Lucapa Diamond Company (ASX:LOM) has increased the value by 31% of its 70% owned Mothae kimberlite diamond project in Lesotho, southern Africa.
The enhanced returns are the result of reviewing the development plan and optimising the pit design and mine plan for Mothae.
The new mine development plan has resulted in a 29% increase in estimated gross project revenues to US$776 million over a 13.5 year mine life.
Stephen Wetherall, managing director, commented: “Mothae was already a compelling project and the optimised mine plan is set to enhance both the economics and production profile, targeting improved returns for all direct and indirect stakeholders in the project.
“We now look forward to bringing Mothae into production early in the second half of 2018 to add a high-value kimberlite production source to our exceptional Lulo alluvial production.”
The new mine development plan has resulted in improvements to the original targeted Mothae development plan.
These improvements to targeted production and cash flows include:
- A 29% increase in gross project revenues to US$776 million;
- A 26% increase in net operating cash flows to US$312 million;
- A 22% increase in diamond production to 498,000 carats;
- A 30% increase in kimberlite material mined to 25 million tonnes;
- A 12% increase in mine life to 13.5 years (notwithstanding higher Phase 1 throughput); and
- A 31% increase in modelled pre financing project NPV to US$85 million (range of US$55 million to US$151 million).
The improvements in targeted kimberlite to be mined, carat production, net cash flows and mine life are derived primarily from increasing the size of the Phase 1 diamond plant from 100 tonnes per hour to 150 tonnes per hour and pit optimisation reviews.
Funding for Mothae in place
Under the new mine development plan, Phase 1 is budgeted to cost US$17 million.
In addition to the company’s cash resources, Lucapa has secured a US$15 million facility to fund the Phase 1 Mothae development.
Furthermore, the Government of the Kingdom of Lesotho, which retains the other 30% interest in Mothae, has agreed to defer the remaining US$4.5 million in consideration payments due.
Originally, the outstanding balance was to be paid in eight monthly instalments beginning October 2017, however, this will now start from June 2018.
Lucapa finished the September quarter holding cash reserves of US$7.0 million (A$8.9 million).
In addition, the company received a further US$3.7 million post-quarter end from expiring LOMOA options.
In addition to Lucapa’s cash reserves, the dedicated Lulo mining company of which Lucapa is 40% owner and operator held cash of US$9.4 million at 30 September 2017, it also had a 1,710-carat diamond inventory.