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...I ESTIMATE Update & Procedures July '98

Zambian Production

Labour Production Yield Mining plan Recovery Security


This report has been worked into the prospectus and only place here for ease of reading to those who read the whole prospectus before the 5th of July 1998.

All prices quoted are in US dollar and stated per Kilogram, gram or carat.

When referring to beryl in this report, I mean the family of beryl which includes emerald, aquamarine, precious beryl and others as commonly found in the Piralla location. When only referring to Quartz I include the whole family as found in the Piralla area - citrine, rock quartz, smoky quartz and clear quartz.

During my conversation with the Emerald & Semi-Precious Stones Mining Association of Zambia (ESMAZ) I learned that there are no more plots in the central ribbon of the emerald fields available. Some vacant lots are available in the extreme North and South border regions. An Indian group has bought all rights on the remaining plots.

At best, the actual yield of emeralds and other gemstone material is guess work. There is no accurate data available from Zambia. The main reasons being:

- True production and tonnage removal are not declared to the authority
- Very slack bookkeeping, if in existence at all

Even the government of Zambia does not know how many emeralds are produced. Estimations are that the official reported figures only reflects about 40% of the real production and 30% of the real values it was sold at.

From four different official sources in Zambia, I received four different figures.  Emerald production from 1046 kg to 22,000 kg! Export values from US$600,000 to US$8 Billion!!! Now which to believe is truly difficult.


At present the plot has a small compound, housing 14 permanent workers - from the nearby village of Chief Nkana temporally workers are available.

Of the present staff, the production manager was a senior mining operator at one of the copper mines, (they closed down in 1996) and another three of the workers are licensed plant operators.

Most of the people in the copperbelt were employed by the Zambian Copper mines and has good practical experience on open pit mining. Machine operators, miners, pit workers, etc. are freely available, lowering the rate of salary compared to South Africa and the rest of the world.

Most of the mining in the copperbelt is of open cast nature.


Emeralds are part of the BERYL group of minerals. The beryls found in this area are: emerald, aquamarine, green / precious beryl and beryl. What sets the emerald apart from the other beryls are quality and colour. Emeralds are green, caused by slight presence of vanadium, chrome and or iron. Emeralds from Columbia has a bluish tint in them, from Zambia the tint may be anything from bluish to yellowish, but very clean (strong) green colour are often found in the latest products. When an emerald quality is low grade, or the colour not green enough it is clasified as beryl only. On average 35% of the total production in this area is of gemstone quality, 65% lower quality and industrial. This might also be due to the fact that real low quality emeralds and beryl are not even reclaimed at all but dumped with the waist.

Most of the mine are not operational during the rainy season from November to March. During this period rain of up to 1,200 mm falls and makes it difficult and dangerous for vehicles to move around the pits. From my perspective, this will be the time to work through the overburden that was not checked during the excavation time and to prepare the new pits for the coming year. Many of the emerald mines are closed during the period November to April.

Plot 13, Gentina mine, second plot west of Plot 5G (also from third plot South)
Operated only for about six months during 1997, only one 50 ton excavator available, no bulldozer or any trucks. Produced 1,950 kg.

Plot 5K, second plot east of 5G, small 20 ha
Small scale mining with hand tools only and operating for three months - 225 kg for 1997

Kamakanga, second / third plot North of Plot 5G
One of five larger mechanised mines. During 1997 was operating on another property further north, but worked at Kamakanga for 6 months during 1996 and produced 2,450 kg. They have just begun mining this plot again.

Piralla, second plot North east of Plot 5G
One of five larger mechanised mines. Averaged 30 kg of emeralds per 380 tons of ore during the past two weeks with lateral mining at about 35 metres. The larger portion of these emeralds were of super grade( A+ & A). Info supplied by one of their managers present with Mr Shaba in the office.

Total operating mines (active):     23
of above, mechanised:                 15
Open cast mining:                        23
Underground mining:                   00   (Kagem is presently the only mine considering it)

The following indicators are ascertained by ESMAZ and Rosmo Mining Consultants in Lusaka, tel no: (09-260-1)
24-0237. This data is applicable to the Piralla region (immediate vicinity of Plot 5G):

EMERALD: (the nice green variety of Beryl) Of the 35% jewellery grade:
3% top grade A+ (65+ points), prices above US$500 per carat (Zambia rates the higest in the world at present. Colombia is 2.2% and Zambia is 2.9%)
37% gemstone quality (A, B+, B or 25 to 65 points), prices from $20 to $500 per carat
60% lower grade (C or -25 points), prices from $1 to $20 per gram

AQUAMARINE: (Blue variety of Beryl) Of the jewelry grade (double sky blue, gemmy, clear, glass like)
Aquamarines are found more to the western side of the emerald area.
5% top grade obtaining prices in excess of $20 per gram
15% good jewellery grade prices between $2 and $20 per gram
80% average gem quality getting prices between $0-50 and $2-00 per gram

BERYL: The rest of the beryl group.
3% Gemstone quality with prices from $0-50 to $5-00 per gram
7% treatable stones, fair quality obtaining prices of $100 to $500 per Kg
90% lower quality beryl, prices from $5 to $100 per Kg.

In the Piralla area about 45% of all the jewellery grade gemstones found are emeralds, 8% Aquamarines, 15% other beryl, 30% of the quartz family and 1% tourmalines.


Getting figures from Zambia ia a disaster. From all the information I could gather, I have tried to get a realistic figure. It is my own estimates based on the following facts:

Most of the gemstones of Zambia are illegally smuggled out of the country using the following techniques. Officially the statement is that about 40% is declared but I estimate that less than 20% in quantity and less than 15% in value is declared.

I found a lot of confusion from some traders and miners especially between gram and carat. One gram is five carats, but often they are misled to show 'one' on the scale as carat where it is actually gram (5 carats).
Quality grading is an absolute mystery. You can buy junk for $50 per ct, of top quality for $10 per carat depending on what the local people think. Often size is their biggest indicator, or amount of host rock left on the crystal! Local people are not good at grading emeralds or determining their prices.
The Government seems to be asleep on something like US$8 per gram, although they are aware of prices in excess of $10,000 per carat at recent auctions, these never reflects in export figures! At a average price of $8-78 per gram (or $1-75 per carat) it will translate into less than $10-00 per carat polished emerald gemstone - including cutting and labor costs!

Zambian emeralds are exported around the world. The finished gemstones are not always lab certified, thus you will find quite some Zambian emeralds being sold as Colombian, Brazilian or often as Sandawana (Zimbabwe).  We have Brazilian people buying emeralds in Zambia and exporting it to Brazil! From there it is sold to the USA as Brazilian! Israeli traders often sell Zambian emeralds as Colombian to the far east and Europe.
Trading from the mines (and the street) in Zambia indicates the following major buyers of rough material with estimate quantities:

Emerald rough imports by countries I could find for 1997 indicates the following - excluding polished stones and emeralds set in jewelry: (Some do come from South America)

Though from my experience I think these are very inaccurate but here they are:


Zambia produced about 7,000 Kg of gem quality emeralds, at $25 per gram, about US$175 million ($5-00 per carat)
Aquamarine (Blue variety of Beryl / emerald), about 1,000 Kg at value of around US$750,000 ($0-75 per gram)
Lower quality emeralds and other of the beryl group, about 10,000 Kg at a value of about $1 million ($100 per Kg)

I think you would agree with me that above prices are extremely low. The processing cost (faceting, polishing, etc.) of emeralds are about $4-00 per carat (in India I paid $1-50 per carat). Emeralds yield on average 22% of the rough material into polished  gemstones.  At above prices an average emerald gemstone will cost less than $30-00 per carat!! Now for the real hit - lower quality emerald gemstones sell retail at prices from US$200 per carat upwards.

Fact is: The Zambian gemstone production and value is considerable higher than the Government even suspect and a much larger percentage are smuggled out of the country. However, Zambia does not even get 10% of the values. Often the people who smuggle these products out are the owners or part owners on the mines and they keep their profits in the foreign countries.

During my visit to one of the bigger companies in India, I learned they get the stones from Zambia with a much deflated value (i.e. US$500 per Kg), polish them and export them to the USA still at the reduced value of say US$1,000 for the same parcel (1,000 carat at $1-00 ea) and then sell them at the realistic value of $200 or more per carat in the USA. They thus save on the export tax of Zambia, import duties in India and the USA.

At the end of the day - The emerald and gemstone market in Zambia is much bigger and profitable than what I even suspected. Much more so if we can finish a large part of our own products.


Plot 5G has three prospecting pits located on the three main theories pointed out by the mine surveyors. The pit (#3) worked on at the moment, by hand, is located on the Northeast corner of the plot in Zone B.

The mining plan will have three main phases:

    - Remove overburden
         * Bulldoze to 4 metres (or deeper if possible)
         * Clear rest of overburden off with excavators and trucks
    - Open cast mining to a depth of about 50 metres
    - Tunnel mining, following emerald bearing veins

Exploration drilling is suggested to obtain accurate readings of the geology of the entire plot. I would also like to make use of the Geological Dept of WITS to determine the effect of geoscience / geophysical equipment in determining underground veins.

As pointed out in the geological reports the overburden on the plot varies between 9 and 12 metres. Although there are occurrences of beryl (emerald, aquamarine) and quartz (citrine, rock and smoky) crystals in this overburden, the priority will be to remove it as quickly as possible, thus gaining access to the emerald bearing schist and pegmatites.

Starting point will be on Zone B at the Northern eastern border of the plot, about 50 metres from the eastern border, and working South.

Clearing of vegetation (especially the trees) will take an estimated one weeks. For this we will need two chain saws. To save time and cost, this could be contracted out to one of the timber companies. We would then lose a large portion of the income from the timber.

Using a bulldozer (D7 or larger) the first pit will commence about 50 metres from the eastern border of the plot. Working South 75 metres and west 75 metres. The bull dozer will rip the soil followed by eight or more workers, each searching with pick and shovel locating possible minerals. After ripping the whole area, the soil will be cleared out to the east end of the plot.

This procedure will continue till a depth of about four metres or until the solid granite stops this procedure. The southwards direction could be extended for another 75 metres.

The bulldozer team will continue clearing up the next area (first pit in Zone A) and then onwards to Zone C.

After the bulldozer work has cleared a pit, excavators and trucks will be needed to remove the rest of the overburden to the actual production depth, which might be from 9 to 15 metres. Once high potential rock is reached, we will have to switch to smaller back hoe / front end loaders. The mining procedure will change from here onwards to smaller operations. Ideally we will have three teams working with hand tools, jack hammer and back hoe/loader in every pit.


There are three distinct occurrences of beryl and other crystals found in this area - alluvial (mostly in the overburden), embedded (single crystals formed within the schist and granites) and pockets or veins.

TYPE 1: In Overburden
The beryl in the overburden is usually of low quality, however, high gemstone quality do occur. The lower quality also has market value. Most of the overburden will be searched on site during the ripping process, before moving out to the dumps. Should an area be found with higher concentrations of beryl or quartz, this ore will be moved to the recovery plant.

TYPE 2: Embedded
Emerald bearing host rock (schist, tourmaline quartz, quartz, etc.) will be moved to the recovery plant, crushed and searched.

TYPE 3: Pockets & veins
These are the main emerald producers. This type of occurrence needs to be searched and recovered on site rather than removal to the recovery plant. Whenever a vein is found, quartz or other, extreme care must be taken to ensure the least possible damage to crystals. This is one of the reasons why further mining is to have smaller teams working with jack hammers and hand tools, using excavation machinery simply to open up the host rocks.

The recovery plant will be divided into three areas: receiving, recovery and dispatch. The receiving and recovery areas will be fenced in and have CCTV monitoring.

All material from the pits will be stockpiled in two areas - overburden and host rock. From here material will be transported to the sieves by conveyor belts. First priority is to work on the host rock. If no host rock is available, work will continue on overburden.

Sieves will work in series, starting off with a rolling sieve of 5 cm grit, feeding to the second of 10 cm grit and on to the third of 20 cm. Rocks larger than this will be crushed and then re-cycled through the sieves.

High pressure water jets would also be installed to wash the gravel when required.

From each of the grit sizes a conveyor belt of approximately 20 metres will run through a picking area. On each conveyor three to ten people will pick crystals by hand. At the other end, the waist will be collected and dumped. The 20 cm rock could be recycled.

Crusher: (Mill)
A hydraulic crusher plant will be needed to break the larger host rocks. Another option is a milling plant with a capacity of about 200 tons per day. The rock will be searched and dumped directly or may pass through the sieves again, depending on the quantity.

Waist will be removed by dumpers to the dumping areas.


Security is one of the most important aspects of working in the mining environment of Africa. Relying on the traditional methods, practised world wide is not effective in Africa. There are many reasons, one being the ‘brotherhood’ of Africans, intimidation, and willingness to take risks.

The only way I ever found effective to work is to use their superstition.

We will incorporate all the standard security measures - fences, lights, guards and dogs. At a later stage perhaps construct a changeroom system with security pass-through. This will operate on the basis of a Private and Company section.

Personnel will come from home, change into an apron, place ALL their belongings in a locker, pass through a scanner device to the company side, put on their work clothes and go to work.

When going off duty, the reverse procedure will be implemented. The security scanners will deter theft and provide a degree of security as NOTHING is to be carried out.

These measures do work quite effectively in the rest of the world, but not in Africa. Here you have the ‘brother’ working as security guard who will let you pass. Even by management monitoring security as is the situation in Kamakanga, they devised a way around it. Parcels of emeralds are hidden during the day at a certain location, at night the security guards collect this and transport it out. At Kagem mine another technique was used for a while. The workers locate a pocket of emeralds during the day, mark it and cover it up. At night they slip through the fence and mine the emeralds!

Parcels are often just thrown over the fence and collected later on.


I have three complimentary techniques: Sharing, CCTV

Security personnel should be brought in from other regions rather than the local people. I do know the Senior Commanding Officer (Compared to rank of Colonel) of a remote district personally. This man is of high integrity and honesty. We might be able to obtain his services as Chief of Security.


Implement a system of bonus or production sharing. As we will have various teams working we should establish a friendly competition between them. This will promote productivity and at the same time give us a leverage on security.

For example:

Divide operations into three teams: Pit workers, Recovery plant and Security.

10% of all products (excluding the top first grade) are to be added to a drum for every team, visible to all.

At the end of the month, half this drum is evaluated and shares paid out to the relevant teams. The other half is added to a yearly drum, which is used as year end bonus for the team.

Should any member from any team find a member of another team stealing or in possession of emeralds outside the mining area, or in process of stealing emeralds, half of the months bonus drum is to be transferred from the guilty teams drum to that of the informants team. Should their monthly drum be empty, they forfeit half their yearly bonus drum. If the member is of the same team, it is left to the team to respond. Effectively, they will work him out.

Should any of the Security officers be the guilty person, 100% of their drum is forfeited. Should management catch any person, 100% of their teams drum is forfeited to the company.

The above is in short, but the following is the spin off:

1. Internal competition, obtaining higher productivity.
2. Jealous guarding of their own shares, and trying to catch some of the other teams.
3. Feeling of participation, sharing and belonging.
4. Team building.
5. Team management will work out their own problems. Management will have less to do regarding the labour relations (employment, discharge, etc.) For this will be done by the team themselves.

Install the standard CCTV cameras around the Recovery plant and have mobile units to place in the pits when working. At night time no person is to be allowed in the mining areas. This can be assisted with trained dogs.

Added to above is to use ‘candid camera’ - remote signalling cameras as used in industrial espionage. These miniature cameras (3x3 cm connected to a sender of 20x15 cm) could be hidden and used to view operations from a distance of up to 300 metres.


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