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EMERALD MINE INVESTMENT OPPORTUNITY |
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| SUMMARY | PROJECT | INVESTMENT | RETURNS | FAQ | ||
Emeralds are the world's most expensive gemstones and becoming scarcer by the day, as mines in Columbia, Brazil, etc., are running out of high quality and larger emeralds. Good top quality emeralds are higher priced than diamonds of the same quality and size. Emerald prices are not controlled by any organisation as happens with diamonds. Therefore, they present a person with the best investment opportunity.
The emeralds from Zambia are known as among the best in the world. Their colour is certainly superior and, if mined properly, so is the quality. Often explosives and shock waves have damaged stones, but using different techniques can avoid that. One of the richest areas in the world is the Ndola District in Northern Zambia. An estimated 30% of the present total world production comes from this small area, covering about 16 x 22 km. Zambia is currently producing more than 1,800 kg (9 million carats) of emeralds per year. Of these a good 20% are of jewellery quality - cabochons and faceting material - obtaining prices of between US$20 and US$2,000 per ct in rough material.
Processed and faceted emerald gemstones reach prices of more than US$8,000 per carat. Crystals in excess of 1,000 carats are found - yielding various gemstone stones totalling around 200 carats of which at least one stone is more than 30 carats when cut. Emerald crystals in the 10 to 200 carat range are not uncommon.
In this emerald restricted area, there are about 180 mining plots. Most of these are undeveloped or in a stage of minor production by local people. These little mines operate on a small scale using only shovels, hammers and chisels. Some nine mines are mechanized to a degree of which the three larger mines are producing about 65% of Zambia's emeralds.
We have obtained the rights to develop four emerald bearing plots in Zambia - the smallest one is 108 hectares. Two of these plots are in the centre of the major current producers and situated on the high quality Piralla vein. Some of the best stones in the world - size, colour, clarity, and quality - come from the Piralla mine, only 500 metres from our plots and 40 metres deep! In Columbia the mines are generally deeper than 200 metres.
Initially we will mine open cast up to about 40 metres and from there to the shaft and tunnel system.
Investment / development may take one of two routes:
Small investment (US$250,000). This will be used for development on plot 5G and from the income thereof, we will expand to the other plots. However, this option will be slow in reaching our full potential. We expect a profit of more than US$1,500,000 within the first 24 months.
Larger investment (US$1 Million). This is a far more viable option. It will allow us to be more economical with various machinery, equipment and personnel. We will be able to develop all four properties together and in less time than with the first option on one plot. A new company will then be established with controlling shares (minimum 60%) in the various mines. The Company shares will allow 35% to the developer and 65% to the investor(s). Expected profit on this investment will be more than US$4 million within the first 12 months.
As security for you, an incorporated company will be registered in Zambia of which the Investor initially holds a 100% share. This company (investor) will own all assets purchased with the initial investment. I will retain my mining rights and the mine owners will retain their ownerships. An agreement will be registered as follow:
Besides Emerald products, once we have obtained the large scale mining licence and gemstone traders licence we will create additional income to cover running costs. This income will come from by products such as:
This project is to develop four emerald mines in Zambia, currently worked by hand. For the purpose of this prospectus I will use only one plot as an example.
PLACE: Plot 5G, Ndola Rural Area, Copperbelt, Zambia. 28.14 deg east,
13.12 deg South.
SIZE: 108 ha
DEPOSITS: Confirmed three areas of approximately 170,000 sq./m
each. More expected at deeper levels.
GEMSTONES: Emeralds, Tourmaline, Green Beryl, various other Quartz
groups.
The ultimate aim and care is to extract the crystals in the largest possible clusters. From these, by using diamond saws, the emeralds will be cleaned off - instead of the present hammer and chisel system which causes further fracturing.
SATELLITE INCOME:
To utilize tax incentives and for added value we plan to establish a
small lapidary on the mining property. The exceptional high grade will be sent to Israel
or Europe for faceting by highly skilled artists. The rest of the material will be
processed in our own lapidary or sold on the open market. We intend doing faceting,
cabochons, carving and creating other ornamental objects.
Once mining operation has begun, we can apply for and obtain a full gemstone licence. This will enable us to trade legally with any gemstones from Zambia, processed and unprocessed, including exportation. The range of gemstones include: Diamonds, Emeralds, Tourmalines, Garnets, Amethysts, Citrines, Aquamarines, Precious Beryls, Quartz, etc.
Trading with gemstones will successfully finance the running cost of our mine. At the same time we will establish our own market for emeralds. During my visits to Kitwe, Livingstone and Mongu I noticed numerous 'traders' with all sorts of gems on the streets. In Kitwe alone it is difficult to estimate the value of black market trade, but personally - from what I have seen and been offered one Friday alone, I would estimate up to TWO kg (10,000 carats) of emeralds are available in any one week. Prices range from 40% to 80% of the real emerald value and stones in all qualities are very freely available.
MARKETING:
It is a well-known fact that the quality and colour of Zambian
emeralds are amongst the best in the world - if not the best. The markets are established
already - Zambian emeralds are mainly processed in Israel and India and thereafter sold to
Europe. Besides the above standard routes, I have a few other options available.
Gemstones will be sold on our own international auctions, by using the Internet and direct marketing. At a later stage one of my objects will be to establish an Emerald Trading Centre in Ndola.
Marketing of emeralds poses no problem. Natural good quality emeralds are always in high demand.
The emerald market is totally under supplied and will be for the foreseen future. At present I have a demand for US$20 million from New York, 5 million Pound sterling from England, and US$10 million per month from Thailand. This alone is more than the average monthly production of Zambia in 1997!
Investment / development may take one of two routes:
Small investment (US$250,000). This will be used for development on plot 5G and from the income thereof, we will expand to the other plots. However, this option will be slow in reaching our full potential. We expect a profit of more than US$1,000,000 within the first 24 months.
Larger investment (US$1 - 2 Million). This is a far more viable option. It will allow us to be more economical with various machinery, equipment and personnel. We will be able to develop all four properties together and in less time than with the first option on one plot. A new company will then be established with controlling shares (minimum 60%) in the various mines. The Company shares will allow 35% to the developer and 65% to the investor(s). Expected profit on this investment will be more than US$3 million within the first 12 months.
As security for you funds an incorporated company will be registered in Zambia of which the Investor holds a 100% share. This Inc. will own all assets purchased with the investment. I will retain my mining rights and the mine owners will retain their ownerships. An agreement will be registered as follow:
Besides Emerald products, once we have obtained the large scale mining licence and gemstone traders licence we will create additional income to cover running costs. This income will come from by products such as:
INVEST US$250,000:
The amount required is based on the minimum set by the Zambian
Government. This amount will qualify us for a full investors permit, all tax incentives
and other advantages. Another advantage is five residents' permits for foreigners. These
would be used for supervisors and management of the mine.
APPLICATION:
Prices are based on South African supplies, used machines in excellent or reconditioned state. Above will maintain the operation for two months until gemstone trading and timber sales can support it.
Deposit: US$65,000 (Items 1,5,7 and 8) To start immediate operations. Balance to be available in 30 day's.
With above equipment we should move about 3,000 cubic metre of over burden per day. An initial area of 70x50 metres down to and estimated 20 metres will take us about one month. Although there will be some emeralds and other crystals in this overburden, no major strikes are expected before 20 metre depths. From then onwards we can expect good production results and be able to expand on our machinery.
On Plot 5G we have three confirmed theories of about 400 metres by 150 metres. It is therefor important to expand very rapidly on our machinery else it will take about 4 years to have all opened up!
INVEST US$1,000,000:
This amount is the ultimate for the start up operation. We will
be able to get sufficient machinery to go in real high production.
APPLICATION:
Prices are based on South African supplies, used machines in excellent or reconditioned state. Above will maintain the operation for two months until gemstone trading and timber sales can support it.
Deposit: US$120,000 (Items 1,7,9 and 10) to start immediate operations.
After land preparation (10-20 day's) US$450,000 for first set of machines
As soon as possible (30 day's) balance of US$440,000 for balance of machinery.
With above equipment we should move about 12,000 cubic metre of over burden per day. An initial area of 70x50 metres down to and estimated 20 metres will take us about TEN days. Although there will be some emeralds and other crystals in this overburden, no major strikes are expected before 20 metre depths. From then onwards we can expect good production results.
On Plot 5G we have three confirmed theories of about 400 metres by 150 metres. With above setup we can have all four properties productive in less than SIX MONTHS!
This is at best only an estimate of the returns, based on knowledge obtained from two other neighbouring mines, as well as the potential of these mines. I am VERY conservative with these estimates.
The present quality and prices of Zambian emeralds are based on the following formula:
1 gram = 5 carats. Prices are depending on the market and demand, however we should receive considerable higher prices especially on the better quality stones. All production sold as rough material.
The following table shows production values of emeralds.
| PRODUCTION | INCOME | 1% | 3% | 6% | 20% | 70% |
| 1 kg p/month | 205,170 | 100,000 | 75,000 | 30,000 | 100 | 70 |
| 2 kg p/month | 410,340 | 200,000 | 150,000 | 60,000 | 200 | 140 |
| 5 kg p/month | 1,025,850 | 500,000 | 375,000 | 150,000 | 500 | 350 |
| 10 kg p/month | 2,051,700 | 1,000,000 | 750,000 | 300,000 | 1,000 | 700 |
| 50 kg p/month | 10,258,500 | 5,000,000 | 3,750,000 | 1,500,000 | 5,000 | 3,500 |
EXPECTED PRODUCTION, EXPENSES AND INCOME:
INVESTMENT OF US$250,000:
| Expected expenses during first 18 month period. | |||||
| Total | Maintenance | Fuel, explosives | Labour | Diverse | |
| Month 1 & 2 | 50,000 | 10,000 | 30,000 | 5,000 | 5,000 |
| Month 3 & 4 | 100,000 | 20,000 | 50,000 | 10,000 | 10,000 |
| Month 5 & 6 | 300,000 | 80,000 | 100,000 | 20,000 | 20,000 |
| Month 7 - 18 | 200,000 | 80,000 p/m | 80,000 p/m | 20,000 p/m | 20,000 p/m |
| After 18 months | 220,000 | 100,000 p/m | 80,000 p/m | 20,000 p/m | 20,000 p/m |
| Expected income and proposed sharing during first 18 month period. | ||||
| Sharing profit | Re-invest | Running expenses | Income | |
| Month 1 & 2 | 55,000 | 100,000 | 50,000 | 205,000 |
| Month 3 & 4 | 60,000 | 250,000 | 100,000 | 410,000 |
| Month 5 & 6 | 425,000 | 300,000 | 300,000 | 1,025,850 |
| Months 7 - 18 | 500,000 p/m | 325,000 p/m | 200,000 p/m | 1,025,850 p/m |
| After 18 months | 705,000 p/m | 100,000 p/m | 220,000 p/m | 1,025,850 p/m |
INVESTMENT OF US$1,000,000:
| Expected expenses during first 4 month period. | |||||
| Total | Maintenance | Fuel, explosives | Labour | Diverse | |
| Month 1 & 2 | 135,000 | 50,000 | 50,000 | 15,000 | 20,000 |
| Month 3 & 4 | 260,000 | 100,000 | 120,000 | 20,000 | 20,000 |
| After 4 months | 220,000 | 100,000 p/m | 80,000 p/m | 20,000 p/m | 20,000 p/m |
| Expected income and proposed sharing during first 18 month period. | ||||
| Sharing profit | Re-invest | Running expenses | Income | |
| Month 1 & 2 | 75,000 | 200,000 | 135,000 | 410,000 |
| Month 3 & 4 | 265,000 | 500,000 | 260,000 | 1,025,850 |
| After 4 months | 705,000 p/m | 100,000 | 220,000 p/m | 1,025,850 p/m |
EXPECTATIONS:
On plot 5G I expect a monthly average of 10 to 20 kg during the first 24 months. Should we be mining on all four plots, the monthly production should exceed 60 kg. Piralla mine produced more than 350 kg during January 1998 and averaged around 70 kg per month during the previous six months.
The future profits will mainly depend on the emerald productions and speed of expansion. The emerald mining venture is extremely profitable. However, we need to initiate with good machinery, a hard working team and an input of many man hours.
As with any mining venture there is a degree of speculation in it, but in this area the probable success is very high. Should we be able to mine on all four properties at the same time, the risk of failure is basically none!
On plot 5G we have all the elements confirmed as well as some low grade emeralds found. The whole area needs to be excavated in order to get to the deeper layers of rock where better qualities are found.
I truly expect to have some good production figures within the first six months - whether small or large investments.
1. Can I be sure of getting my investment back?
YES! The chances of failure are very remote - especially if we obtain the larger
investment (one million or more), where we can develop on four properties at the same
time.
2. How will my investment be secured?
We will create a new Incorporated company in Zambia. All investments will be handled
through this Inc. Most of the money would be used for machinery which will be registered
in the new company. All machinery will be construction orientated. In the very remote
chance of a failure, these could be used in construction work or rented out to other
mines. I stress - this is a very remote chance.
3. Why is this emerald field not fully exploited yet?
Until about 7 years ago, nobody really believed there was a worthwhile emerald
reserve. One of the main reasons was lack of funds to do explorations. The only mining was
that of the local tribe - small mines and the government at Kagem - who lost about 80% in
value of their stones. Another main reason is that only during the last two years
geologists discovered a new type of emerald bearing rock. Unique to this area!
4. If this is such a good opportunity, why hasn’t one of the
large groups taken over?
During the previous regime of President Kaunda, Zambia was not considered a place to
invest money. The entire emerald area was divided into smaller prospecting plots with the
take over of President Chiluba. These were up for grabs on a ten year lease plan.
While the large companies had not awakened to this, the local people registered
their claims. The large corporations are not really interested in working together with
the local people. Yet!
5. What are the real chances of success?
On some plots, like 5G, the possibilities are 95% for good strikes in a short time. On
the other three plots I have, the chances are in excess of 80%. All in all, working on
three or more plots simultaneously, a good emerald strike in a short time will be
imminent.
6. What is the time frame before the first emerald strike?
With the small investment, I stated nine months, but really expect a good strike
within three months from commissioning. With the large investment, this may even be
reduced to one month.
7. How much will I get back from this investment?
Given the worst scenario - should everything go wrong, no emeralds found, no further
work done, machinery sold, etc. you will get at least 75% of your investment back.
However, this is highly unlikely. Should the plan be reasonably successful, you can expect
more than ten times your investment within the next two years.
8. Africa is a risk. How safe will my investment be?
The present Chiluba regime will be in the chair until 2001. With the development and
uplifting taking place at present in Zambia and the last election results, it is very
likely that the same government will be in control until late in the 2000's. Besides,
within the next year the investor would have made a very good profit.
9. How can I be sure my money would not ‘fade away’?
I will personally be there to run the operation. You can keep control of the finances
and approve all purchases and expenses should you wish to do so. Every dollar will
be accounted for.
10. How long before mining commences?
I am ready, the plans are ready, the personnel are ready. From the day the investment
is available - one month. Machinery has to be imported, probably from South Africa.
Purchase and transport to Zambia, arrangements for diesel tanks etc. will take three to
four weeks. We will start clearing within the first week.
11. What will happen to my investment if something happens to you?
As soon as I start, I will appoint a trustworthy assistant. This person will have full
capabilities to take resume my duties during my absence.
12. What is expected from me?
Solely the financial investment.
13. What if I want to be more involved?
You are welcome!
14. What are the chances of more money required at a later stage?
Very remote. The manner in which I want to run this whole operation, our satellite
ventures will be able to supply ample funds for the running costs of the mine(s).
15. The emerald production - can I get some for myself?
Sure, you are able to purchase at the market value whatever you want. As a matter of
fact, should you be interested, you do have the first select on production. As a souvenir,
you will receive a good mounted crystal from our first good strike.
16. Why is the investment you require so small in comparison to
other planned mining operations?
My project will make extensive use of satellite ventures to generate more running
capital.
17. Are you not afraid someone might by-pass you and invest
directly?
Sure, it may happen, but Africa is not an easy place to work in. A person
without knowledge of African ways will certainly have serious losses. The best plots
have all been reserved. Besides, Zambia is not a desirable place to live in and for
this project one would need to be there all the time.
18. With so many ventures in one, how would you be able to
control them all?
My main priority will be the emerald mine, therefore I would spend most of my time
there. The other ventures will be managed by trustworthy personnel.
19. Why doesn't the neighbouring mines develop the whole area?
"I can only eat three meals a day, sleep in one bed at night and drive one car at
a time"
"I have plenty, why should I work more", "I have enough work, why
should I do more?"
"If we get too much emeralds, the price will drop down and we will have to work more
for the same money" - These are the typical answers I got when asking the same
questions.
20. Africa's emeralds are not as highly regarded as emeralds from
Columbia. Why do you differ?
Until recent emeralds from Zambia were quite superficial, but since Piralla mine went
deep in 1987 - more than 40 metres, much higher quality emeralds were found - in colour,
form, size and clarity. From what I have seen America is in for a surprise.
At present the main market for African Emeralds are the Far & Middle
East.
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