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Upcoming Diamond Projects – Liqhobong

Upcoming Diamond Projects – Liqhobong

In our series on up-and-coming global diamond projects so far, we have looked at Stornoway's Renard mine, the Gahcho Que joint venture between De Beers and Mountain Province Diamonds, and the De Beers Jwaneng Cut-8 expansion project. Another new mine, which is expected to begin production in the near future, is the Liqhobong mine in Lesotho. Like all other mines in the small mountainous country, Liqhobong is a joint venture between the government of Lesotho (25%) and the miner, London-based Firestone Diamonds.

Like many of the current and prospective diamond mines in the small, landlocked country of Lesotho, the Liqhobong mine is located high within the Maluti mountain range. Its name is derived from its location, at the head of the Liqhobong Valley in the northern part of the country. It is located about 120 km east-northeast of Lesotho's capital city of Maseru, with a population of just 230,000 people. The mine sits within a cluster of active diamond projects, including the Kao, Letšeng, and Mothae mines. 

Firestone gained ownership of the mine as part of a transaction that saw them acquire Kopane Diamond Developments in 2010. The mine was initially discovered by Colonel Jack Scott in the 1950s, but remained relatively untouched until the 1990s, when a more advanced evaluation program was undertaken. The mine began production in 2005 in a smaller satellite pipe, which was mined for three years, until 2008. During that time, a pre-feasibility study was conducted on the larger main pipe, which showed economic promise. After Firestone acquired the mine in 2010, they resumed mining of the satellite pipe using a small scale process plant, and produced 325,000 carats up to late 2013, when operations were closed to focus on development of the main pipe.

The main pipe has a surface area of 8.6 hectares, compared to just 1.6 hectares for the satellite pipe. The mine integrates four unique kimberlite intrusions, namely K2, K4, K5, and K6. Up to 60% of the resource will be mined in an open-pit incorporating three stripping cuts, with the potential for a fourth cut before underground mining commences. The process plant at Liqhobong will consist of two 250 tonne/hour feeds, which will allow up to 3.6 million tonnes to be processed each year.

The mine required the development of a 5.8km access road, and like other projects in the region, required extensive work to bring in electricity and other power sources to the remote mountain location. In 2015, the company announced that it had entered into an agreement to utilize the same power supply as the nearby Kao mine, and to connect the mines to the national electricity grid. The mine has a grade of between 28 and 33 carats per hundred tonnes (CPHT), and will produce an estimated 1 million carats per year over a 15-year mine life. The company is estimating an average diamond price of $156 per carat.

In order to finance the project, Firestone had to divest of its only other operation, the BK11 mine in Botswana, located a short distance from the Karowe and Letlhakane mines. In total, the project is estimated to cost $185.4 million to construct, and this has been fully financed by the company through a series of debt and equity transactions. The company also has access to an $82.4 million secured debt facility through ABSA Bank in South Africa.

The mine has suffered from some delays in its development, principally due to adverse weather conditions in the region. Earth moving requirements also exceeded initial expectations, and added $13 million to the project start-up budget. The mine was initially scheduled to start selling diamonds during the fourth quarter of 2016, but this deadline was revised. Currently, first sales from the diamond mine are expected in February 2017. Diamond sales will be conducted by First Element in Antwerp.

The views expressed here are solely those of the author in his private capacity. No one should act upon any opinion or information in this website without consulting a professional qualified adviser. 

 

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