Junior diamond explorer and developer, Kopane Diamond Developments (AIM: KDD) has signed a memorandum of understanding (‘MOU’) with Standard Lesotho Bank to finance the construction of a power line to the company’s Liqhobong diamond operations in Lesotho.
The MOU “contemplates” funds being lent by Standard Lesotho Bank to Kopane’s Lesotho subsidiary to construct a 30 kilometre power line. The Government of Lesotho (‘GOL’) has also agreed to provide a sovereign guarantee in respect to the loan funding, and both the GOL and Kopane subsidiary will contribute funds towards the cost of the project.
Kopane Diamonds has said repeatedly in the past that connecting to the grid would significantly reduce the operating cost of the project, which currently relies on diesel generators.
The company suspended production from its Satellite diamond mine in December 2008 after global rough diamond prices slumped. Between 2005 and 2008, Kopane produced over 350,000 carats of diamonds. Kopane also controls the larger, nearby Main Pipe that is widely considered the more promising project with a longer mine life - the Main Pipe has an indicated and inferred resource of nearly 30 million carats.
“The engineering specifications of the power line, together with environmental impact assessment studies, have been completed in readiness for the start of construction in the second half of 2009, once funding is in place,” the company reported. “It is expected that this will enable grid electricity to be connected to the mine site by the first half of 2011.”
Frank Scolaro, Chairman of Kopane Diamonds said the signing of the MOU was an important step in developing Liqhobong into a one million carat per annum operation.
The Liqhobong operations are 75% owned by Kopane Diamond’s Lesotho subsidiary and 25% owned by the GOL.