At the intersection of billion dollar junction

15th February 2019
LOM

Lucapa Diamond Company is storming ahead at its newest operation in Lesotho (reports MiningNews).

The Kingdom of Lesotho is a small, high-altitude, landlocked country surrounded by South Africa.

It also happens to be a major player in the global diamond market, with the sector one of its biggest earners.

The Mothae diamond mine is in the heart of one of the richest cluster of kimberlite mines in the world - with the turn-off to the operations dubbed "billion dollar junction".

It sits just 5km from the world's highest dollar per carat kimberlite mine, Gem Diamonds' Letseng mine.

Mothae previously belonged to Toronto-listed Lucara Diamond Corp, which had outlined capital costs of more than US$200 million.

But Lucara walked away due to its focus on the world-class Karowe diamond mine in Botswana.

Lucapa has been producing alluvial diamonds from the Lulo joint venture mine in Angola for several years, but when the government of Lesotho launched a tender process for Mothae, it was too good an opportunity to pass up.

"Angola is producing the best alluvial diamonds, but no matter how hard we tried, it was hard to attract investment," Lucapa managing director Stephen Wetherall said during a visit to Mothae last week.

After a long, drawn-out tender process, Lucapa emerged as the successful bidder, paying US$9 million for a 70% stake (the government retains the balance) two years ago.

Since then, Lucapa has defined a JORC resource of over 1 million carats to 300m depth.

"Mothae is not a baby in terms of a kimberlite," Mothae general manager Gideon Scheepers said.

The Mothae kimberlite comprises north and south lodes, which are connected via an elongated central "neck" kimberlite body.

The neck is yet to be included in any resource or mine plan.

At this stage, Mothae has a 14-year mine life.

A bulk sampling campaign was conducted between February and October 2018, recovering 4115ct with an average stone size of 0.41ct.

A new 1.1 million tonne per annum processing plant was built last year, incorporating two state-of-the-art XRT diamond recovery sorters.

The facility was built for just $25 million - a fraction of the capex envisaged by Lucara to get Mothae up and running.

First ore was treated on November 3, with the first diamonds recovered on November 19.

The plant averaged 158 tonnes per hour in December - above nameplate of 150tph.

"We've been really fortunate to ramp up quickly," Scheepers said.

Commercial production at Mothae was declared on January 1.

"We're significantly ahead of target," Wetherall said.

Lucapa is regularly recovering large special stones from Mothae, with 74 diamonds grading more than 4.8ct and 18 at more than 10.8ct recovered.

That included a high-colour 77.78ct white diamond and an 89ct yellow diamond.

"We're seeing some really lovely stones come through," Scheepers said.

A revised resource, as well as revised volume, grade, price and cashflow modelling is due in the June quarter.

Current guidance is 22,000ct per annum.

The first run of mine sale of Mothae diamonds is due to take place in Antwerp later this month and the company is confident of achieving strong pricing.

"The large stone market is under pressure, but it's not in the doldrums like the small stone market," Wetherall said.

The company believes Mothae will be the second-highest dollar per carat kimberlite mine after Letseng.

The company is already eyeing a low-cost expansion to 2Mtpa to take production to 40,000ctpa from about 2021.

While making a toast to visitors following the trip to site, Lucapa chairman Miles Kennedy acknowledged that Mothae was described as being close to Letseng.

"In 12 months, [Gem CEO] Clifford [Elphick] will be saying ‘we're next to Mothae'."

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