Name and Location
Liqhobong diamond project, 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 recover 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.

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
Initial production from the Liqhobong project is on track for the fourth quarter of this year, with 85% of construction completed by the end of June, ahead of its target of 81%.

The commissioning phase of Liqhobong has been accelerated and was 18% complete at the end of June.

Once initial production has started, Firestone expects that ramp up to full nameplate capacity of 3.6-million tonnes a year, or 500 t/h, to recover up to one-million carats a year, will take at least six months.

The project is within the $185.4-million budget, with 76%, equating to R1.6-billion, of the revised capital budget of R2.1-billion having been spent by the end of the June quarter.

The company remains fully funded to complete the project, ramp up production and complete the first sale of diamonds.

The emerging mine also has more than 400 000 m³ of water on site, sufficient for the first year of production.

At the end of March, Firestone had $10.7-million cash on hand and $39-million available pursuant to the Absa debt facility, resulting in forecast headroom available to the company of about $9-million at the end of December.

Liqhobong is expected to produce 380 000 ct to 450 000 ct in the financial year to the end of June 2017. The first diamond sale is scheduled for January 2017 in Antwerp, Belgium.

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.