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 shared infrastructure with other neighbouring mines. The owner's team’s costs and contingency allowances were also included.

Duration
Not stated.

Latest Developments
Firestone Diamonds now expects to recover about 360 000 ct of diamonds in the financial year ending June 30, against April’s guidance of 300 000 ct, owing to operational ramp-up at its Liqhobong mine achieving nameplate throughput capacity on multiple occasions since the start of operations.

The Aim-listed diamond miner has also started quarterly repayments under the terms of its $82.4-million Absa debt facility and made its first capital repayment of $1.4-million in March.

The current $15-million standby facility provided by Resource Capital Fund (RCF) expires on June 30 and, while the company has sufficient financial headroom to continue operations and meet its debt repayment obligations as they fall due, the directors have decided to extend the standby facility to provide the company with a prudent level of financial and operational flexibility.

Accordingly, Firestone and RCF have agreed to extend the standby facility for a further year to June 30, 2018, subject to the company’s drawing $5-million on signature of the amendments to the standby facility.

As a result, Firestone has submitted a drawdown request to RCF for $5-million under the standby facility and, at June 21, the company would have had cash on hand of $13.1-million.

The balance of $10-million remaining under the standby facility will enable the company to maintain a prudent working capital buffer and continue optimising mining operations as it se

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?
Commissioning of the mine started in October 2016, with the mine construction completed on time and within the $185.4-million budget.

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