Paragon Diamonds’ (LON:PRG) confidence in the Lemphane diamond project in Lesotho has been further boosted by a major upgrade to the estimated size of the deposit.
Consultant AMEC provided a report of a new geological model for the proposed mine and as a result of 3D modelling of drill data the kimberlite tonnage rises to 48.6mln tonnes from 27mln tonnes.
“We feel confident given the experience of other mines in Lesotho that most, if not all, of that 48.6mln tonnes will be accessible to open pit mining,” managing director Stephen Grimmer told Proactive.
“Basically, at the anticipated scale of mining, which is currently 3mln tonnes, it [the new estimate] significantly extends the open pit life from 8 years to probably in the order of 16 years.”
The prior number used conceptual pit design and certain assumptions, but wasn’t based on drilling data.
Subsequent drilling of four holes went deeper than the previously envisaged pit parameters - to about 350 metres below the surface – and revealed the kimberlite was of a higher density than previously assumed.
Within the previously estimated area, 15% more kimberlite was ‘found’ following the drill programme.
The latest news comes at an important juncture, as the Lemphane project moves towards the start of mining.
April’s scoping study indicated Paragon intends to conduct a two year trial mining operation and it appears that events are moving towards that goal relatively quickly.
To that end, a mining lease was awarded in October and the additional points relating to permitting process are now being finalised.
At the same time, Paragon is currently awaiting the findings of a bulk sampling programme, conducted this year, which will also provide more insight into the characteristics of the Lemphane kimberlite.
According to Grimmer, news on both is likely in the near future.
Aside from adding valuable cash flows, the start of mining – even on a test basis – will have important implications for the future of the mine, as it will allow Paragon to formalise more substantial resource calculations.
It is hoped that trial mining, once up and running, will lift confidence in the company’s longer term plans.
Paragon believes Lemphane is similar to other prominent kimberlite pipes in Lesotho, like the Letšeng and Mothae diamond mines, it has relatively low overall grades but it also has larger, more valuable stones.
Like Letšeng and Mothae, owned by Gem Diamonds and Lucara respectively, mineral resources can only be established based on surface mining and/or extensive trial mining. As such the current tonnage estimates are not considered mineral resources.
“Really, experience on Lesotho kimberlites from others is that the best way to build a resource base is to mine and then extrapolate the surface mining results to demonstrate the resources at depth.”
Grimmer also says more drilling will be required on Lemphane to increase the ‘resolution’ of the data gathered thus far.
“We’ve shown that the tonnes are there, and now the next step is to get the mining going.”
“There four other operating diamond mines in Lesotho, and we are very happy to be joining the list now that we have a mining lease, and we can now be ranked as a miner rather than an explorer.”