PERTH (miningweekly.com) – Diamond miner Lucapa has updated the scoping study for its Merlin diamond project, in the Northern Territory, after the price of rough diamonds increased by 42% over the last three months.

Based on the production of 2.1-million carats over a 14-year operational life, the updated scoping study estimated that the Merlin project could generate revenues of between A$1.6-billion and A$2.3-billion, and earnings before interest of between A$702-million at the low end of the scale, and up to A$1.2-billion at current rough diamond prices.

The low-end scenario was based on rough diamond prices in December of last year, when the initial scoping study was released, while the base case scenario reflected the rough diamond prices in January, and the high-price scenario reflected the rough diamond prices obtained in February.

The updated scoping study saw Merlin’s net present value range between A$343-million and A$697-million, and its internal rate of return from 59% to 105%.

“The results of the scoping study published in December 2021 already highlighted the great potential for a 2.1-million-carat production target at Merlin using Lucapa’s innovative hybrid mining plan,” said Lucapa MD Stephen Wetherall.

“With rough natural diamond prices increasing by some 42% in just three months, the material and positive impact on the financial metrics as shown in the Merlin updated scoping study significantly strengthen the economic potential for a long-life producing mine at Merlin.

“As previously noted, there are clear opportunities to deliver additional value through mineral resource extensions, underground development and exploration as there are a significant number of anomalies on our tenements that have the potential to deliver new source discoveries.

“We look forward to delivering the Merlin feasibility study this year,” Wetherall said.