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Update on Processing Plant for Lemphane Kimberlite Project, Lesotho
Paragon Diamonds Limited, the AIM quoted vertically integrated diamond development company in Lesotho, Africa, have announced the finalisation of the design and order plans for a state of the art processing plant for its 80% owned Meso Diamonds’ Lemphane kimberlite mine, which is located among a cluster of kimberlites known for producing large, high value diamonds. The plant’s modular design and use of the latest X-Ray Transmission (XRT) diamond recovery technology will reduce both capital and operating costs at Lemphane, improve diamond recovery, and as a result significantly enhance the Project’s economics. This update is in line with the Company’s objective to commence Stage I production at Lemphane in Q1 2015, which will involve the extraction of 1 million tonnes of kimberlite over a two year period and, according to an independent report, is expected to lead to the recovery of over 100 diamonds larger than 9 carats, including stones over 100 carats in size.
* Finalisation of design and order plans for US$6 million 75tonne per hour
(0.5Mt/yr) processing plant follows a comprehensive analysis of various
plant options and evaluation of technologies successfully used by other key
industry players previously
* Lemphane Project’s economics significantly enhanced as a result of the
state of the art plant:
+ Lower operating costs – the plant will incorporate the latest advances
in XRT diamond recovery technology which is proven to significantly
reduce costs, maximise the recovery of large high value stones and
minimise breakages.
+ Capital costs of Stage II production expected to be significantly
reduced from the initial scoping study as a result of the new
technology when applied to a full-scale 3Mt/yr plant – it is expected
that the overall size and footprint of the plant will reduce along with
the associated operating costs
+ Improved diamond recoveries – XRT technology has been shown to
significantly improve diamond recoveries compared to other conventional
diamond recovery technology
* An upgraded pre-feasibility study, based on the revised 48Mt of kimberlite
amenable to open-pit mining and incorporating the latest improvements in
both operating and capital costs, including the planned national grid
electrification of the region due mid-2015 will be undertaken in due course
to verify management’s assertions
* Titanium Capital Investments Ltd (`Titanium Capital’), a private equity
investment company managed by Paragon’s Chairman Philip Falzon Sant
Manduca, is acting as assuror (for nil consideration) for the pre-ordering
costs of the plant supporting Paragon’s efforts to prepare for the plant’s
construction as soon as Stage I production funding negotiations have been
successfully concluded – the acquisition of the plant is conditional upon Paragon
securing the required funding. The assurance given by Titanium Capital
constitutes a Related Party Transaction under AIM Rule 13. The directors,
excluding Philip Falzon Sant Manduca consider, having consulted Northland
Capital Partners Limited (the Company’s Nominated Adviser) that the terms
of the assurance are fair and reasonable insofar as the Company’s
shareholders are concerned.
* Board is highly focused on prioritising debt financing over equity as a
means of structuring the funding, thereby rewarding existing shareholders
by generating maximum value added
* Plant is on course to be commissioned in time for commencement of Stage I
production in Q1 2015
Paragon’s Chairman, Philip Falzon Sant Manduca said, “The construction of this `state of the art’ processing plant is a major milestone for Paragon as we home in on our Q1 2015 target for the commencement of Stage I production. As Lemphane is the last, known undeveloped large diamondiferous kimberlite pipe in Lesotho, Paragon benefits from last mover advantage, whereby we get to see in practice the advantages and disadvantages of the various techniques and technologies employed on other kimberlites to date, as well as enjoying access to the latest equipment. We have therefore cherry-picked the best-in-class X-Ray technology for our plant, which not only lowers our forecast operating costs but also maximises the recovery rates of large high value stones at Lemphane, reduces the potential for breakages, and enhances on-site security.
“From the outset, Lemphane’s company-making credentials have always been clear to me. By potentially providing a source of large, high value diamonds, Lemphane delivers a strong platform from which we can build Paragon into a vertically integrated diamond house, with material interests in upstream and downstream activities to capture as much value as possible for our shareholders. Thanks to the plant’s modular design its capacity can be easily scaled up to accommodate Stage II’s higher volumes, which along with the current technology to be adopted will translate into a significant reduction in Stage II’s CAPEX requirement. When measured against a static quantum of resource, this increases the potential magnitude for future revenues and therefore substantially improves Lemphane’s potentially attractive economics. This lies behind a further increase in Titanium’s commitment to Paragon in the form of assurance towards the design and pre-ordering costs of the plant to the relevant contractors, so that we have a greater potential to meet our timetable of production commencing in Q1 2015. I look forward to providing further updates in the near term.”
