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Paragon Diamonds (LON:PRG) chairman Martin Doyle believes the company is close to being granted a mining licence in Lesotho for its potentially company making Lemphane kimberlite.
The application was lodged with mining ministry in February and changes so far, including an increase of stage-one production to 500,000 tonnes annually from 200,000 tonnes, have been “positive”.
“This revision in concert with other recent clarifications on the application gives us confidence to believe the granting of the mining licence is imminent,” said Doyle as the group posted its interim results statement.
“Upon agreement and granting of the mining licence the group will have an updated work programme at Lemphane which it is keen to accelerate as much as possible.”
The focus of the most recent round of work has been on proving the grade and economics of Lemphane.
The work to date bulk sampling the deposit points to it sharing the same characteristics of the other Lesotho kimberlites in being low-grade but yielding “exceptionally large diamond sizes”.
Paragon said 211.22 carats are currently undergoing valuation by WWW International Diamond Consultants.
The last export contained the 8.86 carat stone recovered in April, the largest stone recovered to date.
A valuation completed in January of an initial 90.22 carats, returned values for two individual diamonds in excess of US$2,300 and US$1,800 per carat with the largest stone weighing 6.3 carats.
As is usual for a company at this stage of its development, Paragon was loss-making (to the tune of £500,000 in the first half). The group held cash at the period-end of £1.2mln.
The share price, up 11% in the last month, succumbed to a mild bout of profit-taking to trade 3% lower at 5.68p.
Broker Sanlam said: “A 500,000 tonnes a year plant is a significant facility and potentially highly profitable – especially if a number of very high value stones are recovered.
“Given the scale and economic potential, it is best described a phase one mining as opposed to a bulk sampling/evaluation phase. The ultimate plan is for a three million tonne plant.”