Name and Location
Liqhobong diamond project, Lesotho.

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

Project Description
The Liqhobong deposit has a total indicated and inferred resource of about 90.82-million tonnes, containing an estimated 29.75-million carats (down to 510 m).

An updated definitive feasibility study (DFS) on Liqhobong has confirmed the robust economics of the project. The updated study is an internal review of the study completed in October 2012. It is based on additional work associated with Firestone’s ongoing project finance process and it incorporates the benefit of the company's recently announced updated diamond price assumptions, revalidated operating and capital cost assumptions and updated foreign exchange rates.

The study shows that the project could recover 1.15-million carats a year at an in situ grade of about 32 carats per hundred tonnes and an average stripping ratio of 2.28.

The main treatment plant (MTP) has been designed to treat 500 t/h of ore, which equates to 3.6-million tonnes a year, and comprises purpose-built crushing, scrubbing, screening and recovery technology. Mining and processing will be contractor operated.

Net Present Value/Internal Rate of Return
Not stated.

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. The project capital has increased from $167-million to $185.4-million – an increase of 11% when compared with the October 2012 DFS.

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

Duration
According to the updated DFS, construction and early works for the MTP are expected in early 2014, when funding for the project is finalised.

Thereafter, the project is planned to take two years to construct and commission, with full production scheduled to begin in early 2016.

The power component of the project is expected to take 13 months to complete, with grid power expected to be in place by July 2015.

Latest Developments
Firestone has spent R400-million to date on the development of its Liqhobong mine, remaining on track and within budget.

Construction on the project, which will include a 500 t/h main treatment plant, started in June and is expected to take 24 months to complete. Production is scheduled to start at the end of the second quarter of 2016.

Orders valued at R1.28-billion out of the R1.43-billion budget for the engineering, procurement and construction management (EPCM) contract, have been placed.

The three largest contracts under the overall EPCM contract, totalling R943-million, have been agreed on a fixed-price basis to remove the escalation risk.

Further, the project team's budget of R280-million, which includes, besides others, the escalation, contingency and project team salary costs is in line with the budget.

In addition, Firestone has indicated that the pilot plant has now been removed and the earthworks are progressing on schedule.

The project has already created more than 400 jobs.

The provision of electrical infrastructure to connect the mine to grid power is also progressing as planned, with all equipment and long-lead item orders having been placed and site preparation for the substations well advanced. The power project is expected to cost R165-million and the mine is expected to be connected to the grid by the second half of 2015.

Meanwhile, Firestone has said that the final conditions precedent for the drawdown of the $82.4-million Absa facility are progressing on schedule and are expected to be completed well before the need to draw down on the facility, which is likely to be late March.

Key Contracts and Suppliers
DRA Projects (DFS).

On Budget and on Time?
None stated.

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