the Montepuez ruby deposit, for the expansion and development of Gemfields’ Mozambique ruby operations. The licence is currently under exploration and regulatory compliances.

Gemfields acquired 75% controlling interest in another ruby concession held under the JV company Eastern Ruby Mining Lda. The licence covers an area of 116 sq km and shares its western boundary with the southern licence of Megaruma Mining Ltd, another joint venture of Gemfields. The licence is currently under exploration and regulatory compliances.