Based on an-situ revenue of $33/t, the project gives a pre-tax Internal Rate of Return of 22%, and a Net Present Value, pre-tax, at a 10% discount rate of US$69.0M. This is based on total capital expenditure of approximately US$123M, including a 20% contingency and a mine life of 10 years. In deriving the valuations an exchange rate of 8.5 Maloti to the US dollar has been used.
There is a fair bit of detail released in the summary of the scoping study. By far the most interesting is the fact that as yet there are no ore reserves. The scoping study is a step in the application for a Mining Lease to enable the processing of 0.1Mt of kimberlite over approximately 6 months. Hopefully this will be achieved quickly to allow the trial mining to follow-on seamlessly from the current bulk sampling. Due to the fact that Lesotho diamond mines are typically very low grade but extremely high value per carat mines, bulk sampling is imperative.
Present indications are that the grade is around 2 to 3 carats per hundred tonnes and diamonds with valuations of up to $2,300/ct have been recovered but the average is approximately $300/ct at the moment. Initial mining at approximately 50tph is expected to establish an inferred resource over the upper portions of the kimberlite and Stage 1 mining will convert this to an indicated resource and extend the inferred resource, by combination with the geological model to the limits of open pit mining.
The only other comments we would like to make about the scoping study are that the costs used are within +/-35% and the exchange rate looks very conservative.
There is a fair bit of detail released in the summary of the scoping study. By far the most interesting is the fact that as yet there are no ore reserves. The scoping study is a step in the application for a Mining Lease to enable the processing of 0.1Mt of kimberlite over approximately 6 months. Hopefully this will be achieved quickly to allow the trial mining to follow-on seamlessly from the current bulk sampling. Due to the fact that Lesotho diamond mines are typically very low grade but extremely high value per carat mines, bulk sampling is imperative.Present indications are that the grade is around 2 to 3 carats per hundred tonnes and diamonds with valuations of up to $2,300/ct have been recovered but the average is approximately $300/ct at the moment. Initial mining at approximately 50tph is expected to establish an inferred resource over the upper portions of the kimberlite and Stage 1 mining will convert this to an indicated resource and extend the inferred resource, by combination with the geological model to the limits of open pit mining.
The only other comments we would like to make about the scoping study are that the costs used are within +/-35% and the exchange rate looks very conservative.
