Lucapa adopts low-risk strategy for new Lesotho diamond mine

PERTH (miningweekly.com) – Diamond miner Lucapa Diamonds has been awarded the Mothae kimberlite project, in Lesotho, following a competitive international tender process.

Lucapa acquired a 70% interest in the project for $9-million, payable over ten months.

Mothae used to belong to Canadian junior Lucara Diamond Corporation, but the miner put the project up for sale in 2015. Junior developer Paragon Diamonds was interested in acquiring a 75% interest in Mothae, which is near Gem Diamonds' Letšeng mine, but the companies never concluded a final agreement.

Australia-based Lucapa said on Tuesday that with the existing infrastructure and camp in place, the company was planning to bring the project into production within 12 months, under a staged low-risk development strategy.

Previous development plans for the project have predominantly been focused on large-scale mining and processing scenarios; however, Lucapa will be adopting a staged- and low-capital approach to develop the kimberlite mine.

Phase 1 development is designed to generate early cash flows within 12 months of the acquisition, and will require low upfront capital investment. The production plan will involve processing some two-million tonnes of weathered surface kimberlite material over a three-year period over conventional openpit mining, at a planned treatment rate of 720 000 t/y.

Capital expenditure costs for Phase 1 have been estimated at around $12-million, and Lucapa will fund this through an interest bearing loan on its subsidiary MDL.

During Phase 1, Lucapa will undertake additional studies to determine the scale and development of the Phase 2 plan, which will involve processing material at greater rates from the deeper unweathered zone on a conventional openpit, drill and blast mining method.

Phase 1 mining and processing will provide valuable metallurgical data, diamond grade and value information at deeper levels for optimising the Phase 2 development plans.

MD Stephen Wetherall said Mothae complemented the producing Lulo mine, in Angola, and Lucara’s prospective exploration assets in the advanced Lulo kimberlite project, also in Angola, and the earlier stage Brooking and Orapa Area F projects, in Australia and Botswana, respectively.

“There is only one thing better than owning one diamond mine that produces large, high-value diamonds, and that is owning two. Mothae is a fantastic diamond asset, located in a cluster of operating diamond mines in Lesotho, and just 5 km from Gem Diamonds' Letšeng mine, which is the highest average dollar per carat hard rock diamond mine in the world,” he said.