Lucara Diamond Corp. has reported the results from a feasibility study that support development of an underground mine beneath the currently mined open pit at its Karowe diamond mine in Botswana. The company expects the underground mine to extend mine life at Karowe to 2040 and generate significant revenue and cashflow.

Life-of-mine production is estimated at 7.8 million carats. Preproduction capital costs for underground development are estimated at $514 million. Payback period is estimated at 2.8 years. Average life-of-mine operating costs are estimated at $28.43/metric ton (mt) of ore processed.

The resource remains open at depth.

Lucara President and CEO Eira Thomas said, “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 two greater than 1,000 carats in just seven years of production. Further, we have sold 10 diamonds for in excess of $10 million each, including the record-setting 813-carat Constellation, which sold for $63.1 million.

“A significant portion of the cost to expand our mine underground can be funded from cash flow, and the investment is expected to be paid back in under three years, as the underground allows us to exploit the highest-value part of the orebody first and generate more than $5.25 billion in gross revenue.

“What’s more, margins remain healthy despite the application of conservative diamond pricing models that reflect the current, difficult market environment. Lucara’s short-term view is that the market is now stabilizing. Longer term, market fundamentals are expected to strengthen in line with supply shortfalls from mature, depleting mines in Australia and Canada.

“It is important to note that a return to diamond prices observed in 2015 would nearly double the NPV (5%) of this project to $1.4 billion.”

Combined open-pit and underground indicated resources at Karowe now stand at 54.27 million mt grading 15.3 carats/hundred mt for a contained diamond resource of 8.3 million carats, excluding stockpiles.

Longhole shrinkage bulk mining will be applied in the underground mine, providing early access to higher-value ore. On the basis of a construction start in mid-2020, ore from underground will seamlessly integrate into current operations, providing mill feed starting in 2023, with a ramp up to 2.7 million mt per year (mt/y) of feed to the processing plant by 2026. Current production rates will be maintained through the underground ramp-up period.

Access to underground operations will be via two vertical shafts (production and ventilation) of approximately 765 m and 715 m depth, respectively. The 7.5-m-dia production shaft will be equipped with two 21-mt skips for production hoisting and a service cage for man and material movement. It will also serve as the main fresh air intake to the mine.

The 6-m-dia ventilation shaft will be equipped with a heavy-lift hoist for moving large equipment throughout the life of the mine and for hoisting development waste during preproduction.

Drill levels will be spaced at 100-m vertical intervals, and drilling will utilize in-the-hole hammer drills.

The extraction level design is similar to a block cave design, with five extraction drives driven 31.5 m apart across the width of the resource. A total of 56 drawpoints are planned, giving significant extraction flexibility.

Ore will be mucked from drawpoints using 21-mt load-haul-dump units that will feed a jaw crusher. Crushed rock will then be conveyed to two 3,500-mt bins adjacent to the production shaft.

Comminution test work was conducted to determine the crushing and grindability characteristics of the deeper kimberlite, which 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.

Lucara Diamond Corp. is a Canadian company, headquartered in Vancouver, British Columbia, and a member of the Lundin Group of companies.