Main Page Content
Liqhobong, Lesotho
The Liqhobong Mine is operated by Liqhobong Mining Development Company (Proprietary) Limited, which is 75 per cent. owned by Firestone and 25 per cent. owned by the Government of Lesotho. The Letseng Mine, which is operated by Gem Diamonds Limited, and a number of other kimberlites that are currently undergoing evaluation by other companies, including the Kao and Mothae kimberlites, are also located in Lesotho.
The Liqhobong Mine is comprised of the Main Pipe and the Satellite Pipe, which cover areas of 8.5 hectares and 0.8 hectares, respectively. LMDC has been granted a mining lease by GOL covering an area of 390 hectares in respect of both pipes which expires in August 2017, but is then renewable for a further ten years.
Over 350,000 carats of diamonds have been produced at Liqhobong from the commencement of operations at the Satellite Plant in late 2005 up to the suspension of production in December 2008 due to the sharp fall in rough diamond prices at that time. Activities at Liqhobong since then have been focused on completion of a definitive feasibility study ("DFS") on the Main Pipe, where a resource of approximately 31 million carats has been defined. Preliminary results from the DFS, which is now at an advanced stage and expected to be completed in 2011, indicate that the Main Pipe is likely to support a substantial, long life mining operation.
In December 2009, independent mining and geological consultants, ACA Howe International Limited, issued an updated resource statement for the Main Pipe which is set out on page 123 of the Kopane CPR which showed total resources of 90.66 Mt at an average grade of 34.3cpht containing 31.14 million carats, with an independent run of mine valuation of US$86 per carat (September 2008 valuation), giving revenue of $29/t and a gross in-situ value of $2.7 billion. Of the Mineral Resources at Liqhobong, 38.54 Mt at an average grade of 32.8cpht with contained diamonds of 12.64m carats are in the Indicated Resource category and the remainder are in the Inferred Resource category. With estimated operating costs of $12/t for kimberlite mining in Lesotho (based on Gem Diamonds Limited's costs at the Letseng mine), this provides an indication of the significant economic potential at Liqhobong.
In parallel with completing the outstanding work on the DFS, Firestone is planning for the recommencement of production at Liqhobong in 2011 employing the Number 1 Plant (formerly known as the Satellite Plant) and using diesel generated power until a connection to the electricity grid is available. Following completion of the DFS Firestone intends to construct a new diamond processing plant, which will be significantly larger than the Number 1 Plant and of suitable size to optimally exploit the Main Pipe resource, with a projected 4 mtpa processing capacity. Estimates for the schedule and cost for construction of the new plant are being made as part of the DFS.
The successful development of the Main Pipe will be aided by a connection to the electricity grid operated by the Lesotho Electricity Company. A Memorandum of Understanding between LMDC, the LEC, GOL and Standard Lesotho Bank in respect of funding of the construction of an electrical power line to the Main Pipe was signed in August 2009. Terms for a bank loan to fund the work are in the course of negotiation and tender documents for construction contracts are being finalised. It is envisaged that LEC and GOL will contribute funds towards the cost of the project and GOL will provide a sovereign guarantee to the bank in respect of the loan funding. LMDC will finance the servicing of the loan and its repayment on terms to be agreed. The engineering specifications of the power line, together with environmental impact assessment studies, have been completed in readiness for the start of construction once funding is in place. It is expected that construction will start by the end of 2010, which should allow grid electricity to be available at the mine site by Q1 2012.
