Discussing our operational context

Our relationship with communities is based on the principles of mutual benefit and trust. We take consultative approach to community projects and ensure we perform a needs analysis in which the communities actively participate, to identify initiatives that are both relevant and sustainable.

Following Johnny Velloza’s resignation as Chief operating officer (COO) during the year, the Board felt that it would be in the best interest of shareholders and other stakeholders to provide continuity. While Johnny has stayed on the Board in the capacity of non-Executive Director, Gavin Beevers, who previously spent more than ten years on the Board as a non-Executive Director, was temporarily appointed Technical Advisor until a suitable replacement for Johnny is found.

In this Q&A, Gavin provides insight into the progress made with regard to the Group’s operational and sustainability objectives during the year.

Q: Please highlight significant achievements in terms of operational performance during 2018?

From an operational perspective, 2018 was a largely successful year. However, regrettably, the successes were offset to a great extent by our safety performance. There were four LTIs in the first quarter of the year, which gave us a much-needed wake-up call and the alert that we needed to re-invigorate our approach to safety. This was tackled with a great deal of energy, and pleasingly there were no further LTIs for the remainder of the year.

We recorded a marked improvement in tonnage treated in the second half of the year following a lengthy shutdown for major maintenance and remedial work to both plants. While plant runtime has increased, the focus remains on quality over quantity, which will be achieved by the improvements in plant steady state operations, control and maintenance. Our challenge now is to pursue the opportunities for further improvement and demonstrate that the results we have achieved remain sustainable over time.

Towards the end of 2018, the new mine plan for Letšeng was formally approved. Despite the tight timeline, the plan was largely implemented during the year to prove that the required mining standards to de-risk the plan could be achieved. It utilises steeper inter-ramp slope angles in both kimberlite and waste, leading to a much-improved life of mine net present value. The significant reduction in the waste to be stripped will, in addition to reducing costs, be of environmental benefit by reducing the Group’s waste footprint. Another initiative that kept costs down during 2018 was the renewed and extended mining contract, which incorporates significant productivity gains and positive outcomes for our environmental performance.

Our environmental track record is reflective of the embedded nature of our sustainability principles. Much effort was expended on surface and groundwater quality management, with regular monitoring and evaluation taking place. During the year, we invested in a feasibility study to upscale our bioremediation pilot plant to a production unit that will reduce the presence of nitrates in the water leaving the mine site. In addition, the management of our tailings storage facilities remained an area of intense focus to provide assurance that our facilities are constructed, operated, maintained, inspected and audited both internally and externally in line with international best practice standards.

During 2018, we made the transition to the ISO 45001 standard for occupational health and safety. It was a significant undertaking but one that our team should be proud of. The standard sets out specific requirements that aim to proactively drive improvements in health and safety performance, and minimise hazards and risks.

Our relationship with communities is based on the principles of mutual benefit and trust. We take a consultative approach to community projects, and ensure we perform a needs analysis, in which the communities actively participate, to identify initiatives that are both relevant and sustainable.

Close collaboration with our project affected communities continued during the year with investment being made into community and social programmes. This included continued investment into the dairy farming project (started in 2016), with the purchasing of a further 10 Swiss Brown cows, which are good milk producers and quite hardy in the harsh conditions experienced in the area. Based in Mokhotlong, the project is an initiative that aims to deliver locally supplied pasteurised and packaged fresh milk as an alternative to the milk imported from South Africa, which constitutes the vast majority of locally consumed dairy products. We also received positive feedback from the community concerning the training we provided in animal health and welfare, which benefits the broader community beyond the project.

Investment in education remains one of the most impactful and sustainable contributions we can make and therefore remains a top priority. During the year, we continued our scholarship programme whereby full scholarships are offered annually to students currently studying or interested in studying for tertiary qualifications relating to the development of the natural resources of Lesotho. We also offer an internship programme on the mine, guaranteeing two years of work, and at the end of that period, permanent employment is offered to top candidates.

Yet another project started during the year as part of our investment in infrastructure in the vicinity of the mine was the construction of a footbridge across the Khubelu River. In the summer months, the Khubelu River swells to such an extent that community members cannot cross it, leaving them unable to make the journey to school, work or even, in some cases, to the hospital when an emergency arises. Through consultation with the community, this project was identified as a priority and will be completed during the year ahead.

With the recovery of the 910-carat Lesotho Legend, we initiated the 910 Community Project to share the benefit of this windfall. Through our consultative process, we identified an opportunity for a commercial egg farm in the area. Following a feasibility study, this project will be our focus in 2019.

I have great respect for the leadership and employees of this Company, which made the decision to return as Technical Advisor an easy one.

I want to extend a special thanks to Johnny Velloza and the team for their effort in laying the groundwork in earlier years that culminated in a successful 2018. I would also like to thank the Board for allowing me the opportunity to return to Gem Diamonds. To the management and mine teams – thanks for welcoming me back. It has been fun.

The year ahead will hold its own challenges, but I am confident that, given the work carried out to date, Gem Diamonds is well positioned to deliver sustained value to all its stakeholders.

Gavin Beevers
Technical Advisor