Paragon Diamonds Limited has released positive results of an independent size frequency and revenue modelling report based on 300 carats of diamonds recovered during the 2012/3 bulk sampling programme at its Lemphane Kimberlite Pipe Project in Lesotho.  These results support enhanced economics of the project ahead of the commencement of Stage 1 Production in the near to mid-term.

According to the company, a +100 carat diamond expected per million tonnes was processed with the anticipated diamond values projected between US$930/carat and US$1,025/carat, to be verified during Stage 1 production. Paragon said a size frequency indicates 12% of carats as diamonds exceeding 9 carats while a conservative overall grade of 2cpht used for basis of modeling.

Ahead of commencement of planned Stage 1 Production, the company commissioned The MSA Group, and Dr. Johannes Ferreira to undertake a size frequency and revenue modelling report to independently verify the Company’s in-house estimates. Dr Ferreira is an internationally recognised authority in this field and has previously studied other large diamond size, exceptional value but low grade diamond deposits, including the Mothae kimberlite in Lesotho, Lucara Diamond Corp’s Karowe Mine in Botswana, and DeBeers’ Victor Mine in Canada.

Circa 300 carats of diamonds were recovered from a bulk sampling programme of over 15,000 tonnes of kimberlite at Lemphane, which was concluded in June 2013. The majority of these diamonds were subsequently independently valued by WWW International Diamond Consultants in September 2013.

However, Paragon stated that it should be noted however, that the values obtained relate only to the actual diamonds recovered. Diamonds exceeding 9 carats were not recovered due to limited sample size, although their occurrence can be statistically predicted with confidence. Large diamonds carry exceptional value (over 80% of the total value at the nearby Letšeng Mine) and modelling seeks to address this by applying appropriate values to large diamonds anticipated to be recovered during mining operations. Size frequency and value modelling are standard statistical techniques to determine the anticipated diamond sizes and values that would be expected in the much larger diamond populations recovered during production operations.”

Paragon’s Managing Director, Dr Stephen Grimmer said they are delighted that this independent report confirms the exciting economic potential of our flagship Lemphane project in Lesotho as we move towards Stage 1 production.

“The report highlights that our in-house calculations of preliminary diamond values comfortably exceeding US$750/carat and predicts the recovery of diamonds up to 100 carats in size even in the early stages of production.  In stage 2, with the anticipated frequent recovery of large stones we would expect that the value would increase further, certainly in the realms of $1,500/carat envisaged in the published scoping study.  Lemphane has always shown potential to produce large, exceptional diamonds, and we feel the comparison with other high-value Lesotho kimberlites, made in this study, is fair and offers further upside, given recent remarkable diamond values achieved at neighbouring mines†”.

Diamond Size Frequency

For the diamonds exceeding +7DTC (≡2.46mm Ø or nominally greater than 0.15 carats, representing 74.3% of total carats) expected to be recovered during planned production operations, the relative percentages of large diamonds are shown in the table below:

The results are based on the northern and southern domains of the 6 hectare Lemphane Kimberlite as delineated and sampled to date. The southern domain, which represents circa 60% of the kimberlite, also produced better results in terms of grade, diamond size and value, than the average across the pipe reflected in this study.

“The size component in this exercise is more reliable than the value component, and is very likely to change when more diamonds are recovered and added to the modelling procedure,” Dr Ferreira said.

Based on these results, Stage 1 production can be expected to recover in excess of 100 diamonds larger than 9 carats, including diamonds up to 100 carats in size. Over the entire 48.6Mt of kimberlite delineated by drilling to date, the expectation would be for some 50 diamonds in excess of 100 carats and 175 diamonds in excess of 50 carats (i.e. two to three a year and one a month respectively if mined at 3Mt/yr), including diamonds of over 300 carats in size, being recovered.