LONDON (Alliance News) - Paragon Diamonds Ltd Thursday said it has received positive results from an independent modelling report at the Lemphane kimberlite pipe project in Lesotho, supporting improved economics of the project ahead of the start of production.
The Lesotho-focused diamond development and production company, which is yet to produce any revenues, said the report was based on 300 carats of diamonds recovered during its 2012/3 bulk sampling programme at Lemphane.
The company now expects to uncover a diamond over 100 carats for every million tonnes processed at the site and that around 12% of carats will be diamonds over 9 carats. It anticipates that diamond values will be between USD930 per carat and USD1,025 per carat at the site, as its planned one million tonne of kimberlite from stage 1 mining at the site will take on larger diamonds of up to 100 carats.
Paragon Diamonds has used diamond values of USD750 per carat for its planning of the site up until now and said that in its Stage 2 mining, with the increased recovery of larger diamonds, potentially including over 300 carat stones, even higher values could be realised.
However, the company noted that the values obtained relate only to the diamonds it studied, and the new model used a conservative overall grade of two carats per hundred tonnes. It also noted that of the 300 carats of diamonds recovered for the study, there were no diamonds exceeding 9 carats, but it expects higher recovery rates as it moves through production.
"Lemphane has always shown potential to produce large, exceptional diamonds, and we feel the comparison with other high-value Lesotho kimberlites, made in this study, is fair and offers further upside, given recent remarkable diamond values achieved at neighbouring mines," Managing Director Stephen Grimmer said in a statement.
The company plans to start stage 1 production from its Lemphane project at the end of 2014 and said in May that it expects to begin generating USD8 million per year in revenues from that point based on the production of 20,000 carats per year with an estimated value of USD750 per carat.
Paragon Diamonds shares were up 13% to 4.14 pence, putting it in the top five AIM ALL-Share risers during early trading on Thursday.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
Copyright 2014 Alliance News Limited. All Rights Reserved.
