Published: November 8, 2019 |

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Lucara Diamond Corp. has released the results of a positive underground feasibility study (FS) to expand its 100 percent owned Karowe diamond mine, one of the world’s most prolific producers of large, high value type IIA diamonds, and the only diamond mine in recorded history to have produced two +1000 carat diamonds. 

The underground expansion at Karowe is expected to double the mine life, and generate significant revenue and cashflow out to 2040, extending benefits to the company, its employees, shareholders, communities surrounding the mine, and Botswana.

“Lucara is highly encouraged by the results of the Karowe Underground feasibility study which has outlined a much larger economic opportunity than first envisaged in the 2017 PEA and represents an exciting, world class growth project for our company. Diamond deposits are rare and getting rarer. In this context, we are extending a mine that is in a class of its own, having produced 15 diamonds in excess of 300 carats, including 2 greater than 1000 carats in just seven years of production. Further, we have sold ten diamonds for in excess of $10 million each, including the record-setting 813 carat Constellation which sold for $63.1 million,” said Eira Thomas, president and CEO.

“Lucara is weathering the current downturn in the diamond market better than most of our peers. Karowe’s high value deposit and unique production profile has allowed us to generate enough cash to operate our business, develop the Clara sales platform and to have been a steady dividend payer.  Based on the strong economics outlined in the feasibility study, we are confident that our external financing requirement will be modest and that attractive financing options are available to supplement the expected contribution of our cash flow from operations to fund the underground project. We are optimistic about diamond prices recovering in the short to medium term as global supply decreases next year and we have also identified a number of optimization opportunities for the underground that could add additional value to the project in the near term. With this in mind, Lucara’s Board of Directors has determined that using our available cash flow for detailed engineering and design work, early procurement initiatives and to investigate project debt financing options in the near-term, rather than the payment of a dividend, is the best use of the company’s capital going forward,” said Zara Boldt, chief financial officer.

FEASIBILITY STUDY APPROACH

The FS has been prepared following Canadian Institute of Mining Guidelines for the development of an underground mine. Production from the underground is planned to be coincident with open pit operations coming to completion, at Lucara’s Karowe Mine in Botswana.

Based on the positive FS results, the company will commence advancement of detailed engineering immediately, in parallel with project permitting, arranging project financing and long lead item procurement.

The Karowe Underground FS contemplates both a stand-alone UG scenario and a combined Open Pit Underground LOM scenario. The FS provides for the development of a Long Hole Shrinkage (LHS) operation to mine the South Lobe of the AK06 kimberlite resource from the base of the planned open pit to the 310 masl elevation. Access to the South Lobe underground will be via two vertical shafts (production and ventilation). All Underground mined kimberlite will be processed at the existing Karowe processing plant over a 13-15 year period following the cessation of the current open pit operations, which is expected to occur in 2025.

As a brownfield operation, the Karowe Mine process plant and other site facilities and equipment are sufficient in many areas to support the planned underground mining operation. 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. Upgrades to power infrastructure are required to support shaft services and are costed into the model.

MINERAL PROCESSING

Comminution test work to determine the crushing and grindability characteristics of the deeper kimberlite were conducted. The deeper kimberlite was found to be compatible with the current processing plant comminution circuit.

The predominant diamond separation and extraction process at Karowe utilizes Tomra X-ray Transmission (XRT) sensor based bulk sorting machines to separate liberated diamonds from kimberlite and waste host rock gangue.  XRT tests were conducted on all deeper kimberlite and host rock zones and all were found to be conducive to efficient diamond separation and recovery with the existing circuit.

MINING

The Karowe Mine is an existing conventional drill and blast open pit operation, with diesel excavators and trucks provide an average annual 2.6M tonnes of kimberlite feed to the mill. The open pit mine operation is expected to terminate mid-2025, ending at an elevation of approximately 700 masl.

The subject of the FS targeted the substantial resources remaining below the economic extents of the open pit. A 7,200 tpd shaft operation utilizing long hole shrinkage (fully assisted cave) mining is proposed to provide an additional 13 years of mine life to the Karowe operation after a five year construction period commencing in 2020.

Several UG mining methods were investigated as part of this study including block caving (BC), block caving with pre-conditioning, sub level caving (SLC), and long hole shrinkage (LHS). The bottom up approach of the LHS takes advantage of the denser and higher value kimberlite at depth coupled with low operating costs and high capital costs and de-risks the project with respect to geotechnical and hydrogeological of the host rocks.

The LHS method is planned to systematically drill and blast the entire lobe on a vertical retreat basis. In LHS, a significant proportion of the blasted muck is left in the stope during blasting and stoping to stabilize the host rock with only the swell extracted during the drill and blast phase. Mucking takes place from draw points from 310 L (310 masl) extraction level.  Once the column is fully blasted, the stope is drawn empty by mucking the draw points.

INFRASTRUCTURE

The underground project at Karowe will include the use of existing and new infrastructure at the Karowe Mine. Current and planned infrastructure is designed to support the operation of a 2.7Mtpa mine and processing plant.

Various buildings and surface facilities will be installed adjacent to the shafts in addition to a near-by construction camp, expansion of coarse and fine tailings facilities and a new 29-km long, 132 kV power transmission line running to the mine from the new Botswana Power Corp. substation. 

PERMITTING

The current mining license for open pit mining operations expires in 2023.  An application to the Government of Botswana will be submitted to extend the mining license to cover the remainder of the open pit and proposed underground mining operations. Engagement with the Government of Botswana has been ongoing throughout the FS. Updated Environmental Management and Stakeholder Engagement Plans are being finalized as part of the study.

NEXT STEPS

In the first half of 2020, the company will focus on detailed engineering and early procurement initiatives with respect to the underground. The company will also be reviewing financing options and will update the market when such decisions are reached. The anticipated capital requirements in 2020 represent less than 10 percent of the pre-production capex estimate and can be funded out of the company’s anticipated cash flow, as financing options are explored.

About Lucara
Lucara is a leading independent producer of large exceptional quality Type IIa diamonds from its 100 percent owned Karowe Mine in Botswana. The company has an experienced board and management team with extensive diamond development and operations expertise.  The company operates transparently and in accordance with international best practices in the areas of sustainability, health and safety, environment and community relations.

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