EUROPEAN DIAMONDS (AIM: EPD) updated investors this morning on operations at its Lesotho diamond mine. The company said that it had received a mining licence which extends from the current Satellite Pipe to cover the larger, 9 hectare Main Pipe. European Diamonds is currently mining from the Satellite Pipe, but has ambitions to extend the operation to cover the Main Pipe. Ongoing evaluation of the Main Pipe has turned up unexpectedly larger diamonds, including a 27.7 carat diamond that was sold for US$750,000.
Meanwhile teething problems at the Satellite Pipe continue to be addressed. A new Dense Media Separation (DMS) cyclone and conveyor system has been installed and is working to expectations. However, a new crusher is taking longer than first hopes to commission, but is still anticipated to reach operating targets shortly. It is hoped that once the final upgrades are complete, the Satellite Pipe will move towards full capacity and produce approximately 290,000 carats per annum.
"This Main Pipe Licence amendment is broadly on the same terms and conditions as currently apply for the Satellite licence with the exception that the new licence now allows for a 20 year mining programme at Liqhobong. The holdings remain the same as with the Satellite Pipe, with EPD holding a 75% interest and the GOL holding 25% in the combined mine. In addition, the finalisation of the terms of the mining licence allows us to broaden the scope and the flexibility of the proposed mining operation at Liqhobong and considerably strengthens the PFS on which we are presently working. The recent core drilling and bulk sampling has greatly increased our geological knowledge of the Main Pipe and we are confident that the PFS will indicate that a significant large scale diamond mine can be constructed at the Main Pipe. The confirmation that we have the potential for large high quality stones could have a very significant impact on the project economics. All of the PFS results will be independently verified and we expect to report the results during the second quarter of 2007" said Roy Spencer, CEO.