Rough diamond demand and prices
Numerous factors beyond the control of the Group may affect the price and demand for diamonds.
These factors include international economic and political trends; projected supply from existing mines supply and timing of production from new mines; and consumer trends.
The volatility in the market can significantly impact the ability to generate cash flows and to fund operations and growth plans.
Mineral resource risk
The Group’s mineral resources influence the operational mine plans. Uncertainty or underperformance of mineral resources could affect the Group’s ability to operate profitably.
Limited knowledge of the resource could lead to an inability to forecast or plan accurately or optimally, and lead to financial risk.
With Letšeng being the world’s lowest grade operating kimberlite mine, the risk of resource underperformance is elevated.
A major production interruption
The Group may experience material mine and/or plant shutdowns or periods of decreased production due to numerous events. Any such event could negatively impact the Group’s operations and its profitability and cash flows.
Theft is an inherent risk factor in the diamond industry.
At Letšeng, because of the frequency of high-value diamonds and the associated low grade, theft can have a material impact on Group cash flow.
Letšeng’s valuable Type II diamonds are highly susceptible to damage during the mining and recovery process. To reduce such damage, which is a key focus, creates a potential upside for the Group.
Expansion and Growth
The Group’s growth strategy is based on delivery of expansion projects, premised on various studies, cost trends and future market assumptions. In assessing the viability, cost and implementation of these projects, risks concerning cost overruns and/or delays may affect the implementation and execution thereof.
The risk that a major health, safety, social or environmental incident may occur is inherent in mining operations.
These risks could impact the safety of employees, licence to operate, Company reputation and compliance with facility agreements.
Country and political risks
The political environment of the various jurisdictions that the Group operates within may adversely impact its ability to operate effectively and profitably. Emerging market economies are generally subject to greater risks, including regulatory and political risk, and can be exposed to a rapidly changing environment.
Attracting and retaining appropriate
The success of the Group’s objectives and sustainable growth depends on its ability to attract and retain key suitably qualified and experienced personnel, especially in an environment and industry where skills shortages are prevalent and in jurisdictions where localisation policies exist.