Presentation on theme: "Taking Liqhobong to one million carats per year. Disclaimer The information contained in this presentation (“Presentation”) has been prepared by Kopane."— Presentation transcript:
Taking Liqhobong to one million carats per year
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Two adjacent kimberlite pipes -current production centred on small Satellite Pipe -adjacent large Main Pipe: “rediscovered” by Kopane as major resource Pre-feasibility Study on Main Pipe completed Definitive Feasibility Study on Main Pipe underway Programme to increase production to 1M carats/year The Liqhobong Assets – A Platform for Expansion
254,000 carats produced since Dec 2005 – approx value $13.6M (Satellite and Main pipe mix) 160,000 carats/year current production rate - Liqhobong Plant 180,000 carats expected in calendar 2008 Fine white, “fancy yellows” and large diamond recovery $12.3M sales revenue to date - Sales agent: BHP Billiton Diamond Production
Pre-feasibility Study of the Main Pipe indicates robust economics with resource of 42M tonnes (27.6 cpht), open at depth Advanced Evaluation to upgrade and expand resource expected by Q – Bauer wide-diameter drilling – Mining and bulk sampling through Liqhobong Plant Definitive Feasibility Study (“DFS”) underway using internationally recognised consultants - results by end Finance and implementation of a planned 1M carats/year project; planned commissioning Q Taking Liqhobong to one million carats/year
A visit to Liqhobong
The Satellite Pipe One hectare pipe Mine life of approx 5 years (3 remaining) Grade of 68 cpht Average value of ~$40/carat Some “fancy yellows” production Facilitated the re-discovery of Main Pipe Makes cash contribution to LMDC Demonstrates Kopane’s ability to build and operate a mine Resulting in a 20 year Mining Licence for Main Pipe
Liqhobong Process Plant Process Plant construction started in 2004 and was in production by late 2005: Throughput capacity of 420,000 tonnes/year Treatment of Satellite and Main Pipe kimberlite (including 44,000 tonnes of bulk sampling) Current output approx 160,000 carats/year while treating Main Pipe weathered kimberlite ahead of DFS Bulk Samples Scheduled to rise to greater than 200,000 carats/year when reverting to Satellite Pipe only A Unique Advantage: Industrial scale plant available for Main Pipe sampling Operator training Cash flow generation
Liqhobong Main Pipe 8.5 hectare pipe (330m wide) 7,712m total diamond drilling Multi Phase Intrusion First bulk sample - 30,120 tonnes, recovering 9,014 carats (average grade of 28 cpht) Second bulk sample – 13,861 tonnes (unaudited), recovering 5,685 carats (average grade 41 cpht) March 2007 Average stone value of $70/ct (excluding bonanza stones) 20 year Main Pipe mining lease agreed February 2007
The Finnish Joint Venture Mantle Diamonds to develop 28 mineral exploration claims (29,000 hectares) through JV agreement Mantle will acquire up to 70% of the Finnish assets by: – Spending $5M on the properties – Concluding a DFS on the Lahtojoki property – Issuing Kopane with £2M of Mantle shares Mantle will assume all management responsibilities for these assets Bulk sampling and wide-diameter drilling programme (5,500 tonnes) on Lahtojoki. Awaiting environmental permit. Small DMS plant under construction in RSA.
Implementation at the Liqhobong Site View of the Processing Plant, October 2007 View of the Processing Plant, November 2004
Delivery Construction and commissioning of the Liqhobong Plant 254,000 carats produced with a value of $13.6M Marketing agreement with BHP Billiton Diamonds NV “Rediscovery” of Main Pipe – Multi-phased mineralisation (K2 through K6 facies) – Higher tonnages and grade – Potential for bonanza stones Main Pipe pre-feasibility study - economically robust project 8.65M carats resource base (0.75M carats 2005) Definitive Feasibility Study commenced – due at end 2008 Creation and maintenance of good relations with Government of Lesotho (”GoL”)
Marketing through BHPB Billiton Evergreen marketing agreement Liqhobong diamonds are tendered in Antwerp (10 per annum) Sold a total of ~ 230,000 carats since March ‘06 for US$12.3M Sixty six stones sold totalling 484 carats realising more than $5,538 per carat Fully compliant with the Kimberley process
Liqhobong Diamond Sales Calendar YearSales* Volume Sales Value US$M Value per Carat US$ 2006 H125, H230, H147, H2 77,574** Q134, * Sales do not occur evenly throughout the year but are made through 10 irregular spaced tenders ** Excludes sale of 13,320 carats of industrial grade stones
Main Pipe PFS - Modelled Mine & Plant Modelled Kimberlite Resource55.5M tonnes Proposed Processing Rate3.5 mtpa Initial Mine Life16 years Modelled Grade27.6 cpht Stripping Ratio (t waste: t ore)1.1 - life of mine in first 4 years Gross Recoverable Carats15.3M carats Net Recoverable Carats to KDD11.5M carats Cross-sectional Area8.5 ha at surface and 5.1 ha at 280 meters
Main Pipe PFS - Economic Parameters Indicated Run of Mine Value$70 / carat* Cash Operating Costs$10.5 / tonne $37.9 / carat Capital Costs (including contingences and working capital)$100M Gross Value of Recoverable Diamonds$1,050M * based on a bulk sample of 6,088 carats in 2006
Main Pipe Independent Resource Statement* CategoryGross to LMDCNet Attributable to KDD (75%) MAIN PIPE Mineral Resources Tonnes (millions) Grade (cpht) Contained Diamonds (millions carats) Tonnes (millions) Grade (cpht) Contained Diamonds (millions Carats) Indicated Inferred Total * Prepared by Geocontracts Botswana (Pty) Ltd to CIM Standards based upon sampling up to end 2006.
Main Pipe PFS - Operating Upsides ACA Howe International independent auditor of PFS – endorsed its findings – saw substantial upsides in grade, tonnage and stone values Analysis of diamond production and sales to date implies Main Pipe grade higher than 28 cpht (Q ,861 tonnes bulk sample - 41 cpht) Big and bonanza stones should increase price per carat Each 200,000 tonnes of K4 and K5 facies predicted to yield 4 stones larger than 50 carats and 1 stone larger than 100 carats Source: MM Oosterveld Main Pipe mineralisation open below current extraction model of 340 meters below surface (2,190m AMSL) Diamond drilling demonstrates mineralisation to 650 meters below surface
Main Pipe Definitive Feasibility Study DFS started in October 2007 AMC (study managers) with DRA, Golders, SRK, Africon, ACA Howe and Bauer Wide-diameter drilling programme started February 2008
Main Pipe Definitive Feasibility Study DFS started in October 2007 AMC (study managers) with DRA, Golders, SRK, Africon, ACA Howe and Bauer Wide-diameter drilling programme started February 2008 Bulk sampling and core drilling programmes New 5tph DMS plant to treat wide-diameter drilling material Bulk samples to be treated in Satellite Plant New Resource Statement to be produced Q DFS Opex, Capex and Mine Plan to be completed Q Environmental and Social Impact Assessment to be prepared to “Equator Principles” standards Q1 2009
Timeline for Main Pipe Implementation Preliminary approach to project lenders (H2 2008) DFS completion Q Finance and implementation of Power Line project Completion of finance for Main Pipe project Commencement of Project Implementation (June ‘09) Commissioning of Main Pipe project (H2 2010)
Kopane’s Diamond Sales Growth
Kopane in the market “With production stabilising at or above 160kcts for FY08E (+44% YoY), we believe the market will focus on the Main Pipe - Definitive Feasibility Study (DFS) due in Q4/08. In the interim, the wide diameter drilling programme should commence in February and we expect regular progress reports throughout 2008.” Jan 2008BUY – 28p “Kopane appears to be one of the cheapest diamonds stocks in the diamond universe, trading at one of the lowest multiples to its resource base in the diamond universe. A carat in the ground at Kopane is valued at $2.26 compared with a range of $7.11-$52.11 for other London-listed diamond producers and explorers.” Dec 2007 Outperform – 25p “In July 2007 a management reshuffle led to the appointment of the highly-rated Tim Read as executive chairman, and the Finnish assets have been vended out to a JV with Mantle Diamonds, a private UK company. Mantle will spend US$5m in exploration and development of the assets and will pay 10m shares to Kopane. This gives a look through value to the Finnish assets of £3.6m.” Jan 2008BUY – 38p
The NPV of Liqhobong to Kopane £ millions (Kopane’s attributable 75% interest) Grade of Main Pipe cpht Diamond Value $/ carat Using a 10% discount rate, the modelled resource of 55 million tonnes and a production of 3.5 million tonnes of ore per annum. Diamond prices are assumed to increase by 2% per annum in real terms from 2008.
Weighted Average : 5.28 Weighted Average of companies with resources : 6.04
Summary Strategic focus on Lesotho producing assets with growth potential 1M carats/year production objective The PFS demonstrated the robust economics of the Main Pipe project. The DFS is now underway and due for completion end Grade, tonnage and bonanza stones - potential upsides Considerable operational advantages New management team plus proven in situ operational capacity Production to date 254,000 carats – current rate 160,000 carats/year Sales of diamonds currently exceed 230,000 carats - value of $12.3M through BHP Billiton JV partnership: Mantle Diamonds manage Finnish assets Financing to take Kopane through to June 2009
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