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Lucapa prioritises high-value diamond production, resources

20th February 2019

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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Following a board review of the company’s diamond assets, Lucapa Diamond Company will prioritise production and cash generation from its two high-value diamond mines, the Lulo alluvial mine, in Angola, and the Mothae kimberlite mine, in Lesotho, to ensure shareholder value is maximised.

This entails advancing the year-round Lulo kimberlite exploration programme to identify a possible source of the world’s highest-value alluvial diamonds; and cutting and polishing select special diamonds to accrete additional value beyond the mine gate.

As a consequence, the timing of future work programmes for Lucapa’s two earlier-stage diamond exploration assets – the Brooking project, in Western Australia, and the Orapa Area F project, in Botswana – will be reviewed.

The asset review was undertaken to reflect the current investment climate, where the focus has moved to companies that are maximising cash generation from producing assets. It also accounts for the changing dynamics of the global rough diamond market, where high-value diamond production is favoured.

Lucapa differentiated itself from its diamond peers in 2018 by delivering a second producing asset, putting it in the position of having two mines with high-value production.

According to Lucapa MD Stephen Wetherall, the review ensured that Lucapa kept shareholder value at the forefront, while adapting to current market conditions and continuing to grow as a global niche producer of large and high-value diamonds.

“Growing shareholder value is our major imperative which, in the current climate, we believe warrants a complete focus on our high-value and cash-generating assets.”

“Lulo and Mothae are two of the highest dollar per carat diamond mines in the world. The ability to increase production at our two mines, coupled with the significant marketing policy changes in Angola, leaves Lucapa ideally positioned to deliver additional value in 2019.”

“Our ongoing Lulo kimberlite exploration programme will continue unabated, supported by the strong belief and confidence of the board and our Angolan partners that the hard-rock source of the world’s best alluvial diamonds will be a significant global discovery.”

EXPANSION CAPCITY  

Lucapa’s Lulo and Mothae mines both have capacity for material production increases.

While commercial production only began at Mothae in January, the new 1.1-million-tonne-a-year plant has already demonstrated its ability to operate at throughput rates in excess of nameplate capacity.

The Mothae plant layout was originally designed with the intention of doubling throughput to 2.2-million tonnes a year in Phase 2 in 2021.

However, management believes the capacity of the 1.1-million-tonne-a-year plant can be considerably increased earlier with relatively minor modifications, which are currently being scoped in detail.

After achieving record throughput rates of about 285 000 bulk cubic metres in 2018, the Lulo project partners have approved plans to increase production by at least 25% in 2019.

This increase will be achieved by introducing an additional operating shift on the diamond treatment plant to process alluvial gravels 24/7 and expanding the mining fleet accordingly.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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