Lucapa Diamond Company has released a scoping study for its recently acquired but mothballed Merlin diamond project in the Northern Territory, which suggests it has the potential to be Australia’s next long-life diamond mine.
The preliminary study suggests Merlin has the capacity to produce approximately 2.1 million carats across a 14-year mine life, which is the equivalent of approximately 153,000 carats per year.
The mine’s forecast revenue would be circa $1.6 billion across its life according to the study, with an EBITDA (earnings before interest, taxes, depreciation and amortisation) of circa $702 million across the same timeframe.
The Merlin project comprises two tenements, including a 24 square-kilometre mineral lease (MLN 1154) and a 283 square-kilometre exploration licence that encompasses the mineral lease.
There are 11 known diamondiferous kimberlite pipes across three kimberlite clusters (north, centre and south) within the project. Two additional diamondiferous kimberlites have also been discovered within the broader exploration licence.
There are more than 70 potentially prospective unresolved anomalies within the project, indicating the exploration upside of Merlin.
MLN 1154 contains a kimberlite diamond mineral resource of 27.8 million tonnes at an average grade of approximately 16 carats per 100 tonnes for 4.4 million contained carats.
“The results of the scoping study confirm the great potential identified by Lucapa using an innovative hybrid open pit and vertical pit mining methodology to establish a mining operation at Merlin,” Lucapa managing director Stephen Wetherall said.
“The scoping study sets out strong economics for a long-life mine with a production target of 2.1 million carats, $1.6 billion in revenues and substantial earnings and cashflows to Lucapa over a 14-year life.”
Wetherall believes Merlin’s promise is not only in what’s known but also in what’s untapped, validated by the project’s strong exploration potential.
“There is potential to deliver further significant value through the operational opportunities and from mineral resource extensions, underground development and exploration as the kimberlites continue at depth and there are a significant number of anomalies that have the potential to deliver new source discoveries,” he said.
“Lucapa’s existing mining assets are delivering for shareholders in 2021, and with the transformative strategic acquisition of Merlin showing strong potential, we look forward to delivering the feasibility study, commencing exploration and putting our third producing asset into operation.”
Merlin was mined by Rio Tinto and Ashton Mining between 1999 and 2003, which saw them produce more than 500,000 carats from approximately 2.2 million tonnes of kimberlite processed.
Lucapa is progressing a feasibility study for Merlin which it expects to release in mid-2022. The company suggests Merlin has a two-year development timeline post feasibility study given the advanced nature of the project.