Lucapa Diamond Company Limited (ASX: LOM) (“Lucapa” or “the Company”) is pleased to provide an update on the expansion plan and financing of the 70% owned Mothae kimberlite diamond project in Lesotho, southern Africa (“Mothae”). Lucapa’s partner in the Mothae mine is the Government of the Kingdom of Lesotho (“GoL”).
• Processing plant and mine capacity expansion to 1.6Mtpa
• 45% increase in annual tonnes, carats recovered and revenue
• Earnings enhanced through economies of scale reducing unit operating costs
• A$10m funding to deliver expansion successfully raised
The entire press release taking in all figures and tables can be seen at the company's websites - Klick here.
Mothae became Lucapa’s second producing mine following the commissioning of the mine and its 1.1Mtpa processing plant in January 2019. The Mothae kimberlite resource contains large and high-quality diamonds, the occurrence of which, make it the 2nd highest average US$ per carat kimberlite mine in the world at between US$500 and US$750 per carat on average. More than 75% of the revenue is derived from +4.8 carat diamonds. Mothae recovered 3 +100 carat diamonds in 2019. The Mothae JORC Classified Resource was recently updated and contains an Indicated and Inferred JORC Resource of 48.5Mt and ~1.2 million carats. The update resulted in a ~280% increase in the Indicated
Resource. After 16 months of actual operating results to inform future planning, Lucapa and its partners were investigating the potential to expand the throughput and capacity of the Mothae kimberlite mine (refer 2019 Annual Report released to the ASX on 25 March 2019). The investigations have been completed and the funding to implement the lower cost expansion plan proposed successfully secured. The expansion by ~45% to 1.6Mtpa in 2020/21 with plant modifications and infrastructure upgrades should materially increase production, revenues and due to economies of scale, improve unit operating costs and deliver improvements to earnings. The GoL have signed a Heads of Agreement with Lucapa and Mothae for the implementation of a new marketing channel in addition to the tender and/ or auction channel, which will pave the way for accessing value-adding cutting & polishing margins.
Lucapa Managing Director Stephen Wetherall said “with the completion of this Mothae expansion, Lucapa will have successfully delivered on its group production growth target of 200%. Lucapa looks forward to the returns expected to be generated from both expanded mining operations and growing shareholder value through cash flow generation and the kimberlite exploration program.”
Processing plant and mine capacity expansion to 1.6Mtpa
The expansion plan is an update to the development plan as previously announced to the ASX on 23 October 2017. The investigations have shown that for a much reduced capital requirement of US$6 million, the capacity of the Mothae processing plant can be increased by ~45% to 1.6Mtpa (215tph). With the addition of another parallel secondary crusher in due course, the capacity of the processing plant can be further increased to 1.8Mtpa (250tph). The previous plan included an expansion to 300tph, which is currently not being considered. The plant design and capital costings have been provided by Consulmet (Pty) Ltd in South Africa, who also designed and built the existing 1.1Mtpa Mothae plant. 3D designs of the planned plant modifications are shown in the images below.
Mineral Resources updated
As per ASX announcement 15 October 2020, the JORC Classified Resource was updated using additional information from mining and processing of material from the South, North and Neck lobes between November 2018 and March 2020 and takes into account ~1.5Mt of depletion. The estimated mineral resources underpinning the production target and forecast financial information have been prepared by Competent Persons in accordance with the requirements of the JORC 2012 code. An updated mine plan for the 1.6Mtpa processing capacity, using the recently announced updated JORC Classified Resource, results in a 45% increase in annual tonnes, carats recovered and revenue, when compared to the planned production target and forecast financial information at the original 1.1Mtpa plan. The updated mine plan allows for the mining of 18.9Mt of kimberlite from the pit with a life of mine waste stripping ratio of 1 to 1. The production target and forecast financial information included in the presentation released with this announcement is solely based on the mining of 9.4Mt of Indicated Resource to be mined from the South lobe over the first 6 years following the expansion. The resultant economies of scale achieved by moving to 1.6Mtpa reduce the unit operating costs and increase net operating margins, which should lead to increased annual earnings.
A$10m funding to deliver expansion successfully raised
As per the ASX announcement on 6 November 2020, Lucapa has successfully raised A$10m from an oversubscribed placement. The capital raising, was cornerstoned by Ilwella Pty Ltd, a diversified investment vehicle of the Flannery
family office and by Safdico International, a leading multinational diamond company and subsidiary of Graff International. The Company also welcomed new institutional investors to the register.
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