Shares in Perth-based junior Lucapa Diamond Company have surged on news it has signed a 35-year licence to mine alluvial diamonds at the Lulo diamond concession in Angola.
Shares in Perth-based junior Lucapa Diamond Company have surged on news it has signed a 35-year licence to mine alluvial diamonds at the Lulo diamond concession in Angola.
Lucapa, which is led by managing director Miles Kennedy, said the mining licence was the culmination of six years of continuous investment in exploration and bulk sampling programs for kimberlite and alluvial diamonds at Lulo.
The licence covers a 218 square kilometre area within the 3,000 square kilometre Lulo concession.
Lucapa signed the mining licence with its two Angolan-based mining partners last Friday.
The company said it had negotiated terms with its partners and, as sole operator of the Lulo diamond mine, will retain a 40 per cent stake in the project.
Lucapa commercial and development executive director Stephen Wetherall said the signing of the agreements represented a significant transforming event for the company.
“We have been recovering some of the best diamonds in the world from both our alluvial and kimberlite bulk exploration activities at Lulo,” Mr Wetherall said.
“The $6 million of Lulo diamonds recovered from our bulk sampling at Lulo and sold have achieved average selling prices of close to $7,000 per carat, which is extraordinary when compared to the average global sale price of just $US120 per carat.”
Under the terms of the licence agreement, the 35-year mining term can be extended with 10-year options, while Lucapa is able to repatriate its share of dividends and capital gains.
It also allows Lucapa to be repaid all past and future alluvial exploration and development expenditures from free cash flow.
Lulo is located within 150km of the Catoca, Angola’s biggest diamond mine and the fourth-biggest producing kimberlite pipe in the world.
Mr Wetherall said it was likely that kimberlite bulk samples would be processed through Lucapa’s original dense media separation diamond plant, which has a front end feed rate of 150 tonnes per hour.
In a statement, the company said that by using the existing on-site infrastructure it could target a throughput rate of about 14,000 cubic metres of diamond-bearing alluvial gravels per month by the second quarter of 2015.
Lucapa is able to operate under terms of the mining licence agreement immediately.
Mr Kennedy was also involved in the start-up of Kimberley Diamond Company’s Ellendale diamond mine in Western Australia, before the company was taken over by Gem Diamonds for $320 million in 2007.
Shares in Lucapa were 16.9 per cent higher at 41.5 cents per share at 1pm.