JOHANNESBURG (miningweekly.com) – Aim-listed Kopane Diamond Developments was considering increasing the capacity of its Liqhobong Satellite plant, in Lesotho, to 750 000 t/y, up from the current 450 000 t/y, until a larger plant could be built to process kimberlite from the Main Pipe at the Liqhobong mine.

The company was expecting to start construction on a processing plant for the Main Pipe at the end of 2010, which it expected to phase in on a modular basis eventually to reach a capacity of 3,5-million tons a year or higher.

A definitive feasibility study for the Liqhobong Main Pipe project, which was initially expected to have been completed in the middle of this year was still under way, owing to delays in the large diameter drilling programme.

Meanwhile, Kopane confirmed that it was planning to construct a R131-million power line to connect its Liqhobong mine to the country’s main power grid by 2011.

The company’s chairperson Frank Scolaro noted in a statement on Wednesday that the successful development of its Liqhobong Main Pipe, the resources of which it valued at about $2,6-billion, depended “totally” on the provision of power from the Lesotho electricity grid.

Kopane’s subsidiary, the Liqhobong Mining Development Company (LMDC), has, to that end, signed a memorandum of understanding (MoU) with the Lesotho Electricity Company (LEC), the Government of the Kingdom of Lesotho and Standard Lesotho Bank, in respect of funding the construction of a 132-kVA power line.

In terms of the MoU, the bank would lend the LEC money to fund the construction of the 30-km power line from its substation at Ha Lejone to the mine.

The LEC and the Lesotho government would contribute funds towards the cost of the project, while the government has agreed to provide a sovereign guarantee to the bank in respect of the loan funding, noted Kopane.

The LMDC would finance the servicing of the loan and its repayment, with its share of the debt expected to amount to about R90-million.

An environmental-impact assessment and engineering specifications for the project has been completed. Kopane expected to conclude the loan documentation before the start of construction, scheduled for early in 2010 to allow connection to the grid by the first half of 2011.

The connection to the national power grid would represent a “substantial saving” over diesel-generated power, with diesel fuel costing about $6/t of production, compared with a cost $1/t of production for grid electricity.

The power line was also expected to also benefit the Liqhobong Satellite plant.

DIAMOND MARKET

Meanwhile, Scolaro said that he was pleased with the progress made at the company’s Liqhobong project during the 2009 financial year, despite the challenges the diamond-mining industry was facing and the fact that it had placed the Liqhobong Satellite plant on care-and-maintenance at the end of 2008.

Rough diamond prices had dropped by about 50% between late 2008 and early 2009 owing to the economic downturn, but have since increased by between 30% and 40%, he noted.

However, a sustained pick-up in diamond prices would likely only occur in 2010.

The key to a sustained recovery in rough diamond sales would be the return of confidence to the major jewellery diamond-buying economies, and particularly the US.

While demand in China and the Gulf has grown in recent years, this has not been enough to offset the impact of a weak US market and it would take from about three to five more years before these markets could grow sufficiently to match that of the US.

Jewellery sales growth would likely remain under pressure.

Kopane recorded a net loss of £4,5-million in the year ended June 30, 2009, compared with a loss of £4,6-million the year before, while revenues declined to £1,9-million, compared with £3,4-million the year before.

Diamond output dropped by 63% to 56 500 ct, compared with 152 013 ct produced the year before, owing to the fact that diamonds had only been produced for five months of the year.