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2017-11-02

LUCARA ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR KAROWE UNDERGROUND

Lucara Diamond Corp Övrig information som ska lämnas enligt börsens regler
LUCARA ANNOUNCES POSITIVE PRELIMINARY ECONOMIC ASSESSMENT FOR KAROWE
UNDERGROUND NOVEMBER 2, 2017 (LUC – TSX, LUC – BSE, LUC – Nasdaq Stockholm)
Lucara Diamond Corp. (“Lucara” or the “Company”) is pleased to announce the
results of a Preliminary Economic Assessment (“PEA”) prepared in accordance
with National Instrument 43-101 (“NI43-101”) for the development of an
underground mine to commence production, after the completion of the
current open pit mine, at its Karowe Mine (”Karowe Mine”) in Botswana. All
dollar amounts in this release are presented in US dollars unless otherwise
stated. 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. The results of the PEA represent forward-looking
information that are subject to a number of risks, uncertainties and other
factors that may cause results to differ materially from those presented
herein. PEA Highlights (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 per tonne ?

--

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. William Lamb,
President and CEO, stated, “The results of the PEA demonstrate the
potential economic viability for the development of an underground mine at
Karowe. 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 cashflow
generation at Karowe. 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 presents a stand-alone scenario which does not
incorporate the economics of the current Karowe operations except where
taxes are affected based on capital expenditures. 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
categorized as a Mineral Reserve. Mineral Resources that are not Mineral
Reserves do not have demonstrated economic viability, therefore there is no
certainty that the PEA will be realised. Table 1: Economic Sensitivities
and Key Operational Parameters1 Parameter Unit Base Case
-----------------------------------------------------------------------
Rough diamond price – South Lobe (2017) US$/carat $730
-----------------------------------------------------------------------
Rough Diamond Annual Real Diamond Price Escalator % 2.5
-----------------------------------------------------------------------
After-Tax Undiscounted Net Cash Flow US$M $820
-----------------------------------------------------------------------
After-Tax NPV (5%) US$M $451
-----------------------------------------------------------------------
After-Tax NPV (8%) US$M $318
-----------------------------------------------------------------------
After-Tax IRR % 38.9%
-----------------------------------------------------------------------
Pre-Tax Undiscounted Net Cash Flow US$M $901
-----------------------------------------------------------------------
Payback Period (pre-tax) years 2.5
----------------------------------------------------------------------- 1.
Financial metrics have been calculated taking into consideration the net
tax benefit which the current operations will receive as a result of
capital expenditures on the development of an underground mine at Karowe
Tonnage and Grade
--------------------------------------------------------------------------------
Tonnes milled (Millions) 24.7
--------------------------------------------------------------------------------
Diamond grade (cpht) based on a 1.25mm bottom cut-off size (“BCOS”) and
12.11 inclusive of estimated mining dilution
--------------------------------------------------------------------------------
Average Recoveries
--------------------------------------------------------------------------------
Estimated Mine Call Factor (%) 92%
--------------------------------------------------------------------------------
Production Average Annual
------------------------------------------------------- Rough Diamonds
(carats) 272,000 -------------------------------------------------------
Operating Costs US$ per tonne treated
------------------------------------------------------- Kimberlite (US$/t
treated) $49.36 Diamonds (US$/carat recovered) $407.70
------------------------------------------------------- All-In On-site
Sustaining Costs2 US$ per tonne treated
------------------------------------------------------- Kimberlite (US$/t
treated) $54.18 Diamonds (US$/carat recovered) $411.72
------------------------------------------------------- 2. All-In costs
include ongoing underground development of the sub-level cave rim and
access tunnels. PEA Approach and Project Overview The PEA for the Karowe
Underground project (“Karowe Underground”) and together with the Karowe
Mine, the “Karowe Project”) presents a stand-alone scenario that does not
factor in or modify in any way the economics of the open pit operations of
the Karowe Mine, except where taxes are affected based on capital
expenditures. The PEA does, however, assume that the Karowe Underground
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 million tonnes per annum (“mtpa”) throughput.
The Karowe Underground targets the South Lobe kimberlite resource below the
current planned bottom of the open pit, expected to be at approximately 690
meters above mean sea level (“mamsl”) (320 meters below surface (“mbs”)),
to a depth of 420mamsl (590mbs). The lower portion (200m vertical from 600
to 400mamsl is composed of Inferred Mineral Resource, which the PEA
considered to be too speculative geologically to have the economic
considerations applied to them that would enable them to be categorized as
Mineral Reserves. The PEA is preliminary in nature and there is no
certainty that the PEA will be realised. The Karowe Underground benefits
from the brownfields nature of the existing operations at the Karowe Mine.
Since declaring commercial production in July 2012, the Karowe Mine has
produced an average of 320,000 carats per annum from three kimberlite
lobes, from the treatment of 2.5mtpa. These open pit operations are
scheduled to continue until 2026 with the originally planned processing of
low grade stockpiles in 2027 being moved to 2036, the end of the current
planned underground operations. 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. Existing on-site
infrastructure includes offices, warehouses, laydown areas, maintenance
facilities, a crushed kimberlite stockpile and reclaim, access and service
roads, an airstrip, explosives magazines, and water and electrical
infrastructure. The bulk underground mining method selected to mine the
diamond kimberlite pipe measuring some 200m in diameter is SLC. Initially
the pipe will be partially offset from the pit bottom, resulting in the top
four sublevels being slightly offset from the pit bottom. These top levels
plus two levels below the pit bottom will be mined by a derivation of
Sub-Level Open Stoping (“SLOS”) daylighting into the pit bottom. For the
purpose of the PEA, SLC was considered due to its lower initial capital
cost. On completion of the current PFS geotechnical program, further
consideration will be given to a block caving option. This trade-off study
will be completed as part of the PFS initial pre-feasibility work
programme. The mine design for both the upper levels SLOS and the following
SLC mining once general caving of the host rocks commences, will be
similar. The sublevel interval will be 25m, which is the international norm
for the method. Owing to the reported hardness and strength of the
kimberlite at 156 Mpa, the mine design is intended to evaluate increasing
the sub level interval to 30m at the PFS stage. The assumed competence of
the kimberlite also allows the size of the extraction crosscuts to be
developed 5.0m wide and 5.0m high. The spacing of the crosscuts skin to
skin are set at 8.0m to optimise the draw ellipsoids. The flexibility of
the method allows adjustments to be made to the sub level intervals and
crosscut spacing to suit localised geotechnical conditions. This will apply
particularly to the upper level SLOS access levels. Access and ventilation
will be provided by two ramps developed from surface boxcuts. The ramps
will traverse poor ground conditions over some 2000m each to reach the
first underground mining levels. The mine design contemplates the
development of twin 6.0m wide and 6.3m high ramps to cater to larger haul
trucks. The twin ramp system will be required to facilitate the planned
production rate of approximately 7,500 tonnes per day (“tpd”) of kimberlite
and country rock. Following extraction from the Karowe Underground
sub-level, kimberlite will be trammed to the Karowe Mine process plant
where it will be processed at an average rate of 7,000tpd (~2.5mtpa) using
existing crushing, milling, XRT, DMS concentration and final recovery
facilities. Mineral Resources In support of the PEA an updated Mineral
Resource Estimate, see Table 2: Karowe Mine AK06 Updated Mineral Resource
Statement reflecting depletion as of December 25, 2016, was prepared by
Mine...

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