The PEA, prepared in accordance with NI43-101, was based on starting up production from the underground mine following completion of mining from the current open pit at the Karowe diamond mine in Botswana.
Based on the positive PEA results, the company has continued with the development of a pre-feasibility study (PFS), with an anticipated release in Q2, 2018.
(all figures apply to a stand-alone underground project and are additive to the current open pit operations)
- After-tax undiscounted net cash flow of $820 million
- After-tax NPV (5%) of $451 million and IRR of 38.9%
- Total Life-of Mine (LOM) production of 2.72 million carats
- Resource remains open at depth
- Average LOM operation costs of $49.4/t
- Pre-production capital costs (including a 25% contingency, the costs of a pre-feasibility and feasibility study and hydrogeology and geotechnical testing and modelling costs) of $195 million
Diamond price and exchange rate assumptions include a 2.5% per annum real diamond price increase, a US$/South Africa Rand rate of exchange of US$/R13.00 and a Rand/Pula exchange rate of R1.3/BWP1.
“Underground operations are focused on the high value south lobe, which remains open at depth below the current design, and is a further indication of the potential longevity of the resource and cash flow generation at Karowe,” says William Lamb, president and CEO of Lucara.
“We have seen on-going improvement in the value of diamonds from the south lobe and the development of an underground mine has the potential to add significantly to the life of mine at Karowe.”
The Karowe underground PEA evaluates the development of a sub-level caving (SLC) operation to extract the AK06 kimberlite resource, with all kimberlite being processed at the existing Karowe processing plant over a 10-year period following the depletion of the current open pit operations, which is expected to occur in 2026.
The PEA is preliminary in nature and includes the use of the inferred mineral resource which is considered to be too speculative geologically to have the economic considerations applied to it that would enable it to be categorised as a mineral reserve.
The PEA assumes that the Karowe underground mine will seamlessly integrate into current operations with kimberlite sourced from underground being stockpiled in the latter years of the open cast operations to ensure sufficient availability to the processing facilities to maintain the current 2.5 Mtpa throughput.
The Karowe mine process plant and other site facilities and equipment required to support an underground mining operation have recently been upgraded to accommodate the treatment of harder and higher density material at depth.
Project enhancement opportunities
The following opportunities have been identified as a result of carrying out the Karowe underground PEA. However, these opportunities require technical and economic evaluation and should therefore be considered speculative until the related evaluation work has been completed as part of the PFS.
- consideration will be given to other mining methods (eg. block caving) to reduce operating costs, and reduce dilution and tramp steel reporting to the plant.
- the potential exists to develop early access to the underground mine to de-risk mine dewatering, geotechnical work and remove constraints to future production ramp-up.
- Underground mining optimisation opportunities exist at higher throughputs which are expected, if realised, to have a positive impact on operating costs. Increased mined kimberlite delivery and plant upgrade requirements will be investigated. Typical outputs for this type of mining method may be as high as 10 000 tpd.
- Rim tunnel spacing is currently set at 25 m vertical spacing. Should the geotechnical data show improved stability, the distance between the rim tunnels may be increased to up to 30 m, reducing on-going development costs.
- The PEA assumes purchasing all mobile equipment. It is possible that this equipment may be leased resulting in lowered costs.
- It may be possible to decrease the mine operating costs through the use of automated production load-haul-dump equipment.
Image courtesy of Lucara Diamond Corp. – showing the Karowe mine open pit