Lucapa Expects to Begin Merlin Production in 2023

RAPAPORT... Lucapa Diamond Company plans to begin processing the first ore from its newly acquired Merlin mine in Australia within the next 24 months.The company is currently working with the liquidators to complete administrative requirements and finalize the sale, after which it will begin work at the site, Lucapa managing director Stephen Wetherall told Rapaport News. The miner purchased the deposit for $6.6 million in May. Merlin Diamonds, the site's last owner, was suspended from the Australian Stock Exchange (ASX) in 2018. In April 2020, an Australian federal court declared the company insolvent and appointed liquidators to sell off its assets.The Merlin mine has an estimated resource of 4.4 million carats, 2.3 million of which are indicated diamonds, meaning tests have confirmed their presence. Another 2.1 million carats are inferred - the existence of other known diamonds gives reason to assume they are there. However, Lucapa has yet to determine how many carats it will produce annually."Given the average grade of the 10 pipes that make up the indicated resource...we would produce approximately 170,000 carats per annum," explained Wetherall. "If we doubled that, it would take us to 340,000 carats per annum. Naturally, our mine plan will not work on averages, but will target certain [higher-margin pipes] earlier in the mine plan. Looking at the grades of those pipes, the production could be much higher."In the near term, Lucapa will mine from the current open pit. Longer term, the miner plans to extend the open pit and eventually move to underground mining, where there are multiple clusters of diamondiferous pipes. It will also carry out exploration on more than 70 anomalies found in the tenements where all previous diamond-bearing kimberlite was found. Merlin was previously owned and operated by Ashton Diamonds and Rio Tinto until 2009. At that time, the average price for rough from the mine was $103 per carat.Image: The Merlin mine. (Merlin Diamonds)