Paragon Diamonds provides update on Lemphane Kimberlite tonnage estimate

Paragon project(1)Paragon Diamonds said the geology consultants AMEC have completed work and a report on the initial geological model for the company’s Lemphane Kimberlite in Lesotho.

According to the company, the model is based on the interpretation of some 1,373 metres of drilling on four drill holes to approximately 260 m maximum vertical depth below surface.  The program was undertaken in Q1/Q2 of 2013.  The report indicates the steep almost vertical nature of the kimberlite/wall rock contact which has positive implications for a significant increase in overall estimated kimberlite tonnage.

The original scoping study of February 2013 was based on assumptions made by the Company which were integrated into a 3d model constructed by Steffen, Robertson and Kirsten Consulting (SRK) under contract to Paradigm Project Management (PPM) who were commissioned to undertake the scoping study.

Paragon said this was done in order to broadly determine, in advance, the likely capital costs and operating cost for mining any resource which may subsequently be identified, and thus determine a base-line resource value which needs to be achieved by the resource development work which is ongoing.

The model projected the  5.7 hectare surface expression of the main pipe, (which sits at between 2,600 m and 2,665 m with a centre-point at 2,620 m ASL (above sea level))  downwards  at an inward taper of 85°. A density of 2.60 g/cm³ was assumed. Applying the above parameters produced a tonnage estimate of 23.2Mt to 2,450 m ASL. To a depth of 170 m the kimberlite would be mined over its entire surface area, following which the pit walls would be developed in kimberlite to a depth of 2,350 m (a further 100 m) for a final depth of 270 m. This sub-pit would provide a further 3.8 Mt for a total available tonnage of 27.0 Mt of kimberlite.

Drilling by the company, together with accurate density measurements at regular intervals along the drill core, has been modelled by AMEC and indicates a substantial improvement on the original estimates. It should be stressed that although preliminary and based on four intersections at depth, the revised model is now based on actual data rather than assumptions.

AMEC provided two tonnage calculations, based principally of density variations, which give overall tonnages of between 48.6Mt and 50.6Mt. Given that this model has been constructed from just four drill holes, and that volumes are rounded to the nearest 1,000 cubic metres (~2,600 tonnes), considerable uncertainty remains regarding the accuracy of the model, and the low end of the value range are quoted here in all instances. Applying the same depth intervals, in the upper portion (surface to 2,450 m) the revised model now contains 26.7 Mt versus 23.2 Mt, i.e. a 15% improvement in tonnes.

Below 2,450 m to a final depth of 2,270 m (a total depth of 350 m below mean surface) a further 21.9 Mt of kimberlite is estimated, versus the 3.8 Mt assumed to be accessible in the original model.

Overall the AMEC geological model now includes 48.6 Mt compared to the previous estimate of 27.0 Mt.  This represents an approximate 80% increase in kimberlite tonnage.

A final strip ratio is yet to be determined for the revised tonnage to 2,270 m but it is expected to be within the acceptable economic limits encountered on other open-pit kimberlite mines in Lesotho.

Whilst surface grades have been established in the bulk sampling program, it is not possible at this stage to define a mineral resource.  The Company’s consultants on bulk sampling  MSA note that: “The low grade nature of the Lemphane Kimberlite suggests that it is unlikely to be possible to determine a Mineral Resource classification beyond the Inferred level, because bulk sampling at depth is likely to be unfeasible. Therefore, the grade and revenue model for the pipe at depth will be based solely on geological continuity and with results from a comprehensive and large scale trial mining programme at surface. The principal of establishing a Mineral Resource estimate (grade and value at depth) from the extrapolation of statistically robust surface production or trial mining results has been successfully applied at both Letšeng Mine (Gem Diamonds plc.) and at the Mothae Project (Lucara Diamond Corp.)”

The table below indicates the comparative tonnages based on the original assumptions (as utilized by PPM in the original model) and the revised values based on actual drilling and density measurements, as estimated by AMEC. Data are presented on a level-by-level basis vertically throughout the kimberlite pipe.

Level (ASL)

AMEC

(‘000 tonnes)

PPM         (‘000 tonnes)

to 2,600 m

5,157

4,648

to 2,550 m

7,255

6,727

to 2,500 m

7,263

6,267

to 2,450 m

7,027

5,551

to 2,400 m

6,556

*3,204

to 2,350 m

6,100

*647

to 2,300 m

5,826

to 2,270 m

3,466

Total

48,650

27,044

* Partial mining below 2,450m

 Executive Chairman, Martin Doyle said this highly significant increase in tonnage is excellent news for the project as it has the potential, if proven economic, to approximately double the current volume of kimberlite used in the Scoping Study with an overall positive impact of the project economics.

“I am confident that our work program going forward, which will include significantly more drilling will continue to confirm our belief in the potential of Lemphane to be a very valuable resource of large diamonds.”

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