TIDM0QUI
RNS Number : 2437S
Lucara Diamond Corp
05 November 2019
NEWS RELEASE
LUCARA ANNOUNCES POSITIVE FEASIBILITY STUDY FOR KAROWE
UNDERGROUND
NOVEMBER 4, 2019 (LUC - TSX, LUC - BSE, LUC - Nasdaq Stockholm)
Lucara Diamond Corp. ("Lucara" or the "Company") is pleased to
announce the results of a positive underground Feasibility Study
("FS") to expand its 100% owned Karowe diamond mine, one of the
world's most prolific producers of large, high value type IIA
diamonds and the only diamond mine in recorded history to have
produced two +1000 carat diamonds. The underground expansion at
Karowe is expected to double the mine life, and generate
significant revenue and cashflow out to 2040, extending benefits to
the Company, its employees, shareholders, communities surrounding
the mine, and Botswana.
Combined Open Pit / Underground Economic Highlights (all figures
in US dollars)
-- LOM production of 7.8 million carats out to 2040; resource remains open to depth
-- $5.25 billion in Gross Revenue
-- Pre-production capital costs of $514 million for the underground project
-- After-tax undiscounted net cash flow of $1,220 million, no real diamond price escalation
-- After-tax NPV(5%) of $718 million
-- Payback Period of 2.8 years extending the mine life 15 years (including stockpiles)
-- Average LOM operation costs of $28.43 per tonne of ore processed
Eira Thomas, President and CEO commented: "Lucara is highly
encouraged by the results of the Karowe Underground feasibility
study which has outlined a much larger economic opportunity than
first envisaged in the 2017 PEA and represents an exciting, world
class growth project for our Company. Diamond deposits are rare and
getting rarer. In this context, we are extending a mine that is in
a class of its own, having produced 15 diamonds in excess of 300
carats, including 2 greater than 1000 carats in just seven years of
production. Further, we have sold ten diamonds for in excess of $10
million each, including the record-setting 813 carat Constellation
which sold for $63.1 million.
A significant portion of the cost to expand our mine underground
can be funded from cash flow, and the investment is expected to be
paid back in under 3 years, as the underground allows us to exploit
the highest value part of the orebody first and generate more than
$5.25 billion in gross revenue. What's more, margins remain healthy
despite the application of conservative diamond pricing models that
reflect the current, difficult market environment. Lucara's short
term view is that the market is now stabilizing. Longer term, the
fundamentals are expected to strengthen in line with supply
shortfalls from mature, depleting mines in Australia and Canada. It
is important to note that a return to diamond prices observed in
2015 would nearly double the NPV(5%) of this project to $1.4
billion."
Key Findings of the Study:
-- The Karowe Mine has produced 2.5 million carats since 2012
and generated $1.5 billion in revenue. The FS looks to double the
mine life from the original mine design of 2010 and add net cash
flow of $1.22 billion and gross revenue of $5.25 billion.
-- After-tax NPV(5%) of $718 million for the combined open pit
and underground with no real diamond price escalation
-- Updated Resource confirms increasing value with depth. The
combined open pit and underground Indicated resource now stands at
54.27 million tonnes at 15.3 carats per hundred tonnes ("cpht") for
a contained diamond resource of 8.3 million carats excluding
stockpiles.
-- Long hole shrinkage ("LHS") underground bulk mining method
selected will provide early access to higher value ore and allows
for a short pay back period of 2.8 years and low operating costs of
$28.43 per tonne processed.
-- On the basis of a construction start in mid-2020, ore from
underground mining will seamlessly integrate into current
operations providing mill feed starting in 2023 with a ramp up to
2.7Mtpa to the processing plant by 2026, and the opportunity to
increase throughput. Current production rates will be maintained
through the underground ramp up period.
-- The Underground is designed to access the South lobe
kimberlite resource below the current planned bottom of the open
pit (which is expected to be at approximately 700 meters above sea
level ("masl")), to a depth of 310 masl. Access to the South Lobe
underground will be via two vertical shafts (production and
ventilation) of approximately 765 and 715 meters deep
respectively.
-- Identified key focus areas of hydrogeology, geotechnical
constraints of the kimberlite and host rocks have been addressed
through an intensive set of work programs and data collection that
commenced during the Preliminary Economic Assessment completed in
November 2017 and were substantially updated and augmented by the
FS study.
Zara Boldt, Chief Financial Officer commented: "Lucara is
weathering the current downturn in the diamond market better than
most of our peers. Karowe's high value deposit and unique
production profile has allowed us to generate enough cash to
operate our business, develop the Clara sales platform and to have
been a steady dividend payer. Based on the strong economics
outlined in the feasibility study, we are confident that our
external financing requirement will be modest and that attractive
financing options are available to supplement the expected
contribution of our cash flow from operations to fund the
underground project. We are optimistic about diamond prices
recovering in the short to medium term as global supply decreases
next year and we have also identified a number of optimization
opportunities for the underground that could add additional value
to the project in the near term. With this in mind, Lucara's Board
of Directors has determined that using our available cash flow for
detailed engineering and design work, early procurement initiatives
and to investigate project debt financing options in the near-term,
rather than the payment of a dividend, is the best use of the
Company's capital going forward."
Key Operational Parameters
Parameter Unit UG Base Case OP UG
Base Case
------- -------------
After-Tax Undiscounted Net Cash Flow US$M $844 $1,220
------- ------------- -----------
After-Tax NPV (5%) US$M $388 $718
------- ------------- -----------
After-Tax NPV (8%) US$M $226 $536
------- ------------- -----------
After-Tax IRR % 16% N/A
------- ------------- -----------
Pre-Tax Undiscounted Net Cash Flow US$M $1,447 $2,156
------- ------------- -----------
Payback Period (post-tax) years 2.4 2.8
------- ------------- -----------
Key Operational Parameters continued
Tonnage and Grade UG Base Case OP UG
Base Case
-------------
Waste Tonnes mined (millions) 0.751 13.43
------------- -----------
Ore Tonnes mined (millions) 33.46 49.97
------------- -----------
Processed Tonnes (millions) 33.46 56.03
------------- -----------
Diamond grade (cpht) based on a 1.25mm bottom
cut-off size ("BCOS") and inclusive of estimated mining dilution 15.1 13.99
------------- -----------
Mine Life (Years) 12.9 20.9
------------- -----------
Average Annual UG Base Case OP UG
Base Case
-------------
Production Rough Diamonds (carats) 392,000 374,000
------------- -----------
Operating Cost Kimberlite (US$/t treated) $30.57 $28.43
------------- -----------
Diamonds (US$/carat recovered) $725.00 $670.00
------------- -----------
Feasibility Study Approach
The FS has been prepared following Canadian Institute of Mining
Guidelines for the development of an underground mine. Production
from the underground is planned to be coincident with open pit
operations coming to completion, at Lucara's Karowe Mine ("Karowe
Mine") in Botswana. All dollar amounts in this release are
presented in US dollars unless otherwise stated.
Based on the positive FS results, the Company will commence
advancement of detailed engineering immediately, in parallel with
project permitting, arranging project financing and long lead item
procurement.
The results of the FS represent forward-looking information that
are subject to a number of risks, uncertainties and other factors
that may cause results to differ materially from those presented
here. (See "Cautionary Note Regarding Forward Looking Statements"
below.)
The Karowe Underground FS contemplates both a stand-alone UG
scenario and a combined Open Pit Underground LOM scenario. The FS
provides for the development of a Long Hole Shrinkage ("LHS")
operation to mine the South Lobe of the AK06 kimberlite resource
from the base of the planned open pit to the 310 masl elevation.
Access to the South Lobe underground will be via two vertical
shafts (production and ventilation). All Underground mined
kimberlite will be processed at the existing Karowe processing
plant over a 13-15 year period following the cessation of the
current open pit operations, which is expected to occur in
2025.
As a brownfield operation, the Karowe Mine process plant and
other site facilities and equipment are sufficient in many areas to
support the planned underground mining operation. Existing on-site
infrastructure includes offices, warehouses, laydown areas,
maintenance facilities, a crushed kimberlite stockpile and reclaim,
access and service roads, an airstrip, explosives magazines, and
water and electrical infrastructure. Upgrades to power
infrastructure are required to support shaft services and are
costed into the model.
Capital and Operating Cost Estimates
Capital costs were estimated using a combination of Karowe
budget input, first principle cost estimation with vendor quotes,
contractor estimates and guided by benchmarking and experience. The
UG pre-production capital cost estimate is shown in Table 1. The OP
sustaining capex adds another $54 million to the UG capital costs.
The combined OP and UG operating cost estimates for the FS LOM are
shown in Table 2.
Table 1: Karowe UG Capital Distribution
Capital Costs Pre-Production (US$M) Sustaining/Closure (US$M) Total (US$M)
---------------------- --------------------------
Mining 321.5 38.1 359.7
---------------------- -------------------------- -------------
Bulk Earthworks 18.8 - 18.8
---------------------- -------------------------- -------------
Process Plant 0.1 46.5 46.6
---------------------- -------------------------- -------------
Tailings - 22.3 22.3
---------------------- -------------------------- -------------
Onsite Infrastructure 5.9 - 5.9
---------------------- -------------------------- -------------
Buildings & Facilities 1.6 - 1.6
---------------------- -------------------------- -------------
Offsite Infrastructure 19.6 - 19.6
---------------------- -------------------------- -------------
Project Indirects 47.7 - 47.7
---------------------- -------------------------- -------------
Owner's Costs 46.9 34.0 80.9
---------------------- -------------------------- -------------
Subtotal 462.1 140.9 603.0
---------------------- -------------------------- -------------
Contingency 51.6 12.8 64.4
---------------------- -------------------------- -------------
Total 513.7 153.8 667.5
---------------------- -------------------------- -------------
Table 2: Summary of LOM Operating Costs
OPEX Unit Cost Unit Cost Total
$/t Milled $/carat $M
------------ ----------
OP Mining (per ore tonne mined) 8.25
------------ ---------- ------
UG Mining (per ore tonne mined) 8.72
------------ ---------- ------
Combined Mining 7.77 56 435
------------ ---------- ------
Processing 15.06 108 844
------------ ---------- ------
G&A 5.60 40 314
------------ ---------- ------
Total 28.43 203 1,593
------------ ---------- ------
Economics
The main assumptions with respect to the economic model are
listed in Table 3. Table 4 shows the baseline diamond prices by
zone.
Table 3: Economic Assumptions
Item Unit Value
---------
NPV Discount Rate % 5% & 8%
--------- --------
Annual Escalation % 0
--------- --------
Escalation Start Year Year N/A
--------- --------
Escalation End Year Year N/A
--------- --------
BWP:US$ FX BWP:US$ 10.6
--------- --------
ZAR:US$ FX ZAR:US$ 14
--------- --------
Source: JDS (2019)
Table 4: Baseline Diamond Prices
Unit 2020 2021 2022 FS
----- ----- -----
North 222 222 222 222
----- ----- ----- ----
Centre 323 329 349 349
----- ----- ----- ----
EMPKS 618 705 741 777
----- ----- ----- ----
MPKS 513 578 604 631
----- ----- ----- ----
Source: JDS (2019)
Results
The economic results for the Project, based on the assumptions
outlined above are presented in Table 5.
Table 5: UG-Only and Combined Economic Results
UG-Only UG and OP Combined
------------------
Parameter Unit Pre-tax Results After-tax Results Pre-tax Results After-tax Results
---------------- ------------------ ---------------- ------------------ ---------------- ------------------
NPV5(%) US$M 710 388 1,266 718
------------------ ---------------- ------------------ ---------------- ------------------
NPV(8%) US$M 454 226 945 536
------------------ ---------------- ------------------ ---------------- ------------------
IRR % 20.8 16 na na
------------------ ---------------- ------------------ ---------------- ------------------
Payback period Production years 2.3 2.4 2.8 2.8
------------------ ---------------- ------------------ ---------------- ------------------
Source: JDS (2019)
The break-even price for the Project (NPV @ 8% discount rate) is
US$414/carat after tax for the combined open pit and
underground.
Sensitivities
Sensitivity analyses were performed using diamond prices, mill
head grade, CAPEX, and OPEX as variables. The value of each
variable was changed plus and minus 20% independently while all
other variables were held constant. The Project is most sensitive
to the diamond price and head grade, followed by the OPEX and least
sensitive to the CAPEX. The results of the UG-only sensitivity
analyses are shown in Table 6.
Table 6: UG Only Sensitivity Results (NPV @ 8%, IRR)
Variable Pre-tax NPV(8%) (M$) Pre-tax IRR (%)
------------------------------------------- -------------------------------------------
-20% Variance 0% Variance 20% Variance -20% Variance 0% Variance 20% Variance
-------------- ------------ ------------- -------------- ------------ -------------
CAPEX 547 454 360 25.6 20.8 17.1
-------------- ------------ ------------- -------------- ------------ -------------
OPEX 609 454 264 23.9 20.8 16.3
-------------- ------------ ------------- -------------- ------------ -------------
Diamond Price
or Grade 170 454 738 13.6 20.8 26.4
-------------- ------------ ------------- -------------- ------------ -------------
Source: JDS (2019)
Mineral Resources
In support of the FS an updated Mineral Resource Estimate, see
Table 7 - Karowe Mine AK06 Updated Mineral Resource Statement
reflecting depletion as of June 30, 2019, was prepared by SRK. The
updated resource estimate is based on historical evaluation data
combined with new deep drilling data from the FS study programme.
New sampling results (microdiamond, bulk density, and petrography)
have been fully integrated with recent deep drilling and historical
drilling. Separate size distribution and value models have been
developed from production data for the two dominant domains within
the South Lobe, the EM/PK(S) and M/PK(S). Grade and tonnage
estimates are based on an updated and revised geological model, an
updated recoverable grade model based on Karowe processing plant
recoveries and updated average price per carat values. The 2019
mineral resources for Karowe, as summarized in Table 7, have been
classified as either Indicated or Inferred mineral resources,
according to CIM Definition Standards for Mineral Resources and
Mineral Reserves (CIM, 2014). Mineral Resources reported are
inclusive of those portions of the Mineral Resource that have been
converted to Mineral Reserves as shown in Table 8 and have an
effective date of July 1, 2019.
Table 7 - Karowe Mine AK06 Updated Mineral Resource
Statement
Classification Domain Volume Tonnes Density Carats Grade Average
(Mt) (Mcts) (cpht) US$/ct
---------------- ------- ------- -------- -------- --------
South M/PK(S) 9.40 27.81 2.96 3.01 10.8 $631
--------------------------------- ------- ------- -------- -------- -------- --------
South EM/PK(S) 7.62 22.10 2.90 4.68 21.2 $777
--------------------------------- ------- ------- -------- -------- -------- --------
Centre 1.28 3.28 2.57 0.50 15.1 $367
--------------------------------- ------- ------- -------- -------- -------- --------
Indicated North 0.44 1.08 2.45 0.13 11.8 $222
---------------- ------- ------- -------- -------- -------- --------
TOTAL INDICATED 18.74 54.27 2.90 8.32 15.3 $690
------- ------- -------- -------- -------- --------
South M/PK(S) 0.10 0.31 3.05 0.03 10.5 $631
--------------------------------- ------- ------- -------- -------- -------- --------
South EM/PK(S) 1.40 4.18 2.97 0.87 20.9 $777
--------------------------------- ------- ------- -------- -------- -------- --------
Inferred South_KIMB3 0.32 0.94 2.94 0.10 10.9 $631
---------------- ------- ------- -------- -------- -------- --------
TOTAL INFERRED 1.82 5.42 2.97 1.01 18.6 $750
------- ------- -------- -------- -------- --------
Notes:
-- Mineral Resources are not Mineral Reserves and do not have
demonstrated economic viability. All numbers have been rounded to
reflect accuracy of the estimate.
-- Mineral Resources are in-situ Mineral Resources and are
inclusive of in-situ Mineral Reserves.
-- Mineral Resources are exclusive of all mine stockpile material.
-- Mineral Resources are quoted above a +1.25 mm bottom cut-off
and have been factored to account for diamond losses within the
smaller sieve classes expected within a commercial process
plant.
-- Inferred Mineral Resources are estimated on the basis of
limited geological evidence and sampling, sufficient to imply but
not verify geological grade and continuity. They have a lower level
of confidence than that applied to an Indicated Mineral Resource
and cannot be directly converted into a Mineral Reserve.
-- Average diamond value estimates are based on value models
generated from production and sales data from Karowe operations as
provided by Lucara Diamond Corporation.
-- Mineral Resources have been estimated with no allowance for
mining dilution and mining recovery.
Mineral Reserves
The Karowe Mineral Reserve Estimate for the FS was compiled by
QP Gord Doerksen, P.Eng. and has an effective date of September 26,
2019 and is summarized in Table 8.
Table 8: Karowe Mine AK06 Mineral Reserve Statement
Lobe - Type Classification Ore Diluted Grade (cpht) Contained Carats Price
(Mt) ('000s ct) (US$/ct)
---------------- ------ --------------------- -----------------
Open Pit
---------------- ------ --------------------- ----------------- ----------
North Probable 0.6 10.0 56 222
---------------- ------ --------------------- ----------------- ----------
Centre Probable 3.2 15.1 478 349
---------------- ------ --------------------- ----------------- ----------
South - EM/PK(S) Probable 3.6 23.9 850 777
---------------- ------ --------------------- ----------------- ----------
South - M/PK(S) Probable 10.2 10.8 1,098 631
---------------- ------ --------------------- ----------------- ----------
Open Pit Total 17.4 14.2 2,481 618
---------------- ------ --------------------- ----------------- ----------
Underground
---------------- ------ --------------------- ----------------- ----------
South - EM/PK(S) Probable 16.3 19.9 3,246 777
---------------- ------ --------------------- ----------------- ----------
South - M/PK(S) Probable 17.1 10.6 1,807 631
---------------- ------ --------------------- ----------------- ----------
Underground Total 33.5 15.1 5,053 725
---------------- ------ --------------------- ----------------- ----------
Stockpiles
---------------- ------ --------------------- ----------------- ----------
North Probable 0.4 12.7 51 222
---------------- ------ --------------------- ----------------- ----------
Centre Probable 0.4 12.8 54 349
---------------- ------ --------------------- ----------------- ----------
South - M/PK(S) Probable 1.6 9.5 151 631
---------------- ------ --------------------- ----------------- ----------
Mixed Probable 4.0 5.0 198 609
---------------- ------ --------------------- ----------------- ----------
Stockpiles Total 6.4 7.1 454 542
---------------- ------ --------------------- ----------------- ----------
Combined
---------------- ------ --------------------- ----------------- ----------
All Total 57.3 13.9 7,988 681
---------------- ------ --------------------- ----------------- ----------
1. Prepared by Gord Doerksen, P.Eng. JDS Energy & Mining Inc.
2. CIM definitions were followed for Mineral Reserves and the
effective date of the Mineral Reserve is September 26 2019.
3. Mineral Reserves are estimated at a cut-off value of US$31/t
based on an OP and UG mining cost of US$9/t, a processing cost of
US$16/t and a G&A cost of US$6/t. Process recovery of the
diamonds was assumed to be 100% as the recoveries were included in
the mineral resource block model assumptions and therefore have
taken recoveries into account. All of the kimberlite material in
the South Lobe is above the cut-off value.
4. Average diamond value estimates are based on value models
generated from production and sales data from Karowe operations as
provided by Lucara Diamond Corporation.
5. Tonnages are rounded to the nearest 100,000 tonnes, diamond
grades are rounded to one decimal place. Tonnage and grade
measurements are in metric units; contained diamonds are reported
as thousands of carats.
Source: JDS (2019)
Geotechnical
An exhaustive 21,000m geotechnical/hydrogeological drilling and
data collection program was undertaken in preparation for the FS.
Over 8,000 field rock strength tests and over 2,000 laboratory
tests encompassing a full suite of testing were conducted. Pumping
tests from 23 water boreholes, 58 packer tests and 400
hydrochemical tests and analyses were undertaken.
The unusually high strength (and low weathering susceptibility)
of the South Lobe kimberlite eliminates natural caving as an option
but presents a good opportunity for stoping. Kimberlite intact
strengths are lower (roughly half) where the kimberlite is in
contact with the country rock. The bulk of the host rock above the
basement granite, comprising 345m of sedimentary stratigraphy
(shales, mudstones and sandstones of the Karoo Supergroup) and 130m
of igneous rock (basalts of the Stormberg Lava Group) are of good
quality and display sparse jointing. There are some weaker layers
within the country rock stratigraphy that exhibit low intact
strengths including red mudstone intercalated beds within the lower
sandstone, carbonaceous shale (water-bearing) and weathered
granite.
There are no major faults or fault zones evident in the
kimberlite or host sediments.
The favourable geotechnical properties of the kimberlite
combined with the stable cylindrical shape of the South Lobe are
expected to result in a good geomechanical performance, with
benchmarking and numerical modelling suggesting limited vertical
(ore) and lateral (waste) overbreak (including limited subsidence
beyond the final pit crest), high recovery, stable infrastructure
and low risk of mud rush, air blast and seismicity.
Hydrogeology
Water control and hydrogeological context of the deposit and
host rocks are key elements in the mine plan. The AK6 deposit sits
within layered, sedimentary, regional aquifers that have been
documented since the 1980's.
The main water bearing lithologies are the upper
sandstone/basalt contact and the lower sandstone base contact. A
fracture zone aligned in a north-north-west strike and at a dip of
+/-85(o) to the west is made up of discrete, widely spaced
sub-vertical joints that intersect the water bearing zones, and
provide a conduit for lateral and vertical water movement. In
general, the AK6 kimberlites are not permeable with the exception
of the North Lobe contact zone.
The water-bearing zones are interbedded with impermeable
aquitards made up of grey and red mudstones within the lower
sandstone lithology. These aquitards have a persistent head and
greatly inhibit the ability to dewater and depressurize both the
bottom of the open pit and the proposed underground mine.
An underground dewatering gallery and drill array are planned to
be installed as a priority in the UG mine development and will be
located at the 680 L with access gained via the ventilation shaft
during sinking operations.
Mineral Processing
Comminution test work to determine the crushing and grindability
characteristics of the deeper kimberlite were conducted. The deeper
kimberlite was found to be compatible with the current processing
plant comminution circuit.
The predominant diamond separation and extraction process at
Karowe utilizes Tomra X-ray Transmission (XRT) sensor based bulk
sorting machines to separate liberated diamonds from kimberlite and
waste host rock gangue. XRT tests were conducted on all deeper
kimberlite and host rock zones and all were found to be conducive
to efficient diamond separation and recovery with the existing
circuit.
The current flow sheet is deemed suitable for processing of
underground sourced kimberlite and diamond recovery in line with
the resource model.
Mining
The Karowe Mine is an existing conventional drill and blast open
pit operation, with diesel excavators and trucks provide an average
annual 2.6M tonnes of kimberlite feed to the mill. The open pit
mine operation is expected to terminate mid-2025, ending at an
elevation of approximately 700 masl.
The subject of the FS targeted the substantial resources
remaining below the economic extents of the open pit. A 7,200 tpd
shaft operation utilizing long hole shrinkage (fully assisted cave)
mining is proposed to provide an additional 13 years of mine life
to the Karowe operation after a five year construction period
commencing in 2020.
Several UG mining methods were investigated as part of this
study including block caving (BC), block caving with
pre-conditioning, sub level caving (SLC), and long hole shrinkage
(LHS). The bottom up approach of the LHS takes advantage of the
denser and higher value kimberlite at depth coupled with low
operating costs and high capital costs and de-risks the project
with respect to geotechnical and hydrogeological of the host
rocks.
The LHS method is planned to systematically drill and blast the
entire lobe on a vertical retreat basis. In LHS, a significant
proportion of the blasted muck is left in the stope during blasting
and stoping to stabilize the host rock with only the swell
extracted during the drill and blast phase. Mucking takes place
from draw points from 310 L (310 masl) extraction level. Once the
column is fully blasted, the stope is drawn empty by mucking the
draw points. Advantages to the selected mining method in
include:
-- Extraction of the highest value rock first;
-- Low and delayed dilution
-- Development and production of the underground can occur simultaneously with pit operations
-- Low operating costs;
-- Reduced dewatering risk by using a grouted shaft and delaying
surface breakthrough for five production years;
-- Minimal development in poor ground;
-- Development at the extraction level is designed to manage natural caving should it occur;
-- Ability to rapidly increase draw once the resource is fully blasted; and
-- Ability to economically mine below the 310 L, resource is open at depth
The mine will be accessed from a 765 m deep production shaft,
7.5 m in diameter, driven from surface to 245 masl. The shaft will
be equipped with two 21- t skips for production hoisting and a
service cage for man and material movement through the mine. This
shaft will also serve as the main fresh air intake to the mine. A
second shaft, 6.0 m in diameter, 715 m deep, driven from surface to
295 masl, will be equipped with a heavy lift hoist for moving large
equipment throughout the mine life and hoisting development waste
during pre-production.
Drill levels are spaced at 100 m vertical intervals and drilling
will utilize in the hole hammer (ITH) drills with an effective
drill length with150 mm (6") holes. The average length of hole per
ring will be 58 m, with an average 34 t/m drilled.
Stoping will be conducted to maintain a stable arched back.
The extraction level design is set up similar to a block cave
design with five extraction drives driven 31.5 m apart and run the
entire length of the Lobe. A total of 56 drawpoints are planned,
giving significant extraction flexibility.
Ore will be mucked from the drawpoints with 21-t load-haul-dump
(LHD) units that will feed a jaw crusher. Crushed rock will then be
conveyed to two 3,500-t bins adjacent to the production shaft.
Infrastructure
The Underground Project at Karowe will include the use of
existing and new infrastructure at the Karowe Mine. Current and
planned infrastructure is designed to support the operation of a
2.7Mtpa mine and processing plant.
Various buildings and surface facilities will be installed
adjacent to the shafts in addition to a near-by construction camp,
expansion of coarse and fine tailings facilities and a new 29-km
long, 132 kV power transmission line running to the mine from the
new Botswana Power Corp. substation.
Permitting
The current mining license for open pit mining operations
expires in 2023. An application to the Government of Botswana will
be submitted to extend the mining license to cover the remainder of
the open pit and proposed underground mining operations. Engagement
with the Government of Botswana has been ongoing throughout the FS.
Updated Environmental Management and Stakeholder Engagement Plans
are being finalized as part of the study.
Conclusions
It is the conclusion of the QPs that the FS summarized in this
press release contains adequate data and information to support a
FS. Standard industry practices, equipment and design methods were
used in the FS.
Based on the assumptions used for this evaluation, the project
shows positive economics and should proceed to detailed
engineering, financing and construction.
Next Steps
In the first half of 2020, the Company will focus on detailed
engineering and early procurement initiatives with respect to the
underground. The Company will also be reviewing financing options
and will update the market when such decisions are reached. The
anticipated capital requirements in 2020 represent less than 10% of
the pre-production capex estimate and can be funded out of the
Company's anticipated cash flow, as financing options are
explored.
Qualified Persons ("QPs")
The FS was prepared under the direction of JDS Energy &
Mining Inc. and by leading independent industry consultants. Mr
Gord Doerksen P.Eng is the Project manager and responsible for the
study completion and an Independent Qualified Person under national
Instrument NI 43-101. Dr. J.P. Armstrong, Ph.D. P.Geol., the
Company's VP Technical Services and a Qualified Person under
National Instrument 43-101, and Mr. Doerksen have reviewed and
approved the contents of this news release.
The results of the Karowe Underground FS will be summarized in a
Technical Report prepared pursuant to Canadian Securities
Administrators' National Instrument 43-101 that will be filed on
SEDAR (www.sedar.com) within 45 days of this press release and will
also be available on the Company's website
(www.lucaradiamond.com).
CONFERENCE CALL
The Company will host a conference call and webcast to discuss
the results on Tuesday, November 5, 2019 at 6:00 a.m. Pacific, 9:00
a.m. Eastern, 2:00 p.m. UK, 3:00 p.m. CET.
Please call in 10 minutes before the conference call starts and
stay on the line (an operator will be available to assist you).
Conference ID:
07240950 / Lucara Diamond
Dial-In Numbers:
Toll-Free Participant Dial-In North
America (+1) 888 390 0605
All International Participant Dial-In (+1) 778 383 7417
Webcast:
To view the live webcast presentation, please log on using this
direct link:
https://event.on24.com/wcc/r/2119756/AA485E110CEB641D00D3D85C66D077F6
The presentation slideshow will also be available in PDF format
for download from the Lucara website www.lucaradiamond.com shortly
before the conference call.
Conference Replay:
A replay of the telephone conference will be available two hours
after the completion of the call until November 12, 2019.
Replay number (Toll Free North America) (+1) 888 390 0541
Replay number (International) (+1) 416 764 8677
The pass code for the replay is: 240950#
On behalf of the Board,
Eira Thomas
President and Chief Executive Officer
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For further information, please contact:
Investor Relations & Public Relations +1 604 689 info@lucaradiamond.com
7842
Sweden: Robert Eriksson, Investor +46 701 112615 reriksson@rive6.ch
Relations
ABOUT LUCARA
Lucara is a leading independent producer of large exceptional
quality Type IIa diamonds from its 100% owned Karowe Mine in
Botswana. The Company has an experienced board and management team
with extensive diamond development and operations expertise. The
Company operates transparently and in accordance with international
best practices in the areas of sustainability, health and safety,
environment and community relations.
ABOUT CLARA
Clara Diamond Solutions (Clara), wholly owned by Lucara Diamond
Corp, is a secure, digital sales platform that uses proprietary
analytics together with cloud and blockchain technologies to
modernize the existing diamond supply chain, driving efficiencies,
unlocking value and ensuring diamond provenance from mine to
finger.
The information in this release is accurate at the time of
distribution but may be superseded or qualified by subsequent news
releases.
This information is information that Lucara is obliged to make
public pursuant to the EU Market Abuse Regulation and the Swedish
Securities Markets Act. The information was submitted for
publication, through the agency of the contact person set out above
on November 4, 2019, at 8:45 PM Pacific Time.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
Certain of the statements made and contained herein and
elsewhere constitute forward-looking statements as defined in
applicable securities laws. Generally, these forward-looking
statements can be identified by the use of forward-looking
terminology such as "expects", "anticipates", "believes",
"intends", "estimates", "potential", "possible" and similar
expressions, or statements that events, conditions or results
"will", "may", "could" or "should" occur or be achieved.
Forward-looking statements are based on the opinions and
estimates of management as of the date such statements are made,
and they are subject to a number of known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of the Company to be materially
different from any future results, performance or achievement
expressed or implied by such forward-looking statements. The
Company believes that expectations reflected in this
forward-looking information are reasonable but no assurance can be
given that these expectations will prove to be accurate and such
forward-looking information included herein should not be unduly
relied upon.
In particular, this release may contain forward looking
information pertaining to the following: potential to expand the
life of mine; updated resource and reserves for the Karowe Mine,
including the Underground and the total expected life of mine
production; estimates of the Company's production and sales volumes
for the Karowe Mine, including the Underground and associated cash
flow and revenues; estimates of the economic benefits of the
Underground, including the payback period; pre-production capital
costs for the Underground and the quantum required, and
availability of, external financing; anticipated operating margins
for the Underground operations; the ability to integrate the
underground operations seamlessly into the existing infrastructure;
the anticipated mine plan and mining methods; the ability to fund
certain costs from anticipated cash flows; and anticipated changes
in diamond pricing, including trends in supplies and demands and
the potential for stability in the diamond market and diamond
pricing; changes to foreign currency exchange rate; the timing and
ability of management to further commercialize the Clara digital
sales platform and other forward looking information.
There can be no assurance that such forward looking statements
will prove to be accurate, as the Company's results and future
events could differ materially from those anticipated in this
forward-looking information as a result of those factors discussed
in or referred to under the heading "Risks and Uncertainties"' in
the Company's most recent Annual Information Form available
athttp://www.sedar.com, as well as changes in general business and
economic conditions, changes in interest and foreign currency
rates, the supply and demand for, deliveries of and the level and
volatility of prices of rough diamonds, costs of power and diesel,
acts of foreign governments and the outcome of legal proceedings,
inaccurate geological and recoverability assumptions (including
with respect to the size, grade and recoverability of mineral
reserves and resources), and unanticipated operational difficulties
(including failure of plant, equipment or processes to operate in
accordance with specifications or expectations, cost escalations,
unavailability of materials and equipment, government action or
delays in the receipt of government approvals, industrial
disturbances or other job actions, adverse weather conditions, and
unanticipated events relating to health safety and environmental
matters).
Accordingly, readers are cautioned not to place undue reliance
on these forward-looking statements which speak only as of the date
the statements were made, and the Company does not assume any
obligations to update or revise them to reflect new events or
circumstances, except as required by law.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
MSCUGGGWGUPBUAA
(END) Dow Jones Newswires
November 05, 2019 02:00 ET (07:00 GMT)
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