Modern Mining January 2015

DIAMONDS

Left: Plant and infrastruc- ture layout post 15 years of phase 1 mining. Below: Layout of the new plant, which will have a capacity of 3,6 Mt/a.

grade – approximately 2 to 6 cpht. This low grade is offset, at least in the case of Letšeng, by the consistency with which large high-quality stones are produced – in fact, Letšeng typically gets an average of well over US$2 000/carat for its diamonds. “Liqhobong, by contrast, has an exception- ally high grade by Lesotho standards of 33 cpht but its diamonds have generally been regarded as low value,” he explains. “The base case price per carat used in the revised DFS is a relatively modest US$107 and the project, of course, is highly viable on this basis. We do believe, how- ever, that Liqhobong – like its neighbours – has the ability to produce large stones. The figure of US$107 is based on the recovery and sale of the diamonds from the pilot plant operation but does not take into account breakage of large stones in the plant which – due to shortfalls in its design – was a persistent problem. “We estimate that over the 22 months we operated the pilot plant nine large 100 carat plus stones were crushed. Based on an analysis of the fragments, three of them were calculated to be over 200 carats, with the biggest being an approximately 430 carat yellow diamond. Taking large stones into account, our expec- tation is that the average price could rise to US$156 per carat – hence the upside case in the revised DFS.” The DFS envisages open-pit mining of the main pipe down to 393 m over 15 years – exploiting a reserve of over 11 million carats at a grade of 32,07 cpht – at an average strip ratio of waste to ore of 2,28. The ore will be treated in the Main Treatment Plant (MTP) which utilises a conventional flowsheet comprising scrub- bing, screening, crushing, concentration via DMS, and final recovery using X-ray machines. The plant will have 2 x 250 t/h streams. The

mining cost is estimated at R21,5/t and the pro- cessing cost at R57,8/t. The total cost per tonne of ore processed is projected at R140,92/t. The mine will have a power draw of approximately 5 MW, to be supplied from the Lesotho grid. With the funding under its belt and avail- able in the second quarter of 2014, Firestone was able to award the key contracts and launch the construction phase of the project in May/June 2014 and by 20 June over R1 bil- lion of the project budget had been committed. DRA was appointed as the EPCM contractor while other awards include the residue storage facility or RSF (Turnkey Civils Lesotho), the civils and earthworks (Stefanutti Stocks), the structural, mechanical, piping and platework or SMPP (SMEI Projects) and the overhead power line required to connect the site to the Lesotho grid (Infrastructure Projects). Some of these elements are substantial with the RSF contract being worth R330 million, the civil and earthworks R263 million and the SMPP R327 million. In addition, the contracts for the supply of long-lead items such as the crushers, scrubbers, apron feeder, vibrating screens and primary rock breaker have all been placed. The fact that the mining industry globally is in a subdued state has assisted Firestone inasmuch as suppli- ers generally have capacity and have submitted competitive prices. The escalation risk has

“We estimate that over the 22 months we operated the pilot plant nine large 100 carat plus stones were crushed.” Stuart Brown, CEO, Firestone Diamonds

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