Name of the Project
Liqhobong diamond project.

Location
The project is set in the hills of the Maluti mountains, in Lesotho.

Client
Liqhobong Mining Development Company, comprising Firestone Diamonds (75%) and the Lesotho government (25%).

Project Description
The Liqhobong mine development project’s 8.6 ha orebody contains a probable reserve of 11.4-million carats. It has a total indicated and inferred resource of 90-million tonnes, containing an estimated 29.6-million carats (down to 510 m) and is still open at depth.

The project envisages a potential openpit mine plan to a depth of 390 m below the surface, producing 17.6-million carats, with a life-of-mine of 15 years.

Firestone updated Liqhobong’s October 2012 definitive feasibility study (DFS) in November 2013, which reaffirmed the project’s robust economics and secured its funding.

The updated DFS envisages the construction of a new 500 t/h main treatment plant and supporting infrastructure to treat 3.6-million tonnes of ore and the recovery of more than one-million carats a year. This will place it in the top tier of diamond mines globally.

The main treatment plant comprises purpose-built crushing, scrubbing, screening and recovery technology.

The mining and processing will be contractor operated.

Jobs to be Created
The mine currently employs about 795 people.

Net Present Value/Internal Rate of Return
The updated DFS, which assumes a 3% growth in the diamond price, with all costs being kept flat, sets out a base case project-level post-tax net present value (NPV) – using $107/ct and an 8% discount rate – of about $379-million and a post-tax internal rate of return (IRR) of 30%.

An upside project-level post-tax NPV, taking into account the potential revenues from stones larger than 100 ct using $156/ct and an 8% discount rate, is estimated at about $728-million, with a post-tax IRR of 45%.

Value
The updated DFS includes a revalidation of the total project capital scope and cost requirement. Total initial capital costs are estimated at $185.4-million, compared with a 2012 forecast of $167-million.

The revised and revalidated initial capital cost estimate includes an additional $5-million to provide grid power for the project, with the project carrying the full cost of power infrastructure ($15-million). Previously, this had been modelled on the basis of shared infrastructure with other neighbouring mines. The owner's team’s costs and contingency allowances were also included.

Duration
Initial production is expected to start in late 2016.

Latest Developments
Firestone Diamonds has scheduled its first diamond sale, in Antwerp, from February 6 to 10, as its Liqhobong mine ramps up to full output.

In the three months ended December 31, the company recovered more than 20 special stones larger than 10.8 ct from the mine, including a 37 ct white diamond and several fancy yellow diamonds.

Diamond recoveries started in late October.

"Construction activities at Liqhobong were completed early in the [December] quarter and we are currently in the commissioning and ramp-up stage of the project. We have been pleased with the tonnes processed by the plant, which has already seen nameplate production reached on multiple occasions at this early stage of ramp-up,” CEO Stuart Brown has said.

Further, processing of lower-grade stockpiles and diluted ore has enabled the company to produce 58 000 ct at a grade of 14.4 carats per hundred tonnes.

Firestone expects to host two sales every quarter, with the second auction of this quarter due to be held late in the quarter.

Key Contracts and Suppliers
DRA Projects (EPCM); Stefanutti Stocks (earthworks and civils); Turnkey Civils Lesotho (residue storage facility) and S.M.E.I Projects (structural, mechanicals, platework and piping).

On Budget and on Time?
The project is on track, with initial production on target to start at the end of 2016.

Contact Details for Project Information
Firestone Diamonds, tel +44 20 8741 7810, fax +44 20 8748 3261 or email info@firestonediamonds.com.